ECONOMIC GLOBALIZATION

Rainy Priadarsini S.
INTRODUCTION
Economic globalization is the driving force behind
the various changes bound up with the culture and
politics, principal concern of the alternative
globalization movement

Contemporary globalization: attain autonomy from
other spheres.

Also tied up with (?) inequality in wealth and power,
MNCs and citizens, North and South countries, etc
Capitalism, social democracy and
neoliberalism
Vital ingredient of global economy: set of
deregulating policies pushed by neoliberals,
replace the previous social democratic consensus
in Western nations (Castell, 1996)

Capitalism: generalize production, circulation of
commodities, drive to profit (Buick and Crump,
1986)

Marxist: capital the existence of the waged
labor entails exploitation of the worker by
capitalist

Profitability, market, competition, inequality:
central of capitalism

Osterhammel and Petersson (2003): period
1846-80: age of the free trade

Great depression (1929-33) bringing economic
ruin, unemployment, economic instability
(Hobsbawn, 1995b, Smart, 2003)
Karl Polanyi, 1944: strong critique of the market
model hailed the retreat from free market to state
intervention

30 years, then, Keynesianism , constitute
conventional economic wisdom for western
countries: mix economy (combination of state and
private enterprise) and welfare state

In early 1970, multi-pronged crisis started to eat
away at the Keynesian compromise and neoliberal
ideas became increasingly influential -- Friedrich
von Hayek and Milton Friedman (Hobsbawn,
1995b)
Neoliberalism, in Susan Georges (1999)
estimation, has emerged as a new worldwide
religion, and Perry Anderson (2000) names
neoliberalizm as the most powerful and
successful ideology in the world history
neoliberal hegemony electoral victories of
Ronald Reagen in America (1980) and Margaret
Thatcher in England in England (1979)

For socialist, the main goal of an economic
system should be as the satisfaction of needs and
the achievement of co-operation, rather than
about profitability
Neoliberalism and the IMF, WB and
WTO
For critics of economic globalisation, some of the
most damaging outcomes of globalization attached
to the neoliberal orientation of institutions IMF,
WB, WTO

Washington Consensus is ?.....
a guarantee of fiscal discipline, reduction of public
expenditure, tax reform, financial liberalization,
competitive exchnage rates, trade liberalization,
promotion FDI, privatization state enterprise,
deregulation, protection of property rights
The BW conference of 1944: establishing new
economic order at the end of the war - American
dollar was to function as an effective world
currency

1971: US experienced its first balance of trade
deficit, President Nixon announced that America
was removing convertibility between dollar and
gold

What is SAP?...
BW conference: the establishment of IMF to
secure financial stability in the world economy,
critique?....

The WB (June 1946): aid in the reconstruction of
Europe, and lend money to poorer countries,
critique?....

GATT (1947) pact that govern tariff and
quotas on the trade of goods replaced by
WTO (1995) formal and legally constitute, a
more powerful org. that administers trade
agreement, critique?...
Global Finance
1997: major financial crisis spread through Southeast
Asia

Crisis signing as the growing centrality and volatility of
financial globalization

Castell (1996) the globalization of financial markets is
the very backbone of the global economy

Cetina and Preda (2005: 2) finance has perhaps risen in
importance in the last quarter century more rapidly than
any other sector of the economy

Centrality of finance: liberatizaon of the financial flows.
Pro and critics?...


New Technology
As Mackay (2002) notes, one vital feature of
modernity is its increasingly mediated nature

New information and communication tech. are
frequently viewed as crucial linked to
contemporary globalization notion of end
geography and fast capitalism. Critique?...
Trade and MNC
After WW II, international trade began to grow again:
multinational capitalism, dominated by America

Place of manufactures has increased, rise of office and
telecommunication equipment, consumer goods, motor
vehicles, machinery and transport equipment, trade in
service, capital flows FDI: overseas investment by
companies to set up new overseas subsidiary or acquire a
controlling interest in other company

FDI associated with MNC, what is the characteristics ?...
Environmental commodification

Global Stratification

Work

Tourism, global cities and slums

STRUCTURING THE GLOBAL
ECONOMY

Rainy Priadarsini S.
BEFORE BRETTON WOODS
Global economic system: global capitalist (1896-
1914)
Analogies economic that period and today:
-transportation
-communication
-global economic development
-immigration remittance
-economic specialization comp. adv
-free trade elimination of trade barrier



Probs?
-poor nation and people subjugated the operation
of GO
-not all parts of the world gained equally from the
growing GO
-not only losers in economic competition among
geographic area, certain industry and social
classes lose out
-within nation, the poor tended to suffer most,
when those nation force to repay debt
Economic dev. during and after WW II
After WW I, great depression, WW II had
negative effect on all major economies (except
US)
1930 ; movement of many countries; fascist Italy
and Germany; autarky
In the mist of WW II, western world began
planning for a more open international economy
Reducing trade barrier, free flow of money and
investment, financial stability around the globe:
BWS
BWS
Great depression: lack coordination among
nation-states (high tariffs and other import
restriction, protectionist practices, propensity of
government to devalue their currencies in order
to gain an edge in global trade over the
countries, and exchange rate war
BWS
Each participating states establish par value for its
currency in terms of gold/entire system was in term of
gold value of the USD as of 1944
Officially monetary authority in each country (a central
bank) would agree to exchange its own currency for
those of other countries at the establishes exchange
rates, plus or minus a one-percent margin
IMF was created establish, stabilize, oversee exchange
rates
Member states agrees to eliminate , all restriction on the
use of its currency for intl trade
Entire system was based on the USD
BWS
powerful effect on global trade, monetary order,
and investment unconditional most
1. Unconditional most-favored nation GATT
WTO
2. IMF security and flexibility
3. World Bank

BWS
Global openness BW contributed to the
emergence or expansion of social welfare
programs: social safety net
Rapid rates of Economic growth and most
enduring economic stability in the modern
history
GATT
System for liberalization of trade grew out of BW
and come into existence in 1947 1995.
A forum for the meeting of representative countries
In 1947 a number of initial trade agreement have
been negotiated by 23 nations
Later multinational trade agreement (later the
WTOs) institutional umbrella
Focus on tariff reduction
A number of rounds were completed (Kennedy
Round 1967, Tokyo Round 1979, Uruguay Round
1986 93 = reached to create WTO
WTO
Negotiation issues: reducing tariffs on the
trading of goods, non tariff barrier (quota,
national subsidies to industries and agriculture),
liberalizing intl trade in agriculture
International trade in service - GATS, TRIPS,
TRIMS
WTO org. of member states
Headquartered in Geneva (152 member nations
in 2008) each member has equal vote
Stress and strain between developed and
developing group
Green Room the meeting of the larger power
No mechanism for involvement INGO in WTO
decision making
IMF
created in 1944
The goal is macroeconomic stability for both
member nations and global economy (exchange
rate, balance of payment, intl capital flows,
monitoring of member states and their
macroeconomic policies
Pro: this is the key to the emergence and further
development of the global economic
Contra: supporting developed countries, and
impose their policies on less developed countries
WB
IBRD, special agency of UN, began operation in 1946
Membership is opened to all member states of IMF 184
nations

Mission:
-encouraging development of productive facilities and
resources in less developed countries
-funding for productive purpose when private capital can not
be obtained in reasonable terms
-encouraging intl investment in order to promote intl trade and
development and equilibrium in balance of payments
-helping member countries improve their productivity, standard
o living and labor conditions
The end of Bretton Woods
Died on August 15, 1971
President Richard Nixon