Globalization: Whats new

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Most people in the worldtodaydo not havetelephones; hundreds of millionsliveaspeasantsin remotevillages with only slightconnectionsto worldmarketsor the globalflow of ideas. Indeed,globalizationis accompaniedby increasinggaps, in many respects,between the rich and the poor.

It impliesneither norequity. All too often,theyaredefinedin strictlyeconomicterms,as if the worldeconomydefinedglobalism.

It also involvesthe organization of the processes that arelinkedto theseflows,suchas the organization of low-wage in Asia for the U. A is the "balance of terror" between goodexampleof militaryglobalism theUnitedStatesandtheSovietUnionduringthecoldwar. The two countries'strategicinterdependence wasacuteandwell recognized.

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Not only did it produceworld-straddling alliances,but eitherside couldhaveusedintercontinental missilesto destroythe otherwithin 30 minutes. Theirinterdependence wasdistinctivenot becauseit was totallynew,butbecausethe scaleandspeedof the potentialconflict arisingfromit wereso enormous.

What is Globalisation?

The depletionof the stratospheric chemicals is an of ozone-depleting example environmental globalas is the of the AIDS virusfromwestequatorialAfrica ism, spread aroundthe worldsincethe end of the s. Someenvironmental maybe entirelynatural,butmuchof the recentchangehas globalism beeninducedby humanactivity. Examples includethemovementofreligions or the diffusionof scientificknowledge. An importantfacet of social globalisminvolvesthe imitationof one society'spractices and institutionsby others:what some sociologistsrefer to as hasfollowedmilitary Often,however,socialglobalism "isomorphism.

Ideas,information,and people follow armiesand economicflows,and in doing so, transformsocieties and markets. At its most profoundlevel, social globalismaffects the consciousness of individualsandtheirattitudestowardculture, politics,andpersonalidentity. Indeed,socialandculturalglobalism interactswith othertypesof globalism,becausemilitary,environmental,and economicactivityconvey informationand generate ideas, which may then flow acrossgeographicaland political boundaries.

In the currentera, as the growthof the Internet reducescosts and globalizescommunications, the flow of ideasis increasinglyindependentof otherformsof globalization. This divisionof globalisminto separatedimensionsis inevitably somewhatarbitrary. Thatis,economicglobalism rosebetween and andfellbetweenand However,militaryglobalism roseto new heightsduringthe two worldwars,as didmanyaspectsof social globalism.

The worldwideinfluenzaepidemicof , which took 30 million lives, was propagatedin part by the flows of soldiers aroundthe world. So did globalismdecline or rise between and ? It dependson what dimensionof globalismone is examining. Whenpeoplespeakcolloquially aboutglobalization, referto theytypically in globalism. We preferto speakof globalism asa phenomenon withancientrootsand of globalization astheprocessof increasing noworin thepast. As anexampleof"thinglobalization," theSilkRoad aneconomicandcultural linkbetweenancientEurope andAsia, provided buttheroutewaspliedbya smallgroupofhardytraders, andthegoodsthat weretradedbackandforthhada directimpactprimarily on a small and of consumers elite stratum relatively alongthe road.

In contrast,"thick" relations ofglobalization, asdescribed bypoliticalscientistDavidHeldand involve that others, manyrelationships areintensiveaswellasextensive: flowsthatarelargeandcontinuous, long-distance affectingthe livesof The of financial marketstoday,for many people. But is thereanythingaboutglobalismtoday that is fundamentally differentfromjust 20 yearsago? To say that is differentis alwaysproblematic,since something "fundamentally" absolutediscontinuities do not existin humanhistory.

Everyerabuilds on others,andhistorianscan alwaysfindprecursors forphenomenaof the present. JournalistThomasFriedmanarguesthat contemporary faster,deeper,andcheaper.. Densityof Networks Economistsuse the term"networkeffects"to referto situationswherea product becomes more valuable once many people use it-take, for example, the Internet. Joseph Stiglitz, formerchief economist of the World Bank, has arguedthat a knowledge-basedeconomy generates "powerfulspillovereffects, often spreadinglike fire and triggeringfur For instance,the expansionof tradecan generateindustrialactivityin countrieswithlowenvironmental environmental standards, mobilizing activiststo carrytheirmessageto thesenewlyindustrializing butenvilax countries.

The resultingactivitiesmayaffectenvironronmentally mental interdependence for instance,by reducingcross-boundary pollution but maygenerateresentmentin the newlyindustrializing countries,affectingsocialandeconomicrelations. The worldwideimpactof the financialcrisisthatbeganin Thailand in Julyillustratesthe extentof thesenetworkinterconnections. It generatedfinancialpanicelsewherein Asia, particularly in South Koreaand Indonesia;promptedemergencymeetingsat the highest level of worldfinanceand huge "bail-out" packagesorchestrated by the International Fund and led a to wide IMF ; Monetary eventually spreadloss of confidencein emergingmarketsand the efficacyof internationalfinancialinstitutions.

Beforethat contagiousloss of confidencewasstemmed,Russiahaddefaultedon itsdebt,anda U. Even afterrecoveryhad begun,Brazilrequiredan IMF loan, coupledwith a devaluation,to avoidfinancialcollapsein Economicglobalismis nothingnew. Indeed,therelativemagnitude of cross-border investmentin wasnot unprecedented. Capitalmarketswerebysomemeasures moreintegrated atthebeginningthanat the end of the 20thcentury. The net outflowof capitalfromGreatBritain in the fourdecadesbefore averaged5 percentof grossdomestic product,comparedwith 2 to 3 percentforJapanoverthe lastdecade.

The financialcrisisof wasnot the firstto be globalin scale: "BlackTuesday"on Wall Street in and the collapse of Austria's Creditanstaltbank in triggereda worldwidefinancial crisis and depression. The "Deathof Distance" is the battlecryof the information age. In some thisrefrain istrue;asa generalization, it is a half-truth. Evenforthosepeoplelinked to globalcommunications it is moreaccurate to saythat networks, extensively thesignificance ofdistancevariesgreatly issue area.

Distanceis indeedirrelevant-exceptfor time zones-if a stock can be soldinstantaneously in New Yorkor HongKongby an investorin to one in Moscow. Indeed,if the stockissoldonline,it maybe only Abidjan a fictionthatit was"soldon the New YorkStockExchange. Ordersforsuchitemscan be sent withoutregardto distance,but the carsor flowershave to move or Calgary. Suchmovementis physicallyfromTokyoor Bogotito Jakarta faster than ever-flowers are now sent thousands of milesbyjet takingplace aircraft-butit is byno meansinstantaneous orcheap.

Variability by distanceappliesto culturalglobalismas well. The actual movementof ideasandinformation is virtuallyinstantaneous, buthowwell new conceptsare understoodand accepteddependson how much the of differentgroupsof peoplevary.

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But the money driedup with the globalrecessionof By late , more than 40 countriesworldwideweremiredin severeexternaldebt. But some featuresof the crisisdistinguishit from previous ones. Most economists, governments, and international financial institutionsfailed to anticipate the crisis, and complex new financial instrumentsmadeit difficultto understand.

Evencountriesthat had pre The U. Likewise, verydifferently U. Andforsomeyouthin thesamecity,suchasTehran,suchsymbols arerepresentative of theGreatSatan,orof liberation. Cultural distanceresists homogenization. Finally,elementsof social globalismthat rely on the ofpeoplearehighlyconstrained andbylegaljurisdictions, migration bydistance becausetravelremainscostlyformostpeoplein the world,andgovernments seekto controlandlimitmigration. The mostlethalpollutionis local. Evenglobalphenomena suchasthe depletionof the ozonelayerandglobalwarming varybylatitude andclimaticfactors. Thereis alsogreatvariability by distancein militaryglobalism.

Onlya fewcountrieshaveintercontinental missiles,andonlythe UnitedStateshas the logisticalandcommandandcontrolcapabilities for globalreachwith conventionalforces. Mostcountriesarelocalor at bestregionalpowers. At thesametime,weaklocalactorscanuseothernetworks ofglobalism to cause damage. Evennonstateactorscando so, as witnessedwhena transnational terrorist groupbombedthe WorldTradeCenterin New York. The World Bankhad recentlypublisheda reportentitled "TheEastAsian Miracle" , and investmentflowsto Asia had risenrapidlyto a new peak in , remaininghigh until the crisishit.

In December , Federal Reserve BoardChairmanAlan Greenspansaid:"I have learnedmore about how this new internationalfinancialsystemworksin the last 12 months than in the previous20 years. Thepointisthattheincreasing of globalism-thedensityof thickness in degree. Thicknetworks of interdependence-is not justa difference nessmeansthatdifferent of interdependence intersect more relationships deeplyat morepoints. Hence,the effectsof eventsin one geographical canhaveprofound effectsin othergeographical area,on onedimension, on other dimensions. As in scientific theoriesof "chaos," andin areas, weathersystems,smalleventsin one placecanhavecatalyticeffects,so thattheirconsequences arevast.

Suchsystemsare later,andelsewhere, difficultto understand, andtheireffectsaretherefore oftenunpredictable. As a result,globalprecisely by actingin unpredictable ismwill likelybe accompanied Therewill be by pervasive uncertainty. Frequent to limitinterdependence movements couldleadto popular andto a reversal ofeconomicglobalization. Chaoticuncertainty istoohigha price formostpeopleto payforsomewhathigheraveragelevelsof prosperity.

Unlesssomeof itsaspects canbeeffectively governed, globalization maybe unsustainable in itscurrent form. InstitutionalVelocity The information revolution is at theheartof economicandsocialglobalization. Ithasmadepossible thetransnational ofworkandthe organization a newinternational divisionof expansionof markets, therebyfacilitating labor. As AdamSmithfamously declaredin TheWealth of Nations,"the divisionof laborislimitedbytheextentof themarket. Sometimesthese changesare incorrectlyviewedin termsof the flows. The biggestchangein velocitycamewith velocityof information the steamshipandespeciallythe telegraph: The transatlantic cableof reducedthe timeof transmission of information betweenLondon andNew Yorkbyovera week-hence, bya factorof abouta thousand.

The telephone,by contrast,increasedthe velocityof suchmessagesby a fewminutes sincetelephonemessages do not requiredecoding ,and the Internet,as compared withthe telephone,bynot muchat all. The realdifferencelies in the reducedcost of communicating, not in the communication.

A Bad Time to Be Average

Andtheeffectsaretherefore velocityof anyindividual felt in the increasedintensityratherthanthe extensityof globalism. In it was expensive to send telegramsacrossthe Atlantic, and in or even it was expensive to telephone transcontinentally. Corporationsand the rich used transcontinentaltelephones,but ordinarypeople wrotelettersunlessthere was an emergency. The volume of communications hasincreased andthe bymanyordersof magnitude, intensityof globalismhasbeenableto expandexponentially.

Marketsreactmorequicklythanbefore,becauseinformationdiffusesso muchmorerapidlyand hugesumsof capitalcan be moved at a moment'snotice. Multinationalenterpriseshave changedtheir organizationalstructures,integratingproductionmorecloselyon a transnationalbasisand entering into more networks and alliances, as global capitalism has become more competitive density globalism-the of and more subject to rapid networks ofinterdependencechange.

Nongovernmentalorgais notjusta diferencein degree. Withrespectto globalism andvelocity,therefore, onecandistinguish betweenthe velocityof a givencommunication-"message velocity"and"institutional has little forthe velocity. But institutionalvelocity-how rapidlya systemand the unitswithin it change-is a functionnot so muchof messagevelocitythan of the of globalism. In the late s, intensityof contact-the "thickness" the newscyclewasthe sameas it hadbeenfordecades:Peoplefound out the day'sheadlinesbywatchingthe eveningnewsandgotthe more completestoryandanalysisfromthe morningpaper.

Butthe introduction of hourcablenewsin and the subsequent emergenceof the Internethavemadenewscyclesshorterandhaveputa larger premium on smalladvantages in speed. Until recently,one newspaperdid not normally"scoop"anotherby receivingand processinginformation an hour earlierthan another:As long as the informationcould be processedbeforethe dailypaper"wentto bed,"it wastimely.

But in for ,an hour-or even a fewminutes-makesa criticaldifference a cable televisionnetworkin termsof being "on top of a story"or "behindthe curve. Institutional velocityreflectsnot onlyindividual but networks and interconnections ages amongnetworks.

Internetization: Time, geography are irrelevant

This phenomenonis wherethe realchangelies. Transnational Participationand ComplexInterdependence Reducedcosts of communicationshave increasedthe numberof actorsand increasedthe relevanceof "complexinterdeparticipating This pendence. Weusedthe conceptof complexinterdependence in the sprincipallyto describeemergingrelationships amongpluralistdemocracies. However,we did someaspects arguethatinternational monetaryrelationsapproximated of complexinterdependence in the sandthatsomebilateralrelaandU.

In a worldof we complexinterdependence, argued,politicswouldbe different. The of statepolicy-and the processesof agendasetgoalsandinstruments aswouldthe significance tingandissuelinkage-wouldallbe different, of international organizations. Translated into the languageof globalism,the politicsof complex wouldbe one in whichlevelsof economic,environinterdependence mental,and socialglobalismare high and militaryglobalismis low. Regionalinstancesof securitycommunities-wherestateshavereliable thatforcewillnot be used-includeScandinavia sincethe expectations 20th intercontinental early century.

Arguably, complexinterdependencewaslimitedduringthe coldwarto areasprotectedby the United States,such as the Atlanticsecuritycommunity. Moreover,economic and social globalismseem to have created incentives for leaders in South America to settle territorial quarrels,out of fearboth of being distractedfromtasksof economic and social developmentand of scaringawayneeded investmentcapital.

Eventodaycomplexinterdependence is farfromuniversal. Military forcewas usedby or threatenedagainststatesthroughoutthe s, fromthe TaiwanStraitto Iraq,fromKuwaitto the formerYugoslavia; fromKashmirto Congo. Civilwarsareendemicin muchof sub-SaharanAfricaandsometimeshaveescalatedinto international as warfare, whenthe Democratic of civil war five Republic Congo's engulfed neighboringcountries. Information technologies have given all sorts of individual economic actors—consumers, investors, businesses—valuable new tools for identifying and pursuing economic opportunities, including faster and more informed analyses of economic trends around the world, easy transfers of assets, and collaboration with far-flung partners.

Globalization is deeply controversial, however. Proponents of globalization argue that it allows poor countries and their citizens to develop economically and raise their standards of living, while opponents of globalization claim that the creation of an unfettered international free market has benefited multinational corporations in the Western world at the expense of local enterprises, local cultures, and common people.

Resistance to globalization has therefore taken shape both at a popular and at a governmental level as people and governments try to manage the flow of capital, labor, goods, and ideas that constitute the current wave of globalization. To find the right balance between benefits and costs associated with globalization, citizens of all nations need to understand how globalization works and the policy choices facing them and their societies.

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Internetization: A new word for our global economy

Contact Us. What Is Globalization? Map of the Silk Road But policy and technological developments of the past few decades have spurred increases in cross-border trade, investment, and migration so large that many observers believe the world has entered a qualitatively new phase in its economic development.

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