Free Global Change In Recent Literature Research Paper Sample

There is a large body of literature on the process of globalization and its impacts in the 21st century. A significant trait of the 21st century, according to literature is the increasing internationalization of trade, production, investment, finance, technology, communication, politics, society and almost any conceivable sphere. The world is shrinking towards a truly global village. Does globalization lead to equality as anticipated or brings about grave inequalities in its wake? The neo-liberal ideology and the Washington consensus hold that globalization with its free trade and market competition is inbuilt to foster economic growth. However, there are enough disturbing evidences that point toward discontents and impoverishment as impacts of globalization. Thomas L Friedman on the other hand draws upon the implications of the Flat world of convergence. He nearly sums up some of the globalization trends in 21st century. Author of “The World Is Flat: A Brief History of the Twenty-First Century”, Thomas L Friedman, Pulitzer Prize winning author demystifies the fast paced world of convergence that has turned the world flat. The book explores the flattening process currently experienced by countries, communities, companies and individuals.
There are several implications of the world that became flat in the 21st century. For the first time ever in the human history, the world of commerce has created a level playing field and hence an equal opportunity for all competitors. Furthermore, the national geographical boundaries are increasingly becoming meaningless in the global market, hence the nations, companies and the individuals must make a perceptual shift so as to remain competitive in the current global scenario. The inspiration for this book comes to the author from his visit to Bangalore when he realized the core economic concepts were changing as rapidly as the rules of the game in the brave new world (Bass, 2005).
Friedman visualizes three phases of globalization or triple convergence while we are witnessing the third phase. The first two phases – phaseI (from 1492 to early 1800s) and phaseII (from 1800 onwards) – included countries and the governments bringing about global convergence, while globalization 2.0 was driven by the multinational companies. Globalization 3.0 has literally flattened the world by doing away with the geographical boundaries in a complex web of business relations where workers from typists and call center executives to more skilled workers from India and China work for such companies as Microsoft and Dell. In context of the latest globalization, the author identifies ten flatteners of new global business.
Of the ten flatteners, the first three – fall of Berlin wall in 1989, Netscape going public in 1995 and the creation of workflow software – created a kind of platform for the global collaboration to take place. The fall of Berlin wall represented the breakdown of the East-West global barrier. Five months later, window 3 allowed individuals to create their own digital content. The Netscape revolution in August 1995 created the dotcom boom leading to global connectivity and convergence via optical fiber cables. Similarly the workflow software enabled the companies to communicate within and across the companies leading to yet higher level of connectivity, communication and productivity.
The next six flatteners represent the newly emerging forms of collaboration. Flattener 4 is outsourcing, letting the companies focus on their core competencies as digital technologies allow certain functions to be turned into commodities. Flattener 5 is off-shoring that made companies offset their lack of capital after the dotcom burst. Flattener 6 is uploading identified in more ways than one, each more powerful than the earlier version. Open sourcing allowed individuals to take on the corporation, followed by blogging and podcasting. Friedman identifies supply chaining as the 7th flattener. The example given is that of Wal-Mart, the biggest supply chain giant in America operating globally. The company doesn’t make a thing as it has more than 78,000 manufacturers under its belt. Flattener 8 is Insourcing, while flattener 9 is Informing.
On the other hand, the work of Professor Joseph Stiglitz, “Globalization and Its Discontents” (2001) is a powerful critique of globalization and all its attendant consequences. He outlines the origins of IMF and the World Bank in the opening chapter, The Promise of Global Institutions. The IMF and the World Bank have their roots in 1944 in the Bretton Woods, New Hampshire. The Allies laid out their plans for a new international economic world order to prevent the recurrence of a globally-devastating depression. Adhering to a new post-Depression Keynesian philosophy, the architects of the new system created the IMF to maintain economic stability by helping countries avert crises and the World Bank to induce economic development in poor countries through targeted loans and grants. WTO that came to existence in 1994 had its precursor in the Bretton Woods era GATT with a mandate to make available a level playing field for the rich and the poor nations (Stiglitz, 2001:11).
Despite the failure of international bodies to bring about economic stability and a level playing field, Stiglitz refrains from condemning globalization as an outright evil. He addresses globalization discontents in terms of system analysis that takes into account the dysfunctional aspects of the system. His critique uses the momentum of the anti-globalization protests and draws on the salient failures of international economics in the post-Cold War – increasing poverty, starvation and treatable disease, the East Asian financial crisis and the political and economic instability of capitalist shock therapy on post-communist countries (Stiglitz 5-6). The key issues identified by Stiglitz, broadly stated, concern income/wealth distribution (have versus have-nots), economic stability (preventing/mitigating financial crises and recessions), political representation at the international level (removing the unilateral veto of the U.S. in the IMF and the World Bank), and global governance (instead of market self-regulation).
A somewhat similar approach is also preferred by Stiglitz, who while critical of actually existing globalization, does not propose withdrawing from further economic integration, because, he maintains, the potential benefits to the currently politically and economically disenfranchised are too great (Stiglitz 20).
Stiglitz offers crucial insights on reform of the system in the chapter “The Way Ahead”, that opens with a brief summary of the shortcomings of globalization (Stiglitz 214) and goes on to describe the alternatives – abandon globalization or reform it. There is no mid-way, the status quo, between the two. He clearly favors reform. Stiglitz speaks of two kinds of changes, one leading to the other. The first is a change in view. The present Washington Consensus, which places a premium on laissez-faire economic policy, must be replaced by a Keynesian perspective, which recognizes that markets do sometimes fail and that governments should sometimes intervene (Stiglitz 16). As during the Great Depression, Stiglitz notes, the market is not always self-correcting in a reasonable time frame, and so public institutions must make up for the system failure during times of persistent and high unemployment (Stiglitz 249).
Stiglitz proposes that the same mixed capitalism that the U.S. has had since the Great Depression should be something that global institutions should work towards extending to developing countries (Stiglitz 240). The reforms that Stiglitz enumerates are targeted at regulation, safety nets, and the redistribution of political power (Stiglitz 226, 236-39). Financial institutions and money flows should be better regulated to prevent large firms and market forces from overwhelming small and vulnerable economies. Fiscal stabilizers (e.g., unemployment insurance) should be promoted to protect workers negatively impacted by globalization. The IMF and the World Bank should be restructured so that voting rights are not disproportionately biased towards rich countries.
Stiglitz makes a case for political and economic reforms that will validate capitalism as more sustainable and equitable. Such a reform agenda calls for sharing of economic and political powers that retain their ethos. For economic power sharing capitalism need not commit itself to socialism. Similarly political power sharing across national boundaries doesn’t mean compromising on national sovereignty. He argues that when conservative Economics (laissez-faire, Washington Consensus) is exposed as ideological and critiqued as political instead of scientific, then the reforms that he advocates seem less far-fetched for an economist (Stiglitz 220-21).
The reform proposed by Stiglitz advocates both economic and political reforms. These are also the issues that have been addressed by other scholars like Edward S Herman of Wharton school, University of Pennsylvania. According to him “And as with free trade, while globalization may sometimes yield economic benefits, both the process and economic-political regime it is helping bring about threaten progressive ends, and should be recognized as such and fought at every level” (Herman 1999)
The connotations that go along with globalization in terms of dichotomies of free trade vs. regulation, internationalism vs. regionalism along with promises of efficiency, market regulation gives it an aura of sanctity that is simply beyond questions, argues Hermann. However, he offers a series of evidences of economic crisis and failures to shake off the illusion of globalization. “The new global order has also been characterized by increased financial volatility, and from the Third World debt crisis of the early 1980s to the Mexican breakdown of 1994-95 to the current Asian debacle, financial crises have become more and more threatening” he argues. He claims that income gap between the 20% of the world’s population in the richest and poorest countries have grown from 30 to 1 in 1960 to 82 to 1 in 1995. Over the last twenty years per capita income has fallen in more than 70 nations. Half the world’s population lives under two dollars a day and 800 million suffer from malnutrition. In the third world massive poverty exists alongside affluence (Herman 1999).
Herman has argued that globalization has curbed democracy everywhere. The new agreements and IMF-World Bank actions have denied democratic rights to non-corporate citizens and elected governments and subordinated them to the rights of corporate investors, the superior class of global citizens with priority over all others and beneficiaries of the New TNC Protectionism. The NAFTA agreement governments are denied in advance the right to take on new functions. In the Multilateral Agreement on Investment TNCs have neither responsibility nor can be imposed upon them.
Admittedly then, globalization has both positive and adverse impacts. An important question to ask, therefore, is how globalization is affecting the economic development. It is noticed that globalization has brought about changes in the global markets, international institutions, world trade, and foreign trade. In addition, globalization has impacted the standard of living and employment. Hill (2009) identifies Global Market as “merger of distinct and separate national markets into a huge global market place”. The removal of national trade barriers has made the emergence of global markets possible. According to IMF Center (2005), International institutions like IMF, WTO and the World Bank have begun to function like institutions of global governance with their focus on human relations, justice and political factors.
The world trade picture is also beginning to change. Before the process of globalization began, America dominated the world trade. However, since globalization, several players like China, South Korea, Germany and Japan have emerged to challenge the trade dominance of America. In 1963, America’s share of the world trade output was 40.3 percent, which came down to 10.4 percent in 2004 (Hill, 2009).
Globalization has gone on to increase the MNC trend all over the world. Earlier, before globalization, America was dominant in MNCs. However, a large number of businesses from different nations have transformed into MNCs today. In 1973, the U.S.A’s share of MNCs was over 48 percent which came down to 28 percent in 2002.
Globalization has also brought about technological revolution with the implication that a global technological infrastructure has emerged. Information can move much faster across the world today than any time before in human history. There are laws on copyrights and patents and international agreements can be applied anywhere as and when needed. The internet technology has disseminated knowledge, and awareness. Application of criminal laws has become easier and it is easy to detect and apprehend frauds in society and in international trade (Ogunsola, 2005). Today there are more users of telecommunication in emerging economies than in the advanced economies.
Globalization has brought about the expansion of trade and investment. Poverty rate in countries with expanding trade and investment has been declining. The FDI has been expanding rapidly in India and China and other developing nations where the poverty rate is also declining simultaneously (Harrison, 2006).
With the expansion of globalization, it was apprehended that the jobs from the developed and advanced nations will shift to the developing nations. However, according to the supporters, this shift would eventually result in the long term benefit to the nation. Critics, however, argue that globalization will lead to job insecurities and inequality. In 1995, there were 157.3 million unemployed persons in the world which increased to 191.8 million in 2005 (Geoff Riley, 2007). Globalization has also brought about a transformation in the industrial sector. Since industries now need to cater to the global consumers, there is an enhanced focus on the production of foreign commodities. Coca Cola, for instance, now produces beverages to match the tastes of consumers all over the world.
Conclusion: The real issue in globalization is the leveling of disparity between North and the South, the rich and the poor. The agenda has existed since the post WWII Bretton Woods agreement in different garbs. The 21st century globalization has meant global convergence. In the words of Friedman, the world has become flat today with the emergence of a level playing field and equal opportunity for all competitors. This is evident in the emergence of economies that have shattered the dominance of the U.S in nearly every sphere of economy. There is more wealth and investment opportunities in the developing economies with the creation of global trade and global markets, growing number of MNCs and penetration of technologies in nearly every region of the world. However, while there are advantages of globalizations, its adversities are also being debated. The globalization has made the life of poor people in many poor countries poorer because they do not have the resources like education and access to health so as to take advantages of the opportunities in the global economy. The lack of regulations with liberalization of economy has their attendant adverse consequences result in dangerous fluctuations and depressions.

References

Friedman, Thomas L (2007) The World Is Flat 3.0: A Brief History of the Twenty-first Century, Picador.
Geoff Riley, E. C. (2006) Macroeconomics / International Economy. Retrieved from Tutor 2 u: http://tutor2u.net/economics/revision-notes/a2-macro-globalisation-effects.html
Harrison, A. (2006). GLOBALIZATION AND POVERTY. Cambridge: NATIONAL BUREAU OF ECONOMIC RESEARCH.
Herman, Edward S. The Threat of Globalization, New Politics, vol. 7, no. 2 (new series), whole no. 26, Winter 1999
Hill, C. W. (2009). International Business. New York: McGraw-Hill.
IMF Center. (2005). Ten Basic Questions about Globalization. Washington D.C.: International Monetary Fund.
Ogunsola, L. A. (2005). Information and Communication Technologies and the Effects of Globalization: Twenty-First Century "Digital Slavery" for Developing Countries--Myth or Reality? ELECTRONIC JOURNAL OF ACADEMIC AND SPECIAL LIBRARIANSHIP, 2, 1-2.
Stiglitz, Joseph.(2002) Globalization and Its Discontents. New York: W.W. Norton & Company.
Warren Bass (April 3, 2005). "The Great Leveling". In Washington Post. Retrieved April 22, 2015 from http://www.washingtonpost.com/wp-dyn/articles/A17314-2005Mar31.html.