Wednesday, May 29, 2013

global economy

Introduction The world has been undergoing diverse changes in the past decades. This has led to major debates regarding the nature and historical significance of these changes. This is the idea behind the phenomenon of globalization. Globalization has emerged as a powerful and controversial concept of the modern era. According to Albrow (1990) the world has seen a major process of increased interconnectivity and interdependence of the markets and businesses (economies). The interconnectedness has been contributed to by technological developments that have made it possible and easier for people to travel, communicate and operate in a global scale. Thus, the main driving forces of globalization are telecommunication infrastructures and increase in the use of the internet (new media). While there changes have been evident there is a raging debate regarding globalization and its effects. One of the main topics of debate as far as globalization is concerned is in its implications in terms of nation states sovereignty and governance. This is the main focus of this discussion. Before going further in the discussion of globalization and its implications on states, it is important to define the term. Due to the controversy surrounding the concept of globalization, there is no universally agreed upon definition. Thus, there is no single definition of the term, either in the academic field or even in the everyday discourse. Different authors focus on different aspects of the change like economic, social, cultural, and technology. Nevertheless, at the basic level, globalization is a term used in reference to the increasing interconnectedness. For the many people who have agreed that the world has become globalised, they have developed different definitions of the term. Most of the meanings include an idea of an increasing level of international flows in such a way that one can talk about a ‘global society.’ Kiely (2005) has found evidence that activities in the world have become intercontinental or interregional in scale. Ray (2007) defines the term as the growing unification of the international economic order through elimination of such barriers as export fees, import quotas and tariffs. The main objective of globalization from this perspective is increasing material, wealth, products and services. The term globalization is closely related to the concept of economic globalization. This is the integration of regional economies into the global economy. However, globalization cannot only be understood from an economic perspective. This is due to the fact that globalization also defines the process by which national economies, cultures and societies are integrated through communication, transportation, and trade. The term globalization can also be used in reference to the transnational exchange of ideas, languages, or culture through acculturation (March, p.736). On one side of the debate, is the argument that the world has basically for the better. The supporters of globalization have also argued that it opens up opportunities for everyone to operate in a free market. This is because it has made the agents of production more effective and efficient. On the other side of the argument is the idea that the claim of the positive changes because of globalization is exaggerated. This is supported by the claim that the power of national governments (state), geopolitics and nationalism are still the defining elements of this era. This is an argument that is based on the case that nothing much has changed. Some authors have gone ahead to suggest that the world has not entered an entirely new era as it is suggested by the proponents of globalization. There have been recent popular titles on the subject such as “Lexus and the Olive Tree” and “Jihad Vs. McWorld,” that attest to the apparent contradictory divisive and unifying forces intrinsic in globalization (Kiely, p, 53). It is more than three decades since Charles Kindleberger confidently claimed that “the nation-state is just about through as an economic unit.” In the modern era, there are significant dimensions of global life apart from the relations between states. As a matter of fact, in the modern globalised age, it is a fact that there exists a major change in economic, political and social dynamics. This means that there are “New Realities”. One of the realities is said to be the move to an information or postindustrial society from the industrial world. Things are no longer the same for the nation states as well as the international system (Andreas, 404). In globalization era, there has been evidence of substantial abundance of apocalyptic forecasts of end of the nation-state. From this perspective, globalization is regularly given the role of “prosecutor, judge, jury, and executioner.” In the current globalised world, most of the major issues are on a global level. This means that most of the things that are happening in the world today such as politics, conflicts and business cannot reviewed from a state level. Thus, policies developed by states concerning such issues cannot be developed from a state perspective, but an international or global one. Additionally, most of the things that are happening in different parts of the world are felt, though not uniformly in all other parts of the world. In the globalised world, therefore, it is not possible for the state to remain a lone or sovereign player (Budd, p. 333). The Role of the state in a globalised economy has continued to change and is no longer what it was in the past. It is no longer possible for states to exist and operate in isolation. Due to the increased interdependence in terms of trade and economy, the state has become one of the competitors in the global order (Nederveen and Dasgupta, p. 27). Globalization has allowed increased competition in a free market because it has made the agents of production more effective and efficient. Thus, it is very important for state survival take part in this intense competition. Survival in this international market necessities increased levels of production making nations even in the developing world more productive. Globalization has also enabled access to different products some of which are not produced at a territorial level. This has helped both consumers and industries in accessing both consumer goods and industrial products. With the increase in globalization, international borrowing of capital has been made possible (Meinhard and Potrafke, p. 275). Movement of cultures is another aspect of globalization. Due to the development in technology and infrastructure that has made communication and transportation easier, cultural diffusion has become evident. Thus, states are in the modern era containers of diverse cultures. For many people the idea of cultural globalization means westernization or Americanization. This is the erosion of national cultures and being replaced with western or American culture. This is evident in the world, through how people dress, the kind of programs they watch and the kind of music they listen to, and the kinds of foods they eat among other aspects of cultural globalization. Another major concern has been in the spread of a consumer culture. For majority opponents, non-western cultures and practices are endangered and at risk of being overtaken by homogenizing “McDonaldization” (Giddens, p. 63). On the other hand, America and other western nations have also been affected by diffusion of culture playing the role of containers of diverse cultures. Following globalization, the agenda-based policies which are adopted by nation-states have become more market-centric and thus pre-determined by the international politics. This means that states are presently more market-driven. Products and services in the international market are the main drivers of survival in this period (Pandit & Basu, p. 38). It has been argued by some authors that the state is fading in a borderless world. The state played an important role in the working of its institutions and economy in general. However, with globalization this has changed, especially with the development of international organizations. With these international organizations, the state loses power of policy formulation and therefore its sovereignty and its role in governance (Budd, p. 335). There have been major changes in the control of macroeconomic thinking as well as the real macroeconomic policy between the eras following the Second World War until the late-1970’s as well as the era beginning from the late-1970’s to-date. This change has been universally recognized as a move from nations in the West from Keynesian-kind economic policies to neo-liberal economics perspectives. However, it is important to recognize that this change is ideological. The change in ideology is basically associated with the competing opinions on the role of the state and state regulation in the modern era (Maddison, p. 117). The neo-liberal economics perspectives or free market capitalism is the driving factor behind globalization. Thus, the laissez faire philosophy of the afterward era is different from the perspective which that influence the capitalist systems of the social democracies and welfare states in the western nations such as the united states and a number of European nations following the Great Depression as well as during the post-war era. During the post-war period, a number of economies were put under the state control, even where the market had an important role to play. The economic systems during that period were shaped by Keynesian-kind economic policies with views like those expressed by Karl Polanyi that social systems were importantly to counterbalance the social tensions emanating from unconstructive implications of competitive market pressures, like inequality and acquisitiveness. The extensive regulation as well as the role of the state was core to the commonly acceptable solution presented by Keynes to address the issue of domestic and global macroeconomic instability common in free market capitalism (March and Olsen, p.735). While globalization is viewed from some quarters as a beneficial process, some states suffer negatively by becoming simultaneously weaker as a consequence of globalization. This argument will be best illustrated by looking at the developing world. While some nations such as the United States and Ireland among other industrialized nations are reaping the benefits of globalization, other countries from the third world such as Nigeria are suffering economically because of the increased pressure, making them simultaneously weaker. This is due to the fact that this process has exposed their economies to the interconnectedness, while they are not able to compete on the same level (Coulter and Coleman, p. 127). Some states in the developing and poor nations are getting poorer and weaker as more nations in the developed world become richer and stronger. Globalization has generally resulted to an increase in the gap between the poor and rich nations, the haves and have-nots. There is adequate evidence of selective benefits of the globalization process as well as its limitations. As a matter of fact, the Marxist idea of “the rich exploiting the poor” is always present in any globalization discourse. Most of the global structures and organizations only serve the interests of a few. Regardless of their seemingly altruistic mission statements as well as visions, they do not serve the interests of all, but a selective few (Hirsch and Kannankulam, p. 28). However, this aspect of weakening of the state is not only evident in the developing world, as some nations in the developed world have been affected. For example, some critics of globalization view the decline of the United States power as having been caused by globalization. This has been related to the country’s increased trade imbalance. This has resulted to a shift in economic power towards Asia, especially to China (Andreas, 406). From the argument above, it is evident that globalization does not affect states in the same way. For some states, globalization which comes with the strengthening of the flows of resources and a high level of interdependence of states can finally generate increased overall output. This means a general increase in the quality of life and living standard in the benefiting nations, such as is the case with China, India and Japan (Lowi, p. 246). It cannot be denied that the more states there are in the integration, the less possibility of engaging in conflicts, which ultimately can cause more stabilization as well as sustainable political and economic development. Probably, globalization can cause greater benefits to the majority. However, the problem is that the benefits are not as equally distributed as many people would want the situation to be. The larger issue is that the nation state tends to be greater losers in the process of globalization, given the fact that their independence and sovereignty diminish due to effects of the post-modern tendencies. Progress and development especially on an international level, can take many years, decades or even centuries, to attain and instantaneous satisfaction is an aspect that should be expected. Regardless the evidence that the states in the system are always compelled by self-interests, they can at the same time have an important part to play in pulling those lagging behind along. Thus, it is the responsibility of those lagging behind to ensure that they are a part of the process, by demonstrating their potential as well as participating, rather than just arguing and awaiting benevolence. This means that all the players in the global system have an important role in ensuring that they are not left behind in the political and economic development process (Lowi, p. 247). Conclusion From the discussion, it emerges that globalization is the process that has been developing for a long time amid a lot of debates. With the emergence of globalization, things have continued to change in as far as the nation-state is concerned. Policymakers at the state level are faced with the need to recognize the basic changes in the international politics. States are forced to use economic, political and military powers in fashioning a global environment that is beneficial for the values and interests of all players in the global system. Gone are the days when the state looked at its own interests and values without considering those of others. For much of the twentieth century, national interests and geopolitics drove the policies of most nations, including the US. Beginning in the twenty-first century, “virtually all nation-states become part of a larger pattern of global transformations and global flows. Goods, capital, people, knowledge, communications and weapons, as well as crime, pollutants, fashions and beliefs, rapidly move across territorial boundaries. It has become a fully interconnected global order…” (David, p. 230). Economic, political and economic affairs are no longer just domestic affairs. They are governed by complex international systems and laws which regulate the affairs of the international system. Thus, policies and laws developed in any state, especially as far as relations with other states are concerned are regulated by the international system of laws and institutions. Work cited: Albrow, Martin and Elizabeth King (eds.) Globalization, Knowledge and Society London: Sage, (1990). Andreas, Peter. 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