Globalisation Concepts

 

Globalisation

 

Globalisation is a term that has acquired increased usage in modern times. Understanding what it means is very important because it is a broad term. Some have referred to everything happening in the world as globalisation. McGrew has defined globalisation as “a process (or set of processes) which embodies a transformation in the spatial organisation of social relations and transactions – assessed in terms of their extensity, velocity and impact – generating transcontinental or interregional flows and networks of activity, interaction and exercise of power” (2000, p. 348). According to Tomlinson, globalisation is a sense of the shrinking of distances through the dramatic reduction in the time taken, either physically (for instance via air travel) or representationally (via the transmission of electronically mediated information and images), to across them” (1999, p.3).  Waters (2001) understand globalisation to be “a social process in which the constraints of geography on social and cultural arrangements recede and in which people become increasingly aware that they are receding”. All these definition sums to what Held and others referred to as the “widening, deepening and speeding up of global interconnectedness” (1999).

From the above definitions, it appears that globalisation can have different meaning to different people. One can define globalisation from the perspectives of culture, economic, social or even political. This must be the reason why Mittelman (2001, p.27) remarked that “Globalisation is a highly contested domain, and there is no absolute lines for demarcating it”. It therefore follows that globalisation may mean in interconnectedness of culture, economics, and the social aspect of the global population. It is also true to say that globalisation has led to the porous geographical boundaries, the decline in the territorial sovereignty of states, integration of cultures and internationalisation of global institutions.  The International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) definitions of globalisation is inclined to the economic perspective. According to IMF, globalisation is the growing economic interdependence of countries worldwide through increasing volume and variety of cross border transactions in goods and services, freer international capital flows, and more rapid and widespread diffusion of technology. OECD understand globalisation to be a “process of closer economic integration of global markets; Financial, product and labour”.

In summary, globalisation concept describes the expansion of international commerce, permeability of national boundaries, increased capital flows, increased interaction and communication between peoples and increased travel and migrations (distance is almost irrelevant in the new global age) (Bosworth and Gordon, 2001). Beside the economic perspective, IMF explains that the broader term of globalisation may also incorporate labour movement, technology exchanges as well as the cultural, political, and environmental dimensions. What is clear from the definition is that the expansion of trade and advancement in technology are important factors in globalisation, whether it is a process or a project.

In its own broad sense, globalisation has attracted criticism and support in equal measure. Proponent of globalisation proclaims that it has infinite potential for the development and improvement of human welfare across the globe. Critics have tended to frame globalisation as a western agenda to control the world.  They also question the ability of globalisation ability to help the poor economies (Das, 2004). There are powerful arguments in both side of the debate.

Expansion of Trade

The expansion of trade is both a primary cause and an effect of globalisation. After the end of World War II countries embarked on an agenda to increase cooperation on many fronts, trade being a principle agenda. The world community was convinced that eliminating trade barriers held the key to economic growth, increasing the volume of trade and improving the welfare of mankind. As a result, nations started forming bilateral ties, singling out Preferetial Trade Ares (PTAs) at regional level and cooperating globally under the auspices of the General Agreement on Trade and Tariffs (GATT), currently World Trade organisation (WTO).

The main objective of GATT, which continues to be furthered by its successor WTO, is to liberalise international trade. Under the WTO, the international community has been able to establish the acceptable principles to govern international trade. The central issue in deregulation of trade has been to reduce import barriers and minimise export subsidies. The non-discrimination principle, advanced by the WTO advocates that imported goods should not be treated differently than domestic goods. In reciprocity principle, countries that expect their goods and services to be exempted from trade barriers in foreign market should also accord the same treatment imported goods.

Over the years the international community has been successful in eliminating trade barriers at bilateral, regional and multilateral levels. WTO has made major steps in reducing tariffs, negotiating agreement on anti-dumping practices, eliminating non-tariff barriers and eliminating quotas on agricultural produce. Even countries that have been hitherto opposed to trade liberalisation like China have agreed to open their borders. The fruits of these measures have been increased trade. The WTO for instance records that the volume of international trade increased by twenty seven times from 1950 to 2005 where it rose from $296 to $8 trillion.

Even at regional level, the trend is towards eliminating barriers to trade. The European Union has already established a single internal market while Australia and New Zealand have already agreed on their free trade area. This seems to be trend in major regions of the world including North America, Latin America, Asia, Africa and Middle East. In North America, United States, Canada and Mexico have come together to form the North American Free Trade Agreement (NAFTA), Indonesia, Philippines, Brunei, Thailand, Singapore, Malaysia and now Vietnam are members to the ASEAN Free Trade Agreement while Brazil, Argentina, Uruguay and Paraguay have already established their Mercosur. The list of regions coming together and even attempting to form ties with other region is endless. Such other trade agreements like Asian Pacific Economic Cooperation (APEC) and Free Trade Area of the Americans have already taking hold (Faini, 2004).

 The expansion of trade means the growth of multinational cooperation, increase in Foreign Direct Investment (FDI) and also increase in labour movement. These means that territorial boundaries are no longer intact as they were, countries have to give some of their sovereignty to supranational international institutions like the WTO, European Community, NAFTA and many more. There is already an international law of trade in place restricting trade to certain acceptable practices.

The recent 1998 recession is enough prove of the extent of globalisation. Most of the countries are still reeling on the effect of the recession. For the time that recession was at its peak, international trade slumped. What started in United States as a collapse in the housing sector quickly spread to other countries. This is a clear indication that a collapse of one economy will creates ripple effects in many economies around the world.

  

Technology

 Apart from policies and ideas technological advances have been a major driver for globalisation in the past few decades, especially from the mid 1980s (Bosworth and Gordon 2001). The advancement in transportation infrastructure, communication technology and electronic payment services has indeed made the world a global village.

The advent of sophisticated information technology has paved the way for the establishment of a digital network (Schultz, 2010). The internet and the mobile phone have eased communication around the world. Every computer in any part of the world can be connected to all other world computers through the World Wide Web. The communication is now real time. The days when a mail could take weeks or months to reach oversees is now gone. Through internet people can negotiate trade deals and exchange ideas. In what is now being called e-commerce, internet has become a trading platform. Contracts established over the internet are now valid and enforceable in courts.

As a trading platform, technology has enabled the establishment of international online shops. Sites like ebay and Amazon have their customers coming from all corners of a global. All what a customer need is a virtual payment account like paypal or mastercard to shop online. Combined with efficient transport purchased goods can be delivered to the client in reasonable time. Some of the leading supermarkets, fashion design shops are also operating shops online. An online shop has no national boundary.

In the financial sector, technology has revolutionised international payment. Electronic banking is at the heart of the global village (IMF, 2008). Such system as the Electronic Fund Transfer (EFT) and the Society for Worldwide Interbank Financial Telecommunications (SWIFT) are some of the technology that has made the global electronic financial system reliable. In modern times, citizens of the global village open virtual accounts online like Paypal where they can make payments for goods and services online. The payment is now real time. In addition, visa cards are now accepted by many countries around the globe.

In the field of transport, technology has played a significant role in globalisation. In the early days, global community relied on steam engine and combustion engine to navigate. Advance in technology has transformed transportation industry through efficient road, rail, sea and air transport. Air travel only take few hours to criss-cross major cities in the world, from Beijing, New York, London,  Johannesburg, Tokyo, Moscow, New Delhi and Dubai. In modern air travel, it is not unusual for a person to take breakfast in one city, take lunch in another city and sleep in an entirely different city.   Cars and trains that are efficient, comfortable can cruise different cities in neighbouring region in reasonable time.

The advancement in sea travel is even important in globalisation, especially in expansion of trade. Container shipping has advanced to new levels. Many container ships have cargo cranes fitted in them making the haulage of cargo very efficient. Technology has also modernised modern harbours. Some of the container even provides efficient refrigeration meaning that ships can now transport perishable goods. Expansion of sea transport has also come with reduced cost. With such efficiency, modern corporations are not only producing for local markets, but have their eyes set on the wider global market. Even simple goods, manufactured in a country far away, have found their way into people’s household. Due to that efficiency, in normal household, it is common to find the utensils made in china; the furniture’s imported from Turkey, and the wardrobe to have designs made in Italy.

 

Trade Liberalisation versus Technology

Both of these factors have been crucial in driving globalisation. None of them can be considered to more important than the other. They act in complimentarily to integrate economies. Trade liberalisation informs the agreements or creating the legal infrastructure to enhance trade. Technology on the other hand touches on some of the crucial elements of globalisation. It brings about production, knowledge, possession, instruments and change. Trade liberalisation only eliminates the barrier to trade, but technology makes trade efficient. If for instance a country has the right to export it produce to another market, it has not only to increase production to feed the expanded market, but it has also to produce goods efficiently and timely for it to compete favourably in the new market. It is only through technology that a country can competitively exploit the new global advantage.  Efficient technology therefore becomes a competitive advantage in international trade. The transfer of knowledge is through technology and change is only facilitated through technology. It is therefore correct to conclude that it is technology that has given world trade rules their real meaning.

Nonetheless, globalisation has not completely led to porous boundaries. States still enforce laws that restrict migration. People travelling a foreign country are required to have permission from their embassies. In addition, some form of protectionism and regulation on FDI is still rife in many countries. Few restrictions, however, do not restrict globalisation as such. Globalisation can be said to be on a irreversible trend.

 

 

 

List of References

Bosworth, B & Gordon, P (2001) Managing a Globalisation World: An Overview. [Online] Available at: http://www.brookings.edu/research/articles/2001/09/fall-globaleconomics-bosworth (Accessed on April 25, 2014)

Das, BL (2004) An Introduction to Globalisation and its Impacts. Penang: Third World Networks

Faini, R (2004) Trade Liberalisation in Globalising World.  Discussion Paper Series IZA DP. No.1406

Gurria, A (2006) Managing Globalisation and the Role of the OECD. [Online] Available at: http://www.oecd.org/corruption/managingglobalisationandtheroleoftheoecd.htm (Accessed on April 25, 2014)

Held, D (1999) Global Transformations: Politics, Economic, and Culture. Stanford: Stanford University Press

IMF (2008) Globalisation: A Brief Overview. [Online] Available at: http://www.imf.org/external/np/exr/ib/2008/053008.htm, (Accessed on April 25, 2014).

McGrew A (2000) Sustainable Globalisation. In: Tim Allen & Allan Thomas (eds): Poverty and development into the 21st century. Oxford: Oxford University Press.

Mittleman J (1997) Globalisation: Critical Reflections. New York: Lynne Rienner Publishers

Schultz, R (2010) Information Technology and the Ethics of Globalisation: Transnational Issues and Implications. New York: IGI Global Snippet.

Tomlinson, J (1999) Globalisation and Culture. New York: Cambridge Polity Press

WTO (2012) Volume of World Merchandise Exports and Gross Domestic Product, 1950-2010. [Online] Available at: www.wto.org/english/res_e/statis_e/its2011_e/charts_e/chart01.xls (Accessed on April 25, 2014)

 

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