Globalization

Economic Globalization: David Ricardo and Circular Flow Households, firms, government; rest of the world Factor market (land, labor, capital, entrepreneurial ability; rent, wages, interest, profit) Product market (goods and services, revenue) Trade as technology: Iowa car crop and creative destruction Comparative advantage

Modernization vs. Dependencia Dependency theory: avoid dependence 1st world capital, tech, expertise neo-mercantalism: import-substitution industrialization (Mexico) and export-led industrialization (China) Confirmation: Asian Contagion “Sustainable development”: 1st world development questioned (cultural + social impacts; environmental impact; “free trade butters” hypocrisy) “Decoupling” (not so much)

Corporatism vs. Pluralism Small # groups systematically recognized in policymaking (tripartite decision making—labor, biz, gov’t) Authoritative peak associations for diff. sectors economy Interest group unified w/in selves + cooperative w/others Centralized, monopolistic interest groups Liberal corporatism: consensual policy-making Hierarchy (follow leader’s decisions) w/in group Compulsory/near-universal membership Decisions made by few leaders of group + gov’t officials (little input) Stable relationships w/gov’t Limits power civil society + limits legitimate action/advocacy to state controlled institutions China, Mexico, Russia “Neo-corporatism” in Europe

Costs of Globalization Erosion state sovereignty Outside pressure conform global norms Internal pressure for autonomy (decentralization), secession, disintegration Vulnerability actions others (NGOs, MNCs, WTO, IMF, World Bank, UN, etc.) Cross-border/international problems (crime, disease, environmental, etc.) “Race to the bottom”: Economic growth w/out development; internal inequality Problems of rapid industrialization + urbanization Women hurt more by transition (competition + liberalization reduction social welfare; undercuts subsistence ag., social constraints on new jobs, exploitation in cities/factories) “Americanization” + cultural/political backlash (Nigeriazation of oil industry)

Benefits of Globalization Interdependence cooperation w/in global/regional institutions (integration) Rapid economic growth Global products + services + information Spread democracy + human rights Increased ability organize w/in + across borders Empowerment non-state actors New avenues political access, redress grievances, voice Global citizenship

Globalization Graphs Supply and Demand, consumer and producer surplus Comparative Advantage (lowest cost of production) Exchange rates (derived demand) and balanced trade Interest rates