Economic Globalization What does this mean for the developing world

General Is a post WWII phenomenon Is a post WWII phenomenon Globalization has many definitions Globalization has many definitions Economic Globalization Economic Globalization The integration of national markets into an interdependent global market without bordersThe integration of national markets into an interdependent global market without borders (Joshua Goldstein) Has political, social and economic impacts Has political, social and economic impacts Economically states find it increasingly difficult to protect themselves from turmoil on economic markets Economically states find it increasingly difficult to protect themselves from turmoil on economic markets LDCs are doubly vulnerable LDCs are doubly vulnerable

Theories Liberal economic school focus on theories of integration Liberal economic school focus on theories of integration David Mittrany - functionalist David Mittrany - functionalist Ernest Haas – neo functionalist Ernest Haas – neo functionalist Keohane and Nye Keohane and Nye Complex interdependenceComplex interdependence

Theories Liberal economic school focus on theories of integration Liberal economic school focus on theories of integration David Mittrany - functionalist David Mittrany - functionalist Ernest Haas – neo functionalist Ernest Haas – neo functionalist Keohane and Nye Keohane and Nye Complex interdependenceComplex interdependence

Realism Complex interdependence State dominant actors and coherent units Transnational actors increasingly important. States not coherent units Force usable and effective Military force less useful. Economic and institutional instruments more useful Military security dominates the agenda Military security less important. Welfare issues increasing important

So is it something new? Depends on the variable you choose Depends on the variable you choose Cross-border transactions Cross-border transactions Historic precedentsHistoric precedents Its nothing newIts nothing new Open-border transactions Open-border transactions Statistics speak for themselvesStatistics speak for themselves Trans-border transactions Trans-border transactions supraterritorialitysupraterritoriality

Summary Globalization of economic activity can be understood in several different ways Globalization of economic activity can be understood in several different ways Skeptical interpretations emphasize the current levels of cross border trade, money movements and investment flows are nothing new nor as great as some claim Skeptical interpretations emphasize the current levels of cross border trade, money movements and investment flows are nothing new nor as great as some claim Globalist interpretations argue that the large scale relaxation of border controls have taken international economic activity to unprecedented levels Globalist interpretations argue that the large scale relaxation of border controls have taken international economic activity to unprecedented levels Geographic conceptions of globalization highlight the proliferation of economic transactions in which territorial distance and borders present limited if any constraint Geographic conceptions of globalization highlight the proliferation of economic transactions in which territorial distance and borders present limited if any constraint

Global Trade Transborder production and associated intra-firm trade have developed in a number of industries since the middle of the 20 th century Transborder production and associated intra-firm trade have developed in a number of industries since the middle of the 20 th century Many states have created special economic zones in order to attract “global factories” Many states have created special economic zones in order to attract “global factories” Much contemporary commerce involves transborder marketing of global brand-name products Much contemporary commerce involves transborder marketing of global brand-name products The growth of a substantial global dimension to world trade may have discouraged protectionism The growth of a substantial global dimension to world trade may have discouraged protectionism

Global finance Globalization has changed forms of money with the spread of transborder currencies, distinctly supranational denominations, digital cash and global credit cards Globalization has changed forms of money with the spread of transborder currencies, distinctly supranational denominations, digital cash and global credit cards Globalization has reshaped banking with the growth of supraterritorial deposits, loans branch networks and fund transfers Globalization has reshaped banking with the growth of supraterritorial deposits, loans branch networks and fund transfers Securities markets have gained a global dimension through the development of transborder bonds and stocks; transworld portfolios and electronic round the world trading Securities markets have gained a global dimension through the development of transborder bonds and stocks; transworld portfolios and electronic round the world trading Globalization has likewise affected the instruments and modes of trading on derivatives markets Globalization has likewise affected the instruments and modes of trading on derivatives markets

But just how globalized is the world? Divided Divided Global trade and finance have spread unevenly between different regions and different circles of peopleGlobal trade and finance have spread unevenly between different regions and different circles of people Transborder commerce has to date widened material inequalities within and between countries (class just a much an issue)Transborder commerce has to date widened material inequalities within and between countries (class just a much an issue) Geography is not dead Geography is not dead Territorial geography continues to be important in the contemporary globalizing economyTerritorial geography continues to be important in the contemporary globalizing economy

But just how globalized is the world? Sovereignty Sovereignty Although lacking Westphalian sovereign powers, states exercise significant influence in global trade and financeAlthough lacking Westphalian sovereign powers, states exercise significant influence in global trade and finance Banking regulationsBanking regulations Anti money launderingAnti money laundering Tax conformity and reciprocal agreementsTax conformity and reciprocal agreements Cultural Impact Cultural Impact While economic globalization has weakened cultural diversity and national attachments in some respects, it has promoted them in othersWhile economic globalization has weakened cultural diversity and national attachments in some respects, it has promoted them in others

Case study How is economic globalization currently impacting on Europe and Italy, in particular? How is economic globalization currently impacting on Europe and Italy, in particular?

Benefits of globalization

Problems of globalization