WHAT IS GLOBALIZATION?

Learning Objectives:
In this topic, it is expected that you will be able to:
1. Differentiate the competing conceptions of globalization.
2. Identify the underlying philosophies of globalization.
3. Agree on a working definition of globalization for the course.

Various Definitions of Globalization

The word globalization is the word to describe the growing interdependence of the
world’s economies, cultures, and populations, brought about by the cross-border trade in
goods and services, technology, and flows of investment, people, and information. Countries
have built economic partnerships to facilitate these movements over many centuries. But the
term gained popularity after the Cold War in the early 1990s, as these cooperative
arrangements shaped modern everyday life. The wide-ranging effects of globalization are
complex and politically charged. As with major technological advances, globalization benefits
society as a whole, while harming certain groups. Understanding the relative costs and benefits
can pave the way for alleviating problems while sustaining the wider payoffs.
Another definition is that, globalization means the speedup of movements and
exchanges (of human beings, goods, and services, capital, technologies or cultural practices) all
over the planet. One of the effects of globalization is that it promotes and increases
interactions between different regions and populations around the globe.
According to the WHO, globalization can be defined as “the increased
interconnectedness and interdependence of peoples and countries. It is generally understood
to include two inter-related elements: the opening of international borders to increasingly fast
flows of goods, services, finance, people and ideas; and the changes in institutions and policies
at national and international levels that facilitate or promote such flows.”
According to the Committee for Development Policy (a subsidiary body of the United
Nations), from an economic point of view, globalization can be defined as: “(…) the increasing
interdependence of world economies as a result of the growing scale of cross-border trade of
commodities and services, the flow of international capital and the wide and rapid spread of
technologies. It reflects the continuing expansion and mutual integration of market frontiers
(…) and the rapid growing significance of information in all types of productive activities and
marketization are the two major driving forces for economic globalization.”
 In geography, globalization is defined as the set of processes (economic, social, cultural,
technological, and institutional) that contribute to the relationship between societies and
individuals around the world. It is a progressive process by which exchanges and flows between
different parts of the world are intensified.

Brief History of Globalization

Since ancient times, humans have sought distant places to settle, produce, and
exchange goods enabled by improvements in technology and transportation. But not until the
19th century did global integration take off. Following centuries of European colonization and
trade activity, that first “wave” of globalization was propelled by steamships, railroads, the
telegraph, and other breakthroughs, and also by increasing economic cooperation among
countries. The globalization trend eventually waned and crashed in the catastrophe of World
War I, followed by post war protectionism, the Great Depression, and World War II. After World
War II in the mid-1940s, the United States led efforts to revive international trade and
investment under negotiated ground rules, starting a second wave of globalization, which
remains ongoing, though buffeted by periodic downturns and mounting political scrutiny.
After World War II, the United States helped build a global economic order governed by
mutually accepted rules and overseen by multilateral institutions. The idea was to create
a better world with countries seeking to cooperate with one another to promote prosperity and
peace. Free trade and the rule of law were mainstays of the system, helping to prevent most
economic disputes from escalating into larger conflicts. The institutions established include: the
International Monetary Fund (IMF), United Nations (UN), World Bank (WB), World Trade
Organization (WTO), and North Atlantic Treaty Organization (NATO).

Making Globalization Just

The ability of countries to rise above narrow self-interest has brought unprecedented
economic wealth and plenty of applicable scientific progress. However, for different reasons,
not everyone has been benefiting the same from globalization and technological change:
wealth is unfairly distributed and economic growth came at huge environmental costs. How can
countries rise above narrow self-interest and act together or designing fairer societies and a
healthier planet? How do we make globalization more just?
According to Christine Lagarde, former President of the International Monetary Fund,
“debates about trade and access to foreign goods are as old as society itself” and history tells us
that closing borders or protectionism policies are not the way to go, as many countries doing it
have failed.
Lagarde defends that we should pursue globalization policies that extend the benefits of
openness and integration while alleviating their side effects. How to make globalization more
just is a very complex question that involves redesigning economic systems. But how? That’s
the question.
Globalization is deeply connected with economic systems and markets, which, on their
turn, impact and are impacted by social issues, cultural factors that are hard to overcome,
regional specificities, timings of action and collaborative networks. All of this requires, on one
hand, global consensus and cooperation, and on the other, country-specific solutions, apart
from a good definition of the adjective “just.”

Globalization Concept Map

Because of trade developments and financial exchanges, we often think of globalization as an
economic and financial phenomenon. Nonetheless, it includes a much wider field than just
flowing of goods, services or capital. Often referred to as the globalization concept map, some
examples of globalization are:
1. Economic globalization: is the development of trade systems within transnational
actors such as corporations or NGOs;
2. Financial globalization: can be linked with the rise of a global financial system with
international financial exchanges and monetary exchanges. Stock markets, for instance, are a
great example of the financially connected global world since when one stock market has a
decline, it affects other markets negatively as well as the economy as a whole.
3. Cultural globalization: refers to the interpenetration of cultures which, as a
consequence, means nations adopt principles, beliefs, and customs of other nations, losing
their unique culture to a unique, globalized supra-culture;
4. Political globalization: the development and growing influence of international
organizations such as the UN or WHO means governmental action takes place at an
international level. There are other bodies operating a global level such as NGOs.
5. Sociological globalization: information moves almost in real-time, together with the
interconnection and interdependence of events and their consequences. People move all the
time too, mixing and integrating different societies;
6. Technological globalization: the phenomenon by which millions of people are
interconnected thanks to the power of the digital world via platforms such as Facebook,
Instagram, Skype or Youtube.
7. Geographic globalization: is the new organization and hierarchy of different regions
of the world that is constantly changing. Moreover, with transportation and flying made so easy
and affordable, apart from a few countries with demanding visas, it is possible to travel the
world without barely any restrictions;
8. Ecological globalization: accounts for the idea of considering planet Earth as a single
global entity – a common good all societies should protect since the weather affects everyone
and we are all protected by the same atmosphere. To this regard, it is often said that
the poorest countries that have been polluting the least will suffer the most from climate
change.

Effects of Globalization
1. More goods at lower prices. Globalization encourages each country to specialize in
what it produces best using the least number of resources, known as comparative advantage.
This concept makes production more efficient, promotes economic growth, and lowers prices
of goods and services, making them more affordable especially for lower-income households.
2. Scaled up businesses. Larger markets enable companies to reach more customers
and get a higher return on the fixed costs of doing business, like building factories or
conducting research. Technology firms have taken special advantage of their innovations this
way.
3. Better quality and variety. Competition from abroad drives US firms to improve their
products. Consumers have better products and more choices as a result.
4. Innovation. Expanded trade spurs the spread of technology, innovation, and the
communication of ideas. The best ideas from market leaders spread more easily.
5. Job churn. Globalization supports new job opportunities but also contributes to job
displacement. It does not significantly change the total number of positions in the economy, as
job numbers are primarily driven by business cycles and Federal Reserve and fiscal policies.
Nevertheless, a Peterson Institute study finds 156,250 US manufacturing jobs were lost on net
each year between 2001 and 2016 from expanded trade in manufactured goods, which
represents less than 1 percent of the workers laid off in a typical year. Low-wage workers in
certain regions are most affected. Many of them also face lower earnings or have dropped out
of the workforce. Bigger factors than trade driving job displacements are labor-saving
technologies, like automated machines and artificial intelligence. Better-paying positions have
opened up in manufactured exports—especially in high-tech areas, such as computers,
chemicals, and transportation equipment—and other high-skill work, notably in business
services, such as finance and real estate (see Jobs section).
6. Decline in gap between rich and poor globally, but wider inequality. Globalization
has helped narrow inequality between the poorest and richest people in the world, with the
number living in extreme poverty cut by half since 1990. But within many countries, including
the United States, inequality is rising. A consensus of scholarly work holds that globalization has
contributed marginally to rising US wage inequality, putting this factor at 10 to 20 percent. A
leading explanation for rising US inequality is that technology is reducing demand for certain
low- and middle-wage workers and increasing demand for high-skilled, higher-paid workers.
Wages have also stagnated, though economists are still debating the exact causes. Countries
exposed to globalization have alleviated inequality to different degrees through tax and welfare
systems. The United States has done the least among advanced economies to mobilize
government policies to reduce inequality.
7. Globalization has displaced some workers, while supporting high-skill jobs.
Globalization changes the types of jobs available but has little effect on the overall number of
jobs in the labor market. That being said, some workers have directly benefited from expanding
global commerce, while others have not. Certain manufacturing and industry workers in specific
geographic regions lost out, such as those in furniture, apparel, steel, auto parts, and electrical
equipment industries in Tennessee, Michigan, and the mid-Atlantic states. A widely cited study
shows that between 1991 and 2007, lower-wage manufacturing workers within industries that
faced import competition experienced large and lasting earnings losses, while higher-wage
workers in these industries did not. The lower-wage workers may have lacked the skills and
mobility to transition to other lines of work, whereas higher-wage workers relocated to
companies outside manufacturing. Studies show that globalization has also diminished US
worker bargaining leverage to demand higher wages. Because US firms often beat international
competitors at supplying high-skill services—like engineering, legal, consulting, research,
management, and information technology—workers in these fields have benefited the most
from globalization.
Business-service employment expanded more than 20 percent between 2006 and 2016.
These jobs pay more than 20 percent higher wages than the average manufacturing job.
Foreign-owned companies that do business in the United States have hired Americans at a
faster rate than US private employers between 2007 and 2015. They also pay better, do more
research and development, export more, and invest more than the average US firm. The same
is true, by comparison with local averages, of US firms that invest abroad. One in five American
manufacturing workers is now employed by a foreign-owned company operating in the United
States.
Demand will likely increase for more highly-skilled manufacturing workers, in areas such
as engineering, management, finance, computer and mathematical occupations, and sales. The
greatest areas of job growth now in the United States are in professional and business services,
health care and social assistance, and educational services. More job training and education is
needed to prepare workers for these jobs.

Benefits of Globalization
Globalization has benefits that cover many different areas. It reciprocally developed
economies all over the world and increased cultural exchanges. It also allowed financial
exchanges between companies, changing the paradigm of work. Many people are nowadays
citizens of the world. The origin of goods became secondary and geographic distance is no
longer a barrier for many services to happen. Let’s dig deeper.
 Economic benefit. The most visible impact of globalization is definitely the ones
affecting the economic world. Globalization has led to a sharp increase in trade and economic
exchanges, but also to a multiplication of financial exchanges. In the 1970s world economies
opened up and the development of free trade policies accelerated the globalization
phenomenon. Between 1950 and 2010, world exports increased 33-fold. This significantly
contributed to increasing the interactions between different regions of the world. This
acceleration of economic exchanges has led to strong global economic growth. It fostered as
well a rapid global industrial development that allowed the rapid development of many of the
technologies and commodities, we have available nowadays.
Knowledge became easily shared and international cooperation among the brightest
minds speeded things up. According to some analysts, globalization has also contributed to
improving global economic conditions, creating much economic wealth (that was, nevertheless,
unequally distributed – more information ahead).
Financial benefit. At the same time, finance also became globalized. From the 1980s,
driven by neo-liberal policies, the world of finance gradually opened. Many states, particularly
the US under Ronald Reagan and the UK under Margaret Thatcher introduced the famous “3D
Policy”: Disintermediation, Decommissioning, Deregulation.
The idea was to simplify finance regulations, eliminate mediators and break down the
barriers between the world’s financial centers. And the goal was to make it easier to exchange
capital between the world’s financial players. This financial globalization has contributed to the
rise of a global financial market in which contracts and capital exchanges have multiplied.
Cultural benefit. Together with economic and financial globalization, there has
obviously also been cultural globalization. Indeed, the multiplication of economic and financial
exchanges has been followed by an increase in human exchanges such as migration,
expatriation or traveling. These human exchanges have contributed to the development of
cultural exchanges. This means that different customs and habits shared among local
communities have been shared among communities that (used to) have different procedures
and even different beliefs.
Good examples of cultural globalization are, for instance, the trading of commodities
such as coffee or avocados. Coffee is said to be originally from Ethiopia and consumed in the
Arabic region. Nonetheless, due to commercial trades after the 11th century, it is nowadays
known as a globally consumed commodity. Avocados, for instance, grown mostly under the
tropical temperatures of Mexico, the Dominican Republic or Peru. They started by being
produced in small quantities to supply the local populations but today guacamole or avocado
toasts are common in meals all over the world.
At the same time, books, movies, and music are now instantaneously available all
around the world thanks to the development of the digital world and the power of the internet.
These are perhaps the greatest contributors to the speed at which cultural exchanges and
globalization are happening. There are also other examples of globalization regarding traditions
like Black Friday in the US, the Brazilian Carnival or the Indian Holi Festival. They all were
originally created following their countries’ local traditions and beliefs but as the world got to
know them, they are now common traditions in other countries too.

Negative Effects of Globalization

Globalization is a complex phenomenon. As such, it has a considerable influence on several
areas of contemporary societies. Let’s take a look at some of the main negative effects
globalization has had so far.
1. Cultural Loss. Apart from all the benefits globalization has had on allowing cultural
exchanges it also homogenized the world’s cultures. That’s why specific cultural characteristics
from some countries are disappearing. From languages to traditions or even specific industries.
That’s why according to UNESCO, the mix between the benefits of globalization and the
protection of local culture’s uniqueness requires a careful approach.
2. Economic Effects. Despite its benefits, the economic growth driven by globalization
has not been done without awakening criticism. The consequences of globalization are far from
homogeneous: income inequalities, disproportional wealth and trades that benefit parties
differently. In the end, one of the criticisms is that some actors (countries, companies,
individuals) benefit more from the phenomena of globalization, while others are sometimes
perceived as the “losers” of globalization. As a matter of fact, a recent report from Oxfam says
that 82% of the world’s generated wealth goes to 1% of the population.
3. Environmental Effect. Many critics have also pointed out that globalization has
negative effects on the environment. Thus, the massive development of transport that has
been the basis of globalization is also responsible for serious environmental problems such as
greenhouse gas emissions, global warming or air pollution.
At the same time, global economic growth and industrial productivity are both the
driving force and the major consequences of globalization. They also have big environmental
consequences as they contribute to the depletion of natural resources, deforestation and the
destruction of ecosystems and loss of biodiversity. The worldwide distribution of goods is also
creating a big garbage problem, especially on what concerns plastic pollution.

Underlying Philosophies of Globalization

1. Liberalism. It sees the process of globalization as market-led extension of
modernization. At the most elementary level, it is a result of ‘natural’ human desires for
economic welfare and political liberty. As such, trans-planetary connectivity is derived from
human drives to maximize material well-being and to exercise basic freedoms. These forces
eventually interlink humanity across the planet.
 2. Political Realism. It is interested in questions of state power, the pursuit of national
interest, and conflict between states. According to them states are inherently acquisitive and
self-serving, and heading for inevitable competition of power. Some of the scholars stand for a
balance of power, where any attempt by one state to achieve world dominance is countered by
collective resistance from other states.
3. Marxism. It is principally concerned with modes of production, social exploitation
through unjust distribution, and social emancipation through the transcendence of capitalism.
Marx himself anticipated the growth of globality that ‘capital by its nature drives beyond every
spatial barrier to conquer the whole earth for its market’. Accordingly, to Marxists, globalization
happens because trans-world connectivity enhances opportunities of profit-making and surplus
accumulation.
Marxists reject both liberalist and political realist explanations of globalization. It is the
outcome of historically specific impulses of capitalist development. Its legal and institutional
infrastructures serve the logic of surplus accumulation of a global scale. Liberal talk of freedom
and democracy make up a legitimating ideology for exploitative global capitalist class relations.
4. Constructivism. It views that globalization has also arisen because of the way that
people have mentally constructed the social world with particular symbols, language, images
and interpretation. It is the result of particular forms and dynamics of consciousness. Patterns
of production and governance are second-order structures that derive from deeper cultural and
socio-psychological forces. Such accounts of globalization have come from the fields of
Anthropology, Humanities, Media of Studies and Sociology.
Constructivists concentrate on the ways that social actors ‘construct’ their world: both
within their own minds and through inter-subjective communication with others. Conversation
and symbolic exchanges lead people to construct ideas of the world, the rules for social
interaction, and ways of being and belonging in that world. Social geography is a mental
experience as well as a physical fact. They form ‘in’ or ‘out’ as well as ‘us’ and they’ groups.
5. Postmodernism. It is anchored on the idea that the perspective on globalization
depends upon the reigning situation. There is no absolute perspective. Knowledge is always
invented and not discovered. It values subjectivity and multiple opinions of individuals and
communities rather than predetermined rules for action. It assigns value to multiple meanings
rather than a single authoritative voice of the expert researcher.
6. Feminism. It puts emphasis on social construction of masculinity and femininity.
Biological sex is held to mold the overall social order and shape significantly the course of
history, presently globality. Their main concern lies behind the status of women, particularly
their structural subordination to men. Women have tended to be marginalized, silenced and
violated in global communication.
7. Transformationalism. It is based on the premise that states and societies across the
globe are experiencing a process of profound change as they try to adapt to a more
interconnected but highly uncertain world. Globalization can be conceived as a process (or set
of processes) which embodies a transformation in the spatial organization of social relations
which allows every change to be an impact of globalization.
8. Eclecticism. It is based on the belief that there is no single idea that can transform
society. This means that there is a need to use many different items to form a whole. It is the
practice of selecting doctrines from different systems of thought without adopting the whole
parent system for each doctrine.
Simply spoken that each type of philosophies of globalization highlights certain forces
that contribute to its growth. They put emphasis on technology and institution building,
national interest and inter-state competition, capital accumulation and class struggle, identity
and knowledge construction, rationalism and cultural imperialism, and masculinize and
subordination of women. For eclecticism, these ideas can be synthesized as forces of
production, governance, identity, and knowledge. It is based on the belief that there is no single
idea that can transform society.