2007 Schools Wikipedia Selection. Related subjects: Economics

A KFC franchise in Kuwait.
A KFC franchise in Kuwait.

Globalisation or globalization is an umbrella term for a complex series of economic, social, technological, cultural and political changes seen as increasing interdependence, integration and interaction among people and companies in disparate locations. As a term 'globalization' has been used as early as 1944 but economists began applying it around 1981. Theodore Levitt is usually credited with its coining through the article he wrote in 1983 for the Harvard Business Review entitled "Globalization of markets". The more encompassing phenomenon has been perceived in the context of sociological study on a worldwide scale.

" Globalization " was first defined at the University of Pittsburgh by sociologist Roland Robertson as " The compression of the world and the intensification of the consciousness of the world as a whole. " (Globalization: Social Theory and Global Culture 1992)

The term "globalization" is used to refer to these collective changes as a process, or else as the cause of turbulent change. The distinct uses include:

  • Economically, socially and ecologically positive: As an engine of commerce; one which brings an increased standard of living — prosperity to developing countries and further wealth to First World and Third World countries.
  • Economically, socially, and ecologically negative: As an engine of " corporate imperialism"; one which tramples over the human rights of developing societies, claims to bring prosperity, yet often simply amounts to plundering and profiteering. Negative effects include cultural assimilation via cultural imperialism, the export of artificial wants, and the destruction or inhibition of authentic local and global community, ecology and cultures.

A typical - but restrictive - definition can be taken from the International Monetary Fund, which stresses the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, free international capital flows, and more rapid and widespread diffusion of technology.

While being a complex and multifaceted array of phenomena, globalization can be broken down into separate aspects:

  • industrial globalization (alias transnationalization) - rise and expansion of multinational enterprises
  • financial globalization - emergence of worldwide financial markets and better access to external financing for corporate, national and subnational borrowers
  • political globalization - spread of political sphere of interests to the regions and countries outside the neighbourhood of political (state and non-state) actors
  • informational globalization - increase in information flows between geographically remote locations
  • cultural globalization - growth of cross-cultural contacts


Globalization/internationalisation has become identified with a number of trends, most of which may have developed or accelerated since World War II. These include greater international movement of commodities, money, information, and people; and the development of technology, organizations, legal systems, and infrastructures to allow this movement. The actual existence of some of these trends is debated.

  • Economically
    • Increase in international trade at a much faster rate than the growth in the world economy
    • Increase in international flow of capital including foreign direct investment
    • Creation of international agreements leading to organizations like the WTO and economic cartels such as OPEC
    • Development of global financial systems
    • Increased role of international organizations such as WTO, WIPO, IMF that deal with international transactions
    • Increase of economic practices like outsourcing and offshoring by multinational corporations
  • Culturally
    • Greater international cultural exchange,
    • Spreading of multiculturalism, and better individual access to cultural diversity, for example through the export of Hollywood and Bollywood movies. However, the imported culture can easily supplant the local culture, causing reduction in diversity through hybridization or even assimilation. The most prominent form of this is Westernization, but Sinicization of cultures also takes place.
    • Greater international travel and tourism
    • Greater immigration, including illegal immigration
    • Spread of local consumer products (e.g., food) to other countries (often adapted to their culture)
    • World-wide fads and pop culture such as Pokémon, Sudoku, Numa Numa, Origami, Idol series, YouTube, MySpace, and many others.
    • World-wide sporting events such as FIFA World Cup and the Olympic Games.
    • Formation or development of a set of universal values
  • Technical/legal
    • Development of a global telecommunications infrastructure and greater transborder data flow, using such technologies as the Internet, communication satellites, submarine fibre optic cable, and wireless telephones
    • Increase in the number of standards applied globally; e.g. copyright laws and patents
    • The push by many advocates for an international criminal court and international justice movements (see the International Criminal Court and International Court of Justice respectively).

It is often argued that even terrorism has undergone globalization, with attacks in foreign countries that have no direct relation with the own country.

Since World War II, barriers to international trade have been considerably lowered through international agreements such as the General Agreement on Tariffs and Trade (GATT). Particular initiatives carried out as a result of GATT and the WTO, for which GATT is the foundation, have included:

  • Promotion of free trade
    • Of goods:
      • Reduction or elimination of tariffs; construction of free trade zones with small or no tariffs
      • Reduced transportation costs, especially from development of containerization for ocean shipping.
    • Of capital: reduction or elimination of capital controls
    • Reduction, elimination, or harmonization of subsidies for local businesses
  • Intellectual property restrictions
    • Harmonization of intellectual property laws across nations (generally speaking, with more restrictions)
    • Supranational recognition of intellectual property restrictions (e.g. patents granted by China would be recognized in the US)

Historical precedents

Although the term "globalization' was coined in the latter half of the twentieth century, and the term and its concepts did not permeate popular consciousness until the latter half of the 1980's; various social scientists have tried to demonstrate continuity between contemporary trends of globalization and earlier periods. Earlier forms of globalization existed during the Mongol Empire, when there was greater integration along the Silk Road. Liberalization in the 19th century is often called "The First Era of Globalization", a period characterised by rapid growth in international trade and investment, between the European imperial powers, their colonies, and, later, the United States.

The "First Era of Globalization" began to break down at the beginning with the first World War, and later collapsed during the gold standard crisis in the late 1920s and early 1930s. Countries that engaged in that era of globalization, including the European core, some of the European periphery and various European American and Oceanic offshoots, prospered. Inequality between those states fell, as goods, capital and labour flowed freely between nations.

Globalization in the era since World War II has been driven by advances in technology which have reduced the costs of trade, and trade negotiation rounds, originally under the auspices of GATT, which led to a series of agreements to remove restrictions on free trade. The Uruguay round (1984 to 1995) led to a treaty to create the World Trade Organization (WTO), to mediate trade disputes. Other bi- and trilateral trade agreements, including sections of Europe's Maastricht Treaty and the North American Free Trade Agreement (NAFTA) have also been signed in pursuit of the goal of reducing tariffs and barriers to trade.

The world increasingly is confronted by problems that can not be solved by individual nation-states acting alone. Examples include cross-boundary air and water pollution, over-fishing of the oceans and other degradations of the natural environment, regulation of outer-space, global warming, international terrorist networks, global trade and finance, and so on. Solutions to these problems necessitate new forms of cooperation and the creation of new global institutions. Since the end of WWII, following the advent of the UN and the Bretton Woods institutions, there has been an explosion in the reach and power of Transnational corporations and the rapid growth of global civil society.


Critics of the economic aspects of globalization contend that it is not, as its proponents tend to imply, an inexorable process which flows naturally from the economic needs of everyone. The critics typically emphasize that globalization is a process that is mediated according to corporate interests, and typically raise the possibility of alternative global institutions and policies, which they believe address the moral claims of poor and working classes throughout the globe, as well as environmental concerns in a more equitable way.

In terms of the controversial global migration issue, disputes revolve around both its causes, whether and to what extent it is voluntary or involuntary, necessary or unnecessary; and its effects, whether beneficial, or socially and environmentally costly. Proponents tend to see migration simply as a process whereby white and blue collar workers may go from one country to another to provide their services, while critics tend to emphasize negative causes such as economic, political, and environmental insecurity, and cite as one notable effect, the link between migration and the enormous growth of urban slums in developing countries. According to "The Challenge of Slums," a 2003 UN-Habitat report, "the cyclical nature of capitalism, increased demand for skilled versus unskilled labour, and the negative effects of globalization — in particular, global economic booms and busts that ratchet up inequality and distribute new wealth unevenly — contribute to the enormous growth of slums."

Various aspects of globalization are seen as harmful by public-interest activists as well as strong state nationalists. This movement has no unified name. "Anti-globalization" is the media's preferred term; it can lead to some confusion, as activists typically oppose certain aspects or forms of globalization, not globalization per se. Activists themselves, for example Noam Chomsky, have said that this name is meaningless as the aim of the movement is to globalize justice. Indeed, the global justice movement is a common name. Many activists also unite under the slogan "another world is possible", which has given rise to names such as altermondialisme in French.

There are a wide variety of kinds of "anti-globalization". In general, critics claim that the results of globalization have not been what was predicted when the attempt to increase free trade began, and that many institutions involved in the system of globalization have not taken the interests of poorer nations, the working class, and the environment into account.

Economic arguments by fair trade theorists claim that unrestricted free trade benefits those with more financial leverage (i.e. the rich) at the expense of the poor.

Many see globalization as the promotion of a corporatist interests, which is intent on constricting the freedoms of individuals in the name of profit. They also claim that the increasing autonomy and strength of corporate entities increasingly shapes the political policy of nation-states.

Some "anti-globalization" groups argue that globalization is necessarily imperialistic, is one of the driving reasons behind the Iraq war and is forcing savings to flow into the United States rather than developing nations; it can therefore be said that "globalization" is another term for a form of Americanization, as it is believed by some observers that the United States could be one of the few countries (if not the only one) to truly profit from globalization.

Some argue that globalization imposes credit-based economics, resulting in unsustainable growth of debt and debt crises.

The financial crises in Southeast Asia that began in 1997 in the relatively small, debt-ridden economy of Thailand but quickly spread to Malaysia, Indonesia, South Korea and eventually were felt all around the world, demonstrated the new risks and volatility in rapidly changing globalized markets. The IMF's subsequent 'bailout' money came with conditions of political change (i.e. government spending limits) attached and came to be viewed by critics as undermining national sovereignty in neo-colonialist fashion. Anti-Globalization activists pointed to the meltdowns as proof of the high human cost of the indiscriminate global economy.

Many global institutions that have a strong international influence are not democratically ruled, nor are their leaders democratically elected. Therefore they are considered by some as supernational undemocratic powers.

The main opposition is to unfettered globalization ( neoliberal; laissez-faire capitalism), guided by governments and what are claimed to be quasi-governments (such as the International Monetary Fund and the World Bank) that are supposedly not held responsible to the populations that they govern and instead respond mostly to the interests of corporations. Many conferences between trade and finance ministers of the core globalizing nations have been met with large, and occasionally violent, protests from opponents of " corporate globalism".

Some "anti-globalization" activists object to the fact that the current "globalization" globalizes money and corporations, but not people and unions. This can be seen in the strict immigration controls in nearly all countries, and the lack of labour rights in many countries in the developing world.

Another more conservative camp opposed to globalization is state-centric nationalists who fear globalization is displacing the role of nations in global politics and point to NGOs as encroaching upon the power of individual nations. Some advocates of this warrant for anti-globalization are Pat Buchanan and Jean-Marie Le Pen.

The movement is very broad, including church groups, national liberation factions, left-wing parties, environmentalists, peasant unionists, anti-racism groups, anarchists, those in support of relocalization and others. Most are reformist, (arguing for a more humane form of capitalism) while others are more revolutionary (arguing for what they believe is a more humane system than capitalism). Many have decried the lack of unity and direction in the movement, but some such as Noam Chomsky have claimed that this lack of centralization may in fact be a strength.

Protests by the global justice movement have forced high-level international meetings away from the major cities where they used to be held, into remote locations where protest is impractical.

Pro-globalization (globalism)

Supporters of democratic globalization are sometimes called pro-globalists. They consider that the first phase of globalization, which was market-oriented, should be completed by a phase of building global political institutions representing the will of world citizens. The difference with other globalists is that they do not define in advance any ideology to orient this will, which should be left to the free choice of those citizens via a democratic process.

Supporters of free trade point out that economic theories of comparative advantage suggest that free trade leads to a more efficient allocation of resources, with all countries involved in the trade benefiting. In general, this leads to lower prices, more employment and higher output.

Libertarians and other proponents of laissez-faire capitalism say higher degrees of political and economic freedom in the form of democracy and capitalism in the developed world are both ends in themselves and also produce higher levels of material wealth. They see globalization as the beneficial spread of liberty and capitalism.

Critics argue that the anti-globalization movement uses anecdotal evidence to support their view and that worldwide statistics instead strongly support globalization:

  • The percentage of people in developing countries living below US$1 (adjusted for inflation and purchasing power) per day has halved in only twenty years, although some critics argue that more detailed variables measuring poverty should instead be studied.
  • Life expectancy has almost doubled in the developing world since WWII and is starting to close the gap to the developed world where the improvement has been smaller. Infant mortality has decreased in every developing region of the world. Income inequality for the world as a whole is diminishing.
  • Democracy has increased dramatically from almost no nation with universal suffrage in 1900 to 62.5% of all nations in 2000.
  • The proportion of the world's population living in countries where per-capita food supplies are less than 2,200 calories (9,200 kilojoules) per day decreased from 56% in the mid- 1960s to below 10% by the 1990s.
  • Between 1950 and 1999, global literacy increased from 52% to 81% of the world. Women made up much of the gap: Female literacy as a percentage of male literacy has increased from 59% in 1970 to 80% in 2000.
  • The percentage of children in the labor force has fallen from 24% in 1960 to 10% in 2000.
  • There are similar trends for electric power, cars, radios, and telephones per capita, as well as the proportion of the population with access to clean water.

However, some of these improvements may not be due to globalization, or may be possible without the current form of globalization or its perceived negative consequences, to which the global justice movement objects.

Some pro-capitalists are also critical of the World Bank and the IMF, arguing that they are corrupt bureaucracies controlled and financed by states, not corporations. Many loans have been given to dictators who never carried out promised reforms, instead leaving the common people to pay the debts later. They thus see too little capitalism, not too much. They also note that some of the resistance to globalization comes from special interest groups with conflicting interests, like Western world unions.

Others, such as Senator Douglas Roche, O.C., simply view globalization as inevitable and advocate creating institutions such as a directly-elected United Nations Parliamentary Assembly to exercise oversight over unelected international bodies.

Measurement of globalization

To what extent a nation-state or culture is globalized in a particular year has until most recently been measured employing simple proxies like flows of trade, migration, or foreign direct investment. A more sophisticated approach to measuring globalization is the recent index calculated by the Swiss Think tank KOF. The index measures the three main dimensions of globalization: economic, social, and political. In addition to three indices measuring these dimensions, an overall index of globalization and sub-indices referring to actual economic flows, economic restrictions, data on personal contact, data on information flows, and data on cultural proximity is calculated. Data are available on a yearly basis for 122 countries. According to the index, the world's most globalized country is the USA, followed by Sweden, Canada, the United Kingdom, and Luxembourg. The least globalized countries according to the KOF-index are Togo, Chad and the Central African Republic.

Australia's push for globalization

In a speech outlining the Australian Government's reasons for the selling of telecommunications company, Telstra; Treasurer Peter Costello stated that the sale 'Would be beneficial for Australia in progessing toward a globalised community.' Treasurer Costello, along with Prime Minister John Howard, have been known for their push for a more globalised economy, since the Liberal Party's election into Parliament in 1996.

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