Lecture 5 Globalization and New development Globalization defined 1. The manifestations of globalization include the spatial reorganization of production, the interpenetra tion of industries across borders, the spread of financial markets, the diffusion of identical consumer goods to distant coun tries, massive transfers of population within the South as well as from the south and the east to the west. resultant conflicts be tween immigrant and established communities in formerly tight-knit neighborhoods, and an emerging worldwide preference for democracy. James Mittelman (1996: 2) 2. Globalization refers to the growing economic interdependencies of countries worldwide through the increasing volume of and variety of cross-border transactions in goods and services and of interna tional capital flows and also through the rapid and widespread diffusion of technology. IMF(1997, p 45) GLOBALIZATION AND THE NEW WORLD what is globalization? Global more than international Economic aspect production, financial markets, foreign investment consumer goods(McDonald's, Nike, gucci) Social entertainment (world Cup, Olympics, Tennis) population migration (legal, illegal, internal, international communication flows(internet, TV) Technological aspect IT-computer, robotics, telecommunication biotechnology, material science Cultural aspect foreign experience(travel, media world view cross-border flows 13th century 15th century 19th, 20th century 1980s Causes of globalization Global economic restructuring 1970s 1980s, mega trends
1 Lecture 5 Globalization and New Development Globalization defined 1. The manifestations of globalization include the spatial reorganization of production, the interpenetration of industries across borders, the spread of financial markets, the diffusion of identical consumer goods to distant countries, massive transfers of population within the South as well as from the South and the East to the West, resultant conflicts between immigrant and established communities in formerly tight-knit neighborhoods, and an emerging worldwide preference for democracy. James Mittelman (1996:2) 2. Globalization refers to the growing economic interdependencies of countries worldwide through the increasing volume of and variety of cross-border transactions in goods and services and of international capital flows and also through the rapid and widespread diffusion of technology. IMF (1997, p.45) GLOBALIZATION AND THE NEW WORLD ◼ What is globalization? ◼ Global, more than international ◼ Economic aspect ◼ production, financial markets, foreign investment ◼ consumer goods (McDonald’s, Nike, Gucci) ◼ Social aspect ◼ entertainment (World Cup, Olympics, Tennis) ◼ population migration (legal, illegal, internal, international) ◼ communication flows (internet, TV) ◼ Technological aspect ◼ IT - computer, robotics, telecommunication biotechnology, material science ◼ Cultural aspect ◼ foreign experience (travel, media) ◼ world view ◼ cross-border flows Timing ◼ 13th century ◼ 15th century ◼ 19th, 20th century ◼ 1980s Causes of globalization ◼ Global economic restructuring ◼ 1970s ◼ 1980s, mega trends
I Sharp drop of prices, commodity ■2. Rise of capital 3. Technological innovations Consequences 1. Uneven development ■ developed countries restructuring or decline Chicago, Pittsburgh, Manchester, Lille, birmingham a developing countries Africa and latin america 2. Opportunities rapid growth new fields and networks u re-energized cities Berlin, vienna) 3. Challenges marginalized cities/countries rise of localism/communalism conflicts(Bosnia, former Soviet Union) m economic and polarization 1900 rich/poor gap 8: late 1980s rich/poor gap 36: 1 960 richest 20% world received 70% global income bottom 20% world received 2.3% global in come 1989 richest 20%world received 82% global income bottom 20% world received 1. 4% global income New global economic order New international division of labour (NIDL) 2. Comparative advantage 3. Open competition, free trade, markets 4. Foreign direct investment(FDD 5. Borderless economy Impact on Pacific Asia Uneven effect Asia beneficial results I FDI inflows Japan, Plaza Accord 1985) u 2 Spatial consequences world cities a growth triangles urban corridors extended metropolitan regions(EMrs)
2 ◼ 1. Sharp drop of prices, commodity and energy ◼ 2. Rise of capital ◼ 3. Technological innovations Consequences 1. Uneven development ◼ developed countries ◼ restructuring or decline ◼ Chicago, Pittsburgh, Manchester, ◼ Lille, Birmingham ◼ developing countries ◼ Asia ◼ Africa and Latin America 2. Opportunities ◼ rapid growth ◼ new fields and networks ◼ re-energized cities (Berlin, Vienna) 3. Challenges ◼ marginalized cities/countries ◼ rise of localism/communalism ◼ conflicts (Bosnia, former Soviet Union) ◼ economic and polarization a.) 1900 rich/poor gap 8:1 late 1980s rich/poor gap 36:1 b.) 1960 richest 20% world received 70% global income bottom 20% world received 2.3% global income 1989 richest 20%world received 82% global income bottom 20% world received 1.4% global income New global economic order 1. New international division of labour (NIDL) 2. Comparative advantage 3. Open competition, free trade, markets 4. Foreign direct investment (FDI) 5. Borderless economy Impact on Pacific Asia Uneven effect Asia beneficial results ◼ 1. FDI inflows (Japan, Plaza Accord 1985) ◼ 2. Spatial consequences ◼ world cities ◼ growth triangles ◼ urban corridors ◼ extended metropolitan regions (EMRs)
3. Rapid rise in income 4. Life-style changed, quality of life improved 5. Regional cooperation (APEC, PECC, AFTA) 6. Participatory democracy(sKorea, Taiwan, Philippines, Indonesia) sian financial crIsIs 97S. Korea. Thailand. Indonesia Peril of globalization Causes: 1. Liberalization without sufficient safeguards and control 2. Speculative investment, international agents(real estate, stock market) 3. Massive financial flows 4. Complacency and bureaucracy 5. Government-corporate collusion no check and balance(Zaibatsu, Chaebol) 6. Economic bubble (Japan 1991; elsewhere 1997) Future Challenges 1. Let africa and latin America catch 2. Asia has to restructure and re-engineer 3. Build more robust, responsible institutions 4. Minimize conflicts and contradictions 5. Evolve new governance structures 6. Attention to poor and deprived -policy and resources
3 ◼ 3. Rapid rise in income ◼ 4. Life-style changed, quality of life improved ◼ 5. Regional cooperation (APEC, PECC, AFTA) ◼ 6. Participatory democracy (S. Korea, Taiwan, Philippines, Indonesia) Asian financial crisis 1997 S. Korea, Thailand, Indonesia Peril of globalization ◼ Causes: ◼ 1. Liberalization without sufficient safeguards and control ◼ 2. Speculative investment, international agents (real estate, stock market) ◼ 3. Massive financial flows ◼ 4. Complacency and bureaucracy ◼ 5. Government-corporate collusion no check and balance (Zaibatsu, Chaebol) ◼ 6. Economic bubble (Japan 1991; elsewhere 1997) Future Challenges 1. Let Africa and Latin America catch up 2. Asia has to restructure and re-engineer 3. Build more robust, responsible institutions 4. Minimize conflicts and contradictions 5. Evolve new governance structures 6. Attention to poor and deprived-policy and Resources