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History of Globalization
• It a fairly recent concept
and vocabulary
• Emerged forcefully in
• Its processes are as old as
history itself because
human race have always
engaged in:
• Cultural exchange
• Dissemination of
• Trade of goods and
• Important developments in
early part of the 20th
century accelerated these
Globalization - refers to the
intensification and expansion of
political relations across the
Three Dimensions:
1. Political Globalization refers to the intensification
and expansion of political
relations across the globe.
(Steger, Manfred B.)
2. Economic Globalization refers to the widespread
international movements of
goods, capital , services ,
technology and information.
3. Social Globalization - pertains
to human interaction within
cultural communities
encompassing topics like family,
religion, work and education.
Causes of Globalization:
• Technological Advances
• Policies that encourage
international business
• Business Outsourcing
• Education
• Mass Media
Advantages of Globalization
• Reduce trade barriers such
as tariffs
• Represents free trade
• Competition among
• Chance for poor countries
to develop
• Globalization and democracy
will go hand in hand.
• Worldwide market
• World market is created
instead of compartmentalized
power sector
• Influx of information between
• Cultural intermingling
• Financial interest, corporations
and government are trying to
sort out ecological problems
• People have become more
open and tolerant
towards each other.
• Speedy travel , mass
communications and quick
dissemination of
information through the
internet .
• Labor can move from one
country to another to
market their skills.
• Sharing technology with
developing nations will
help them progress.
• Transnational companies
installing plants in other
countries provide
Disadvantages of Globalization
• Rich countries will become
richer while the poor
becomes poorer.
• Trade barriers are not
really eliminated .
• Jobs are lost in developed
countries and transferred
to lower cost-countries.
• Workers in developed
countries like the United
States face pay-cut
demand from employers
who threaten to export
• Large multi-national
corporations put-up tax
havens in other countries
to avoid taxes .
• Multi-national corporations
are accused of :
- Social injustice
- Unfair working
- Lack of concern for the
• Multi-nationals are
increasingly influencing
political decisions .
• Technologies are at risks of
being copied or stolen.
• Globalization is not
working for the majority of
the world.
• Globalization leads to
incursion of communicable
diseases like HIV/AIDS.
• Leads to exploitation of
• Social welfare schemes are
under great pressure in
developed countries like
deficits and job losses.
Definition of Globalization
According to Manfred Steger:
• the expansion and
intensification of social
relations and
consciousness across
world-time and worldspace
• a worldwide
• a multidimensional
Economic Globalization:
• a historic process
• the result of human
innovation and
technological progress.
• the increasing integration
of economies around the
• the movement of goods,
services, and capital across
• the movement of people
(labor) and knowledge
(technology) across
international borders
According to Benczes (2014),
economic globalization can thus
have several interconnected
dimensions such as the
1. The globalization of trade of
goods and services;
2. The globalization of financial
and capital markets;
3. The globalization of
technology and communication;
4. The globalization of
• an “organic system”
• extending transnational
economic processes and
economic relations to more
and more countries and by
deepening the economic
interdependence among
History of Economic
• Grills and Thompson
(2001), globalization began
since homo sapiens began
from migrating from the
African continent to
populate the rest of the
• Frank and Grills (1993),
considered the Silk Road
(Asia, Europe, Africa) the
best example for archaic
globalization 5,000 years
• Adam Smith (1776),
considered the discovery of
America by Christopher
Columbus in 1492 and the
discovery of the direct sea
route to India by Vasco de
Gama in 1498 as the two
(2) greatest achievements
of human history.
• Gereffi (2005) if global
economy did exist during
1500 to 1800, it was only in
the sense of trade and
exchange rather than
production. Countries wer
e mostly self-sufficient and
autarkic, the UK and the
Netherlands being the only
• Maddison (2001), the real
breakthrough came only in
the 19th century. The
annual average compound
growth rate of world trade
saw a dramatic increase 4.2
per cent between 1820
to 1870, and was relatively
high, at 3.4 per cent
between 1870 and 1913.
• By 1913, trade equaled to
16-17 per cent of world
income because of
transport revolution: steam
ships and railroads reduced
transaction costs and
bolstered both internal and
international exchange.
The relatively short
period before World War I
(1870-1913) is often
referred to as the "golden
age" of globalization,
characterized by relative
peace, free trade and
financial and economic
stability (O'Rourke and
Williamson, 1999).
• According to historians
Dennis Flynn and Arturo
Giraldez, the age of
globalization began when
“all important populated
continents began to
exchange products
continuously and its values
sufficient to generate
crucial impacts on all
trading partners.” They
traced this back in 1571
with the establishment of
galleon trade that
connected Manila in the
Philippines and Acapulco in
Mexico. This was the first
time the Americas were
directly connected to Asian
trading routes (as cited by
Claudio, 2018).
The International Monetary
System (IMS)
• According to Salvatore
(2007), international
monetary system refers to
rules, customs,
instruments, facilities, and
organizations for effecting
international payments. In
the liberal tradition, the
main task of IMS is to
facilitate cross-border
transactions involving trade
and investment.
• To Cohen (2000), IMS is,
however, more than just
money or currencies; it also
reflects economic power
and interests as money is
inherently political, an
integral part of high politics
of diplomacy.
The Gold Standard
• To Einaudi (2001), the
origin of first modern – day
IMS dates back to the early
19th century when the UK
adopted gold monometallism in 1821. Half a
century later, in 1867, the
European nations, as well
as the United States,
propagated a deliberate
shift to gold at the
International Monetary
Conference in Paris. Gold
was believed to guarantee
a non-inflationary, stable,
economic environment, a
means for accelerating
international trade.
• According to Meisser
(2005), Germany joined the
IMS in 1872, France in
1878, United States in
1879, Italy in 1884, Russia
in 1897 and roughly 70 per
cent of the nations
participated in the gold
standard just before the
outbreak of World War I.
• During World War I, when
countries depleted their
gold reserves to fund their
armies, many were forced
to abandon the gold
standard. Since Europeans
have low gold reserves,
they adopted floating
currencies that were no
longer redeemable in gold
(Claudio, 2018).
The Bretton Woods System
and its Dissolution
• the wish to return to peace
and prosperity impelled
the allied nations
• to negotiating a new
international monetary
• the United Nations
Monetary and Financial
Conference in Bretton
Woods, New Hampshire
(US) in July 1944
• Delegates of 44 countries
• peg system
• US dollar as the only
convertible currency
• the establishment of two
(2) international
- International Banks
Reconstruction and
Development (IBRD or
World Bank) became
responsible for post-war
- International Monetary
Fund (IMF) was to
promote international
financial cooperation
and buttress
international trade. The
IMF was expected to
safeguard the smooth
functioning of the goldexchange standard by
providing short-term
financial assistance in
case of temporary
balance of payments
Today, these international
financial institutions are key
players in global economy.
• Keynesianism
• British economist John
Maynard Keynes believed
that economic crisis occurs
not when a country does
not have enough money,
but when money is not
being spent and, thereby,
not moving.
• When economies slow
down, according to Keynes,
governments have to
reinvigorate markets with
infusions of capital.
• General Agreement on
Tariffs and Trade (GATT) in
1947. GATT’s main
purpose was to reduce
tariffs and other hindrance
to free trade
• In the 1970s, the prices of
oil rose sharply as the
result of the Organization
of Arab Petroleum
Exporting Countries’
imposition of an embargo
because of the US and its
allies’ support to Israeli
military during the Yom
Kippur War. When stockmarkets crashed in 197374 after the US stopped
the dollar to gold, the
Bretton Woods system was
dissolved (Claudio, 2018).
The Washington Consensus
• economic thinking in the
• Friedrich Hayek and Milton
• the governments’ practice
of pouring money into their
economies had caused
inflation by increasing
demand for goods without
necessarily increasing
• government intervention in
economies distort the
proper functioning of the
market. Critics labelled this
thinking as neo-liberalism.
• The Washington Consensus
is a set of 10 economic
• Set by International
Monetary Fund(IMF),
World Bank (WB), United
States Department of the
Treasury and eventually by
the World Trade
Organization (WTO).
• English economist John
The following rules are set
under the Washington
Fiscal policy discipline
Effective public spending
Tax reform
Competitive exchange rates
5. Trade liberalization
6. Financial market liberalization
7. Trade liberalization of foreign
direct investment
8. Privatization
9. Deregulation
10. Security of property rights
The European Monetary
• The United States started
to advocate an
economically and militarily
strong Germany and
Western Europe.
• The Marshall Plan
• Organization for European
Economic Cooperation
• Cooperation for Economic
Cooperation and
Development (OECD)
• Coal and Steel Community
• Rome Treaty of 1957
• European Economic
• Germany, France, Italy,
Netherlands, Belgium and
The collapse of the Bretton
Woods system led to the setting
up of the European Monetary
System (EMS) in 1979.
• The European Union (EU)
was formally established
when the Maastricht
Treaty came into force in
• It founded the European
Economic and Monetary
Union (EMU)
• European Central Bank
(ECB) in 1999
• Euro became the second
most widely used reserve
currency (European
Commission, 2008).
Impact of Economic
• To what extent is the
nation-state still a relevant
actor in economic
globalization is a major
topic of current debates.
• According to Ohmae
(1995), states ceased to
exist as primary economic
organization units in the
wake of a global market.
• To Reich (1991),
globalization transforms
the national economy into
a global one where there
will be no national
products or technologies,
no national corporations,
no national industries.
• Boyer and Drache (1996),
admit that globalization is
redefining the role of
nation-state as an effective
manager of the national
economy. The state is the
main shelter from the
perverse effects of a free
market economy. To
Brodie (1996),
governments are acting as
the midwives of
• Milner and Keohane
(1996), admit states are
not influenced uniformly
by globalization.
• According to Gereffi
- the major players of
present global economy
are the transnational
corporations (TNCs)
- TNCs are concerned
more with profits
- “race to the bottom”
refers to countries’
lowering their labor
standards, including the
protection of workers’
interests, to lure foreign
investors seeking high
profit margins at the
lowest cost possible.
- Government weakens
environmental laws to
attract investors,
creating fatal
consequences on their
ecological balance and
depleting them of their
finite resources like coal,
oil and minerals
(Claudio, 2018).
• According to Bairoch
(1993), contemporary
globalization is, however,
considered to be a myth.
More concerns have been
raised with regard to its
impact on the worldwide
distribution of income.
• Dollar and Kraay (2002),
argue that only nonglobalizer countries failed
to reduce absolute and
relative poverty in the last
few decades. On the other
hand, countries that have
embraced globalization
(trade openness) have
benefited from openness
• The World Bank (2002),
claimed that globalization
can indeed reduce poverty
but it definitely does not
benefit all nations.
• According to Maddison
(2003), the ratio of richest
region’s GDP per capita
and that of the poorest was
only 1.1 in 1000, 2 in 1500
and still 3 in 1920. It
widened to 5 in 1871 and
stood at 9 at the outbreak
of WWI. In 1950, it
climbed to 15 and peaked
to 18 at the turn of the
new millennium.
• Bairoch (1993), said that
while in the developed part
of the world, industrial
revolution and intensified
international relations
reinforced growth and
development on an
unprecedented scale, the
rest of the world did not
manage to capitalize on
these processes. He
claimed that the
industrialization of the
developed countries led to
the de-industrialization of
the developing countries.
• The World System Analysis
claims that capitalism
under globalization
reinforces the structural
patterns of unequal
change. According to
Wallerstein (1983),
capitalism, a historical
social system, created a
dramatically diverging
historical level of wages in
the economic arena of the
world system. Thus, the
growing inequality, along
with economic and political
dependence, are not
independent at all from
economic globalization.
The World System Analysis
Market Integration - it is the
fusing of markets into one.
Global Market Integration - it
means that the price
differences between
countries are eliminated as all
markets become one.
• Global economy was highly
• Unprecedented flows of
capital, goods and labor
across borders
History of Global Market
First Millenium BC
- long distance trade
existed for centuries
- Driven by growing
population and income.
- Created a demand for
new products.
• Globalization took off
• Price differences started to
close –up because of :
1. Transport revolution
- invention of refrigeration
2. Opening of Suez Canal
-slashed the journey time
between Europe and Asia.
Eve of World War I
19th century Onwards
• Technological change
helped integrate markets
because of steam powered
transport invention.
Great Depression of the 1930s
• Governments imposed
tariffs which were intended
to switch the demand for
domestically produced
Smoot-Hawley Tariff
• Enacted in the United
States which raised tariffs
on imported goods.
• Tariffs reduced demand for
foreign goods .
• Foreign countries
retaliated that worsened
the effects of Depression of
• It took decades to rebuild
the world economy.
End of the 20th Century
• Markets are more
integrated as
transportation cost have
continued to fall
• Most tariffs have been
scrapped altogether.
• Trend was toward a freer
flow of capital across
• Liberalization of capital
markets , where funds for
investment can be
Problems in Global Market
• Institutional Differences
between countries
• Incompatibility with
democracy and
• Removal of institutional
variations between
• It suffocates countries’
economic development
Advantages of Global Market
• Harmonization of
institutions across
• Brings prosperity.
Definition of nation – state
• According to Scholte
(2000), a nation has four
(4) general features
1) a large population;
2) a specific territorial homeland;
3) unique cultural attributes;
4) constitutive
• To Benedict Anderson
• a nation is an
imagined community.
• limited by a given
• Citizens have rights
and responsibilities
• To James Wilford Garner
Four (4) elements of state
1. a specific population or
1. a specific territory
2. an organized government
3. internal and external
4. Sovereignty is not absolute
in practice because of the
development of
international relations and
consequently, of
international law
• Nation and state are
closely related. It is the
state that rules over a
nation (Claudio, 2018).
• World politics today has
four (4) key attributes.
1. there are countries or
nation - states that are
independent and govern
2. these countries interact
with each other through
diplomacy (negotiations)
3. there are international
organizations like the
United Nations that
facilitate these
4. international
organizations take on
lives on their own. The
UN, for example, has
task-specific agencies
like the World Health
Organization (WHO) and
the International Labor
Organization (Claudio,
The Interstate System
• The Peace Treaty of
Westphalia (Germany)
• This was a package of
treaties that ended the 30
years European wars of
religion (1618-1648).
European states – the Holy
Roman Empire, Spain,
France, Sweden and the
Dutch Republic – agreed to
respect one another's
territorial integrity.
• The three (3) core points of
the Westphalian Treaty are
the following:
a. the principle of state
b. the principle of legal
equality of states; and
c. the principle of nonintervention of one state in
the internal affairs of
• The earliest challenge to
Westphalian system was
Napoleon Bonaparte,
Emperor of the French
Empire. He sought to
spread the principles of the
French Revolution across
Europe by launching the
Napoleonic Wars between
1803 to 1815. The
Napoleonic code forbade
birth privileges, upheld
freedom of religion and
meritocracy in government
The Concert of Europe (18151914)
• The main aim was to
restore the Westphalian
system. Alliances of “great
powers” of Austria, Prussia,
Russian Empire, United
Kingdom agreed to
maintain “balance of
power” (no one state is
strong enough to dominate
all others) and would
support each other if any
revolutions broke out.
• Sir Klemens von Metternich
Austrian diplomat was the
architect of the Concert of
• These two interstate
systems divided the world
into separate, sovereign
• Internationalism has been
brought by the Peace
Treaty of Westphalia and
the Concert of Europe
Various sovereign states
and people desire for
greater global cooperation
and unity.
• Internationalism is divided
into the following
categories :
The well-known liberalinternationalists:
1. Woodrow Wilson (USA)
forwarded the “principle of
self-determination”. He
became the notable
advocate of the LEAGUE OF
2. Immanuel Kant (German)
imagined a form of “global
3. Jeremy Bentham (British)
advocated the creation of
“international law” that
would govern the interstate relations.
4. Giuseppe Mazzini (Italian)
believed that a free, unified
nation-states should be the
basis of an equally free,
and cooperative
international system.
• The League of Nations was
founded after WW1 in
1919. There were 58
members. Its main
objective was to maintain
world peace through
international arbitration.
Its primary achievement is
the birth of task-specific
international organizations
like the World Health
Organization (WHO) and
the International Labor
Organization (ILO).
• The main proponent of
Socialist Internationalism
was Karl Marx. He did not
believe in nationalism
(rooted people on
domestic concerns). He
placed a premium concern
on economic equality. He
argued that the world is
divided into classes. First,
the capitalist class or the
owners of the factories and
other means of production.
Second, the proletariat
class or those who worked
for the capitalists.
• To Marx, the proletariat
had no nation. Its battlecry is “WORKERS OF THE
opposed nationalism
because it prevented the
unification of world’s
• The Socialist International
(1889-1916) was an
organization of labor and
socialist parties, mainly in
Europe. Among its
achievement are the 8hour working day,
International Women’s
Day, and International
Labor Day on May 1. Its
parties became major
players in the electoral
politics of Europe. In 1916,
it collapsed when its
member- parties supported
the war efforts of their
respective states.
• The Communist
International (Comintern)
was established in 1919
until 1943. It was a
product of the Bolshevik
victory in Russia (USSR)
under the leadership of
Vladimir Lenin. It became
a tool to promote
revolution, a central body
for all Communist Parties
across the world. It
dissolved in 1943 to
appease Allied Powers.
• Communist
internationalism has
weakened since the
dissolution of the USSR in
• The United Nations (UN)
has propagated liberal
internationalism since the
end of World War II to this
• During the period of Cold
War, the French
demographer Alfred Sauvy
coined the term Third
World to describe the
economically lessdeveloped states that
tended to share colonial
past. They adopted foreign
policies based on
nonalignment. In 1955, the
Bandung Conference was
attended by 29 countries
which agreed to combat
colonialism and
neocolonialism by either
the US or the USSR. This
formally gave birth to the
non-aligned movement, a
Mazinnian internationalism
for decolonizing countries.
• Today, the communist
countries have almost
totally vanished, thus
making the term Third
World obsolete. Now the
terms Global North (the
wealthy countries
previously known as the
First World) and the Global
South (the less-developed
countries along the
equator and in the
Southern Hemisphere) are
popular (Kegley and
Raymond, 2012).
The State as the Primary Actor in
World Politics
• According to Scholte
(2000), the sovereign,
territorial state has been
the lead actor on the world
stage for nearly four
centuries. In some
respects, it is still
flourishing because many
people look to the state as
a source of security,
welfare and identity. Yet
numerous states are failing
to fulfill these traditional
purposes, leading scholars
to ask whether the nationstate will remain capable of
addressing once
considered its sole
prerogative. With national
boundaries becoming
increasingly porous and
policy problems
transcending political
frontiers, the managerial
capabilities of states have
been severely strained,
regardless of form of
government. Auguste
Comte, a 19th century
Sociologist, argued that
human beings create
institutions to deal with
serious problems. When
they are no longer able to
perform this vital function,
they are replaced by other
institutions. Today, as the
Westphalian state seems
unable to cope with the
many transnational
problems, is the nation state becoming obsolete?
• To Dhonte and Kapur
(1997), the Bretton Woods
institutions have
recognized the importance
of the state for an
effectively functioning
global market.
• To Scholte (2000), the rise
of supra-territoriality has
encouraged changes in the
character of the state
without undermining the
state itself. Whatever new
world order might be
emerging in the course of
contemporary accelerated
globalization, the state has
remained a major part of it.