Three prime movers: Economic globalisation. Technological globalisation. Political globalisation.
The three prime movers initiated a process in which geographic distance becomes less a factor in the establishment and sustenance of bordercrossing, long distance economic, political and socio-cultural relations and which we call globalisation.
Global Village?
The metaphor used by futurologists to portray a world without borders and where humans live in a single community.
Concepts of community are shaped by distance—new technologies reduce the importance of proximity between people and change people’s perceptions of what “community” is.
People become aware of this fact. Networks of relations and dependencies therefore become potentially bordercrossing and worldwide.
This potential internationalisation of relations and dependencies causes democratic, environmental, security and social deficits and rebound effects, like a change in attitudes and administrative shortcomings.
Globalisation is not only negative. It also includes people in the world community and gives rise to new systems of global governance and a global civil society.
Economic Globalisation
Most people see changes in trade and economic relations as the main mover of the globalisation process:
Globalisation of trade. Globalisation of finance. Globalisation of production. Globalisation of labour.
The worldwide appearance of trade, production and consumption, the worldwide acceptance of market economics and free trade and the sharply increasing freedom of capital movements are caused by political globalisation and technological globalisation.
New technologies and the worldwide introduction of democracy have made economic globalisation possible, by providing new means of communication and by opening up countries.
As economic globalisation progresses, the number of multi-national companies also grows and the number of strategic alliances between companies in different countries increases. This way businesses deal with globalisation.
Technological Globalisation
Technological developments have been one of the strongest movers of globalisation.
New technologies also lead to other modes of production, trade and economic relations, less based on natural resources and machines and more on knowledge, services and infrastructures for communication.
The telecommunications revolution. The marriage between new information and communication technologies (f.e. satellites) and computer electronics makes communications cheaper and easier. It is therefore less difficult and costly to communicate on a global level, which makes it easier to bridge distances.
The decline of distance as the prime determinant of the costs of communication will most likely be the key economic force shaping the society of the 21st century.
1. PC’s & Internet. The ever increasing number of home PC's opening the world to the average user.
2. Global Media. Decreasing number of owners. Moves towards monopolies. CBS-Viacom merger--find out more Filtration of news to suit corporate agendas. Avoidance of difficult issues, focus on simplistic entertainment.
The transportation revolution.
1. Transport. Technological progress (initially stimulated by the needs of WW2 and the Cold War) has: - Enhanced the size of transport equipment (container principle); - Lowered operating costs (cheaper and longer distance); - Lowered the cost per unit transported;
Key issues: - Panama Canal; - Jet engine; - Rail networks; - Super-ships; - Developments in loading/off-loading systems; - Effectiveness of the trucking industry in delivering specific amounts of goods to required locations;
2. Travel. Citizens benefit from transportation revolution, buy being able to visit ANY corner of the planet in under 24 hours. A century ago, a journey from paris to Berlin would have taken DAYS, whereas today, thanks to the European fast-rail network, the trip takes under 3 hours.
CONSIDER: Can viruses (and their proliferation) become the greatest challenge to Humanity?? Prior to the transportation revolution, the most lethal viruses were "self-limiting": their lethality restricted their expansion.
Financial Globalisation
According to Knight, 2006: The global financial system of today is vastly more accessible by companies and households than it was twenty years ago, or even a decade ago. The financial marketplace offers greatly enhanced risk management properties, particularly for credit risk pools. For example, over the past five years the trade in credit risk transfer instruments, such as credit default swaps and asset-backed securities, has made possible the sharing of credit risks among often geographically dispersed firms and households on a scale never witnessed before. Both the scope and scale of involvement of non-financial companies and households in cross-border financial transactions are unprecedented.
Financial reforms began to accelerate in the mid-1980's.
REQUIRED READING: U. Backstrom, 1998, "Financial Globalisation"
Political Globalisation
New rules and norms • Market economic policies spreading around the world, with greater privatization and liberalization than in earlier decades. • Widespread adoption of democracy as the choice of political regime. • Human rights conventions and instruments building up in both coverage and number of signatories—and growing awareness among people around the world. • Consensus goals and action agenda for development. • Conventions and agreements on the global environment—biodiversity, ozone layer, disposal of hazardous wastes, desertification, climate change. • Multilateral agreements in trade, taking on such new agendas as environmental and social conditions. • New multilateral agreements—for services, intellectual property, communications— more binding on national governments than any previous agreements. • The Multilateral Agreement on Investment under debate.
New actors • Multinational corporations integrating their production and marketing, dominating world production. • The World Trade Organization—the first multilateral organization with authority to enforce national governments’ compliance with rules. • An international criminal court system in the making. • A booming international network of NGOs. • Regional blocs proliferating and gaining importance—European Union, Association of South-East Asian Nations, Mercosur, North American Free Trade Association, Southern African Development Community, among many others.
Political globalisation consists of the hegemony of the neo-liberal ideology. This is about the triumph of the market-ideology, the economisation of life and mass-consumption. But not alone. Political globalisation also consists of the dominance of democracy as model of decision making within countries. Democracy?? find out more
Political globalisation is therefore a combination of market and democracy. The worldwide victory of market and democracy ended the traditional division between the matured (capitalist, democratic) first, Communist second and poor third world. Some poor third world countries heavily invested in education and technology and became rich. The Communist countries freed themselves of the yoke of their oppressive systems and most developed democratic systems.
Global migration crisis—the movement of populations across borders. Search for better life? find out more
Left critics of globalisation define the word quite differently, presenting it as worldwide drive toward a globalised economic system dominated by supranational corporate trade and banking institutions that are not accountable to democratic processes or national governments.
Globalisation is fundamentally a capitalist process. It has taken off as a concept in the wake of the collapse of the Soviet Union and of socialism as a viable alternate form of economic organisation. Socialism??? find out more
Criminal globalisation
United Nations claims that: Organised crime is a threat for the globalisation process. "At the root of all this is the growing influence of organized crime, estimated to gross $1.5 trillion a year, rivaling multinational corporations as an economic power. Global crime groups have the power to criminalize politics, business and the police, developing efficient networks, extending their reach deep and wide." [...] "All have operations extending beyond national borders, and they are now developing strategic alliances linked in a global network, reaping the benefits of globalization."
Crime syndicates prefer globalisation, for it creates "new and exciting opportunities, and among the most enterprising and imaginists are the world’s criminals." According to the HDR crime groups are able to generate enormous amounts of money: "The illegal drug trade in 1995 was estimated at $400 billion, about 8% of world trade, more than the share of iron and steel or of motor vehicles, and roughly the same as textiles (7.5%) and gas and oil (8.6%)."
Read more here
Key players: - Chinese Triads; - Japanese Yakuza; - Nigerian mafia; - Italian mafia; - Russian mafia; - Colombian drug cartels;
Organised crime = criminal MNC's?? The same motivations characterise criminal global expansion as the expansion by MNC's. Utilisation of: - production networks; - Distribution networks; - Marketing networks; - Exploiting new markets;
Global world: ripe ground for organised crime. 1. Reduction in barriers to finance. Easier for: - Money laundering; - Criminal transactions; 2. Reductions in barriers to transfer of goods. Easier for: - Smuggling of products; - Smuggling of people; 3. Collapse of governance regimes. Easier for: - Setting up of complex operational structures; - Maintaining large structures; - Exploiting systemic weaknesses; 4. Emergence of large-mass (global) underclass. Easier for: - Exploitation; - Recruitment; 5. Emergence of new nations / transformation of existing countries. Easier for: - Creation of new markets; - Development of new products; - Acquisition of new capabilities; 6. Emergence of new technologies. Easier for: - Exploitation of systemic weaknesses; - Matching technological capabilities with nation states and institutions; - Development of new "business" opportunities;
Organised crime: the advantages 1. Skills (ruthless, murder, etc). 2. Economic/profit orientation (being an overriding incentive). 3. Impenetrable structure (based on kinship, mutual experiences, etc).
CONSIDER: How did the post-Cold War environment affect that opportunities open to organised crime??
CONSIDER: What happened to all the military, intelligence, security professionals after the post-Cold War downsizing??
Corruption
Global activities require effectiveness: - Tenders must be won; - Positive resolution to issues must be assured; - Competition must be challenged; - Operations must be protected;
Even if companies are subject to anti-corruption legislation in their HOME countries, they may be more "flexible" in their approach to ethical business conduct in other, often far-away, countries.
CONSIDER: Should corporations have a uniform global code of conduct or should they behave in accordance with LOCAL tractions and culture??
Terrorist globalisation
Today, is there a difference between a terrorist and a criminal?? Shelley, 2006, argues that the distinction is increasingly blurred. In the modern world the notion of a terrorist is blurred and can be confused with: - Radical freedom movements; - Organised criminal violence. WHO IS the actor that applies terror??
Terrorism isn't a new phenomenon. 1st -- 14th century AD: - Zealots of Judea. Fought against the ROmans and Jews that were seen as NOT upholding the religious "standards". - Assassins (Shia Islamists) Use of the word "terrorism" began in 1795 in reference to the Reign of Terror initiated by the Revolutionary government. The agents of the Committee of Public Safety and the National Convention that enforced the policies of "The Terror" were referred to as 'Terrorists". World War 1 started due to an assassination...
The rebellious 1960's brought with them new ideologies, including the expansion of idealistic Marxism. This was backed by anti-systemic ideologies (anarchism, etc). Nation state identification began to weaken, fueling separatist movements.
Modern terrorism might be said to have begun in 1968 when the Popular Front for the Liberation of Palestine (PFLP) hijacked an El Al airliner en route from Tel Aviv to Rome.
Key players: - Popular Front for the Liberation of Palestine (PFLP); - Irish Republican Army; - Red Brigades; - ETA; - Japanese Red Army; - Baader-Meinhof Gang; and countless more....
After 1989, with the end of the Cold War the ease with which illegal/paramilitary organsations could contact each other and cooperate, INCREASED. - States began to weaken offering new opportunities for separatist movements, promotion of different ideologies. - Finance could be transferred more easily. - Weapons could be acquired and shipped to distant locations. - Global ideologies crumbled, leaving an ideological vacuum.
"Freedom, fighter" of various denominations found themselves out of work after 1989 or at least lacking the support they received previously from opposing regimes that maintained the Cold War. ALternative "work" had to be found... - Creation of new organisations focused on terror (otherwise motivated); - Criminal activity;
Read more on the link between globalisation, crime and terrorism
Al-Kaida al-Qaeda ("the foundation" or "the base") is an international Sunni Islamic fundamentalist paramilitary organization and campaign comprising independent and collaborative cells that all profess the same cause of reducing outside influence upon Islamic affairs. Organisational core: Afghan Mujahedeen's, trained by the CIA to oppose the Soviet invasion of Afghanistan. The guys had nothing to do after the end of the Cold War, so they decided to FIND themselves a NEW enemy: The USA's involvement in the middle east proved a worthwile target.
Read more about Al-Kaida
CONSIDER: Will terrorism WIN the battle with Capitalism and Democracy??
Educational globalisation
Process accelerated by: - Ease of communication; - Ease of transportation; - Spread of global values;
Key issues: 1. Focus on Knowledge as a source of competitiveness; - The Knowledge-based economy and society is the key for achieving and maintaining long-run competitive advantage. - Knowledge generation requires extensive networks for information transfer, large pools of educated citizens who can MAKE USE of such infrastructures, and a systemic environment supportive of knowledge and its resulting entrepreneurial activities. 2. Search for top examples in given discipline. - "Academic drift" or the tendency of institutions “...to copy the role and mission of the prestige institutions” (Berdahl, 1985: 303), has focused on the tendency of less successful universities to ape the program offerings of more prestigious universities. Very often such uiniversities will be located in other countries and copying them will result in the transfer of external values/systems. 3. Networks, helpful in the exchange of academic experiences, knowledge and skills are being set up everywhere. - Modern communication aloows for the immediate and detailed sharing of ideas and programmes. - Increasing numbers of multi-schol programmes are offered, requiring extensive collaboration and sharing between partner institutions. - Transnational "equivalence" systems are being set up: ECTS in the European Union.
Key concept: political economy.
Definition: term stressing that the political, economic and legal systems are interdependent. (Hill, 2011, p.42) Doing business in any country requires dealing with these interrelated spheres, as they affect the costs, benefits and risks of operating in a given nation.
Political systems.
Definition: system of government in a nation. (Hill, 2011, p.42) Two main dimensions (axis):
o Collectivism vs individualism;
o Democratic vs totalitarian;
Both axis are interrelated. Collectivism: political system that stresses the primacy of collective goals over individual goals (Hill, 2011, p.43). Needs of society are more important than needs of an individual or group. Examples:
o Communism;
o Socialism;
Individualism: opposite of collectivism, philosophy stressing the importance of individual freedom in economic and political pursuits. (Hill, 2011, p.44). Two major tenets:
o Emphasis on guaranteeing individual freedoms and self-expression.
o Welfare of society is best served by allowing individuals to pursue self-satisfaction, self-interest and NOT dictating to them society’s best interest.
International business seems to thrive well in democratic, free market societies. Democracy: political system in which the government is by the people, exercised either directly or indirectly through elected representatives. (Hill, 2011, p.45) Categories:
o Representative democracy (modern, indirect);
o Athenian (direct);
Totalitarianism: all individual rights are denied to citizens, oppression is common, free elections are missing. (Hill, 2011, p.47) Categories:
o Communist (Vietnam, Laos, North Korea);
o Theocratic (Saudi Arabia, Iran);
o Tribal (Africa);
o Right-wing (Germany, Italy before WWII)
Economic systems.
Pure market economy: all production assets are privately owned. (Hill, 2011, p.48) Principles:
o No good or services are planned. Production is defined by supply&demand.
o Unrestricted supply.
o Avoidance of monopolies.
Command economy: the government plans the goods & services that the country produces, their quantity and price at which they are sold. (Hill, 2011, p.48). Objective: to mobilise the economic resources of a nation for public good.
Mixed economy: economies located on the axis between command and market. (Hill, 2011, p.49). Governments tend to make important decisions and take over important industries/firms if they are important for nation.
