Globaliz(s)ation and its impacts * What is globalization? Is it new phenomenon? * What are characteristics of the contemporary wave of globalization? * What is the impact on the world economy? Table of contents A. definition of globalization B. specifics of contemporary globalization C. impact of globalization What is globalization? And is it new? * No one knows! * every discipline comments the phenomenon -- sociology, politics, economics, ... -- d- chaos -- d- very difficult to handle d- I will keep on the field of economics * even so nearly every author uses the word its way * d- plenty of definitions integration X st. completely new * integration * the range -- from integration of a single market * for example capital markets -- up to overall integration * and the time period? -- from prehistoric times -- up to only last twenty years -- strong stream that reminds the last wave of integration at the end of the 19th century * something completely new -- prominent Dicken (Global Shift) * Internationalization processes involve the simple extension of economic activities across national boundaries. It is, essentially, a quantitative process which leads to a more extensive geographical pattern of economic activity. * X Globalization processes are qualitatively different from internalization processes. They involve not merely the geographical extension of economic activity but also -- and more importantly -- the functional integration of such international dispersed activities. SO? * d- it is matter of understanding or believe -- I don't find anything so "qualitatively different" that we would need a new word for it -- d- I don't think that it is anything completely new and I deem the processes as part of long run integration * integration -- in the form of trade -- has prehistoric roots * is the world more integrated now? -- it depends -- generally ... * we already had period of deep integration -- before the First World War * integration of all markets - goods, capital and labour * EX and IM/GDP (in %) between 1913-1987 * d-d- so globalization (in my point of view) is integration with a few new features -- otherwise it is very old phenomenon and in fact everything penetrating * (popular) example with pencil * and it is spontaneous -- releasing creative powers in the world economy -- nobody invented it and nobody steers it * the question is: "what are the specifics of the contemporary wave of globalization?" Table of contents A. definition of globalization B. specifics of contemporary globalization C. impact of globalization Specifics of contemporary G. * degree of integration of the markets * n number of states * growing population of the World * democratisation * strong role of governments * technological development * supranational organizations * pressure groups * structure of national economies * international monetary system * changes in economic theory 1. degree of integration of the markets * goods and capital markets are probably the most integrated in the history -- but the labour market is not * capital -- dismantling barriers after the WW2 -- dramatic, relatively easy d- the most integrated market -- SR capital X FDI * goods -- export of goods and services as a percentage of world output 8.7% in 1913 d- 12.1% in 1973 d- 23.6% in 1996 -- total trade (EX +IM)/output 28% in 1970 d- 45% in 1998 - Sullivan (2000) -- o barriers after the WW2 BUT different forms of protection (H) * antidumping -- almost 2/3 of trade within 500 kilometres and more than µ within 1000 kilometres -- n of trade b/c n growth of transaction within the supranational companies Average tariffs 1940 -- 1995 (Dicken, Global Shift) World export and GDP * services -- outsourcing * labour force -- the least integrated market -- creating barriers in the developed countries -- at the end of the 19^th century the markets more integrated * no trouble to move and start new life abroad 2. n of number of states * in the process more countries b/c growth of independent states -- but previously members of colonial empires d-n length of frontiers and possibility to bloc integration Membership in the UN 3. growing population of the World * n people d- n S and D on all of the markets d- growth of markets and ability to specialize d- positive for integration -- but if the markets don't absorb -- changing structure of population d- ... can be negative 4. democratisation * democracy becomes the dominant form of the political system -- 1900 kind of democracy (women excluded) only 6 of 43 of the national states -- n democracies after 1945 (GER, JAP, Italy and some developing countries India). -- but 1980 only 37 countries from 121 democratic government (35% world population) -- n after 1989 d- 1998 already 117 from 193 (54% world population) * impact on integration questionable -- o in international conflicts -- democracies dont fight each other and start international conflict only in rare (extreme) cases d- the most important point for international integration -- X -- politicians orientate on specific (pressure) groups in society -- these are (mostly) against integration 5. strong role of governments * growing role of state -- eg. in the 19. century -- government expenditures below 10% of GDP * (in the US only 2.50%) (Cameron) -- changes with * WW1 * great depression * Keynes * building of social state Development of public expenditures (in % GDP) 1870 -- 1994 * if globalizace spontaneous process -- d- G against it and block it * if more money in the treasury for redistribution d- more power to intervene at the markets * states can easily block all three markets -- eg labour markets -- but situation used to be worse -- d- G relaxed its policy and enable integration * eg the capital markets 6. technological development * driving force of integration -- X previous periods (obviously) new forms (electronics, telecommunications, IT and transport) -- within the last 30 years o in prices of computer processing by 99.999% Decline in real prices during technological revolutions, annual average * o transport and transaction costs d- n specialization + division of labour d- n integration on the markets of goods, services and capital * + impact on labour market -- it is cheaper to move -- even groups that could not afford it previously 7. supranational organizations * international organizations -- some of them influence (at minimum under certain conditions) on national governments -- impose rules -- till the end of the WW2 no such organizations .. League of Nations ... -- foremost the WTO -- conditions for entrance -- liberalization of trade, solving disputes and punish in case of braking the rules -- the reciprocal relationship with G. * international blocks * extreme the EU but Mercosur, NAFTA -- today at minimum 80 international regional agreements * G is blocked by "regionalization" (creation of blocks) -- create large internal markets but build obstacles on the outer frontiers -- eg the EU d- real politics - integration inside the group but against the integration of the global economy -- the internal markets free but prevent moving from abroad -- quotas for import of cars from Japan, agriculture production or migration * X some authors that regionalization supports integration 8. strong pressure groups * plenty of different groups (including supranational companies) -- development after the WW2 -- most of them against integration (exceptions Cato Institute or Adam Smith Institute) -- the obvious cases demonstrations against globalization Seattle (1999), Prague (2000) or Stockholm (2001) + agricultural lobby against liberalization in the EU -- their goals are often crossing -- support for developing countries X protection of agriculture markets in developed countries 9. changing structure of national economies * o in proportion of agriculture and n in services (H) * in the world GDP S= 62%, I=33% and A= 5% * impact unambiguous -- o the proportion of A d- peasant very strong pressure group -- X some of the services like traveling Share of agriculture on employment Number of overnight stays in Finland by foreigners at accommodation establishments 10. changes in the international monetary system * in the 19. century -- most of the countries on gold -- fixed exchange rates d-d- B-W * since 1970 floating systems and volatile d- negatively affect capital transfers, goods and services * attempts to fix d- recreate stability d- troubles -- fixed exchange rate in developing countries -- euro Exchange rate systems in developing countries between 1976 and 1996 The Economist, 20.9.1997 11. changes in economic theory * changes after the 1970s -- failure of keynesian economics d- contra-revolution d- -- n importance of markets X states * how affected is the economic policy? -- deregulations and privatisations -- but does not have to be * generally -- less state d- dismantling barriers for integration of markets, ... Table of contents A. definition of globalization B. specifics of contemporary globalization C. impact of globalization General impacts on the world economy * pros -- G = n of subjects with different connections abroad * o of international tension among the countries -- in popular form two countries with McDonalds dont fight each other * growth of interdependence (H) -- G in the form of integration d- n movement of goods, services, capital and labour d-d- specialization, n competition and n division of labour d-d-nn productivity and better using of scarce sources * consumers are better off * limited role of govt. (?) -- most of the authors * diffuse of technology and knowledge * + n integration d- economic convergence -- integration allow catching up of the technological leader via imitation -- eg World Economic Outlook (IMF, 2000) -- convergence in periods of integration of the world economy and divergence in periods of disintegration -- but ... -- improving economic situation of developing countries (?) -- legging behind -- extreme cases -- autarchy -- North Korea, Myanmar (Barma) -- inequality among the states * cons -- n interdependence (H) * shocks -- loss of national identity (?) Czech trade 1-12/2000 * limited role of govt. (?) -- some authors "limits abilities of governments to improve functioning of markets and reduce the negative aspects of the process" (Cerny, 1996) -- d- generally the view depends on the personal perception of the state ... trust or distrust; believe or disbelieve * Amin a Thrift (1994) globalizace d- monopolization of the world economy -- popular idea but without proof (H) * d- in my opinion monopolization is not threat X G = n international competition The Economist (11. 9. 1999) Procentní změny v zaměstnanosti v USA v důsledku zahraničního obchodu mezi lety 1970-80 should we fear? * NO * natural process * releasing creative powers -- let markets work * enable developing countries develop