CONTEMPORARY WORLD (GE 103) PRELIM NOTES

INTRODUCTION TO GLOBALIZATION

1 Globalization in a literal sense is 5 Currently globalization has been due to

international integration. North American business and trade
developments throughout the world.
2 It can be described as a process by
Thomas L. Friedman "examines the
which the people of the world are
impact of the 'flattening' of the globe",
unified into a single society and
functioning together. 6 Friedman argues globalized trade,
outsourcing, supply-chaining, and
3 This process is a combination of
political forces have changed the world
economic, technological, sociocultural
permanently for good and bad.
and political forces.
7 He examines the positive and negative
4 Globalization, as a term, is very often
effects flattening has had and will
used to refer to economic globalization,
continue to have on global POLITICS
that is integration of national
and business.
economies into the international
economy through 8 The terms internationalization and
globalization are used interchangeably
- Trade foreign
but there is a slight formal difference.
- direct investment
- capital flows 9 The term internationalization refers to
- migration the importance of international trade,
- spread of technology relations, treaties etc.

10 International means between or among

• The word globalization is also
nations
used, in a doctrinal sense to
describe the neoliberal form of 11 Internationalization refers to the
economic globalization. increased importance of relations
between nations - the basic unit
• Globalization is also defined as remains the nation.
internationalism, however such
12 In contrast, the term globalization
usage is typically incorrect as
refers to economic integration on a
"global" implies "one world" as
global scale, into a global economy,
a single unit, while
which blurs national boundaries.
"international" (between
nations) recognizes that 13 In the extreme, globalization would
different peoples, cultures, mean erasure of national boundaries
languages, nations, borders, for economic purposes; international
economies, and ecosystems trade (governed by comparative
exist. advantages) would become
interregional trade (governed by
absolute advantages).
INTRODUCTION TO GLOBALIZATION
3. Globalization in its largest extent began
a bit before the turn of the 16th
14 Globalization is a term used to describe
century, in Portugal.
the changes in societies that are the
result of dramatically increased trade
4. The country's global adventurism in the
and cultural exchange. In specifically
16th century linked continents,
economic contexts, it refers almost
economies and cultures as never
exclusively to the effects of trade,
before.
particularly trade liberalization or “free
trade”.
5. The Kingdom of Portugal kicked off
15 It is a common belief that globalization what has come to be known as the Age
a role just at levels of trade and of Discovery, in the mid-1400s.
commerce, but the fact is that it has
played an important role in making our 6. The westernmost country in Europe,
lives much more comfortable too. was the first to significantly probe the
Atlantic Ocean, colonizing the Azores,
16 The phones, apparels, gadgets, or Madeira and other Atlantic islands,
accessories that we use in our day to then braving the west coast of Africa.
day life are due to globalization.

17 Knowingly or unknowingly, we are all 6 In 1488, Portuguese explorer

under the impact of globalization, and Bartolomeu Dias was the first to sail
more importantly it has helped in around the southern tip of Africa, and
bringing international peace and in 1498.
justice to mankind.
7 His Countryman named Vasco da Gama
repeated the experiment, making it as
HISTORY OF GLOBALIZATION far as India.

1. Globalization had begun with the first 8 The Portuguese Empire would establish
movement of people out of Africa into ports, forts and trading posts as far
other parts of the world. west as Brazil, as far east as Japan and
(Traveling short or long distances, Timor, and along the coasts of Africa,
migrants, merchants and others have India and China. For the first time in
delivered their ideas, customs and history, a wave of global trade,
products to new lands. The melding, colonization, and enculturation
borrowing and adaptation of outside reached all corners of the world.
influences are found in many areas of
human life.) 9 In the 19th century it was sometimes
called - "The First Era of Globalization"
2. As kingdoms grew and empires being - a period characterized by rapid
forged, the flow of different ideas and growth in international trade and
innovations spread like wildfire. investment, between the European
imperial powers, their colonies, and,
later, the United States.
 HISTORY OF GLOBALIZATION
Agreement on Tariffs and Trade (GATT).
10 It was in this period that areas of sub- Particular initiatives carried out as a
saharan Africa and the Island Pacific result of GATT and the World Trade
were incorporated into the world Organisation (WTO), for which GATT is
system. the foundation.

11 The "First Era of Globalization" began

to break down at the beginning with the NATURES OF GLOBALIZATION
first World War, and later collapsed
during the gold standard crisis in the
late 1920s and early 1930s. 1 Liberalization
- It stands fort the freedom of the
12 Globalization in the era since World entrepreneurs
War II was first the result of planning - to establish any industry or trade or
by economists, business interests, and business venture, within their own
politicians who recognized the costs countries or abroad.
associated with protectionism and
declining international economic 2 Free trade
integration. - It stands for the free flow of trade
relations among all nations.
13 Their work led to the Bretton Woods - Each states grants MFN (Most
conference and the founding of several Favored Nation) status to other
international institutions intended to states .
oversee the renewed processes of - Keeps its business trade away from
globalization, promoting growth and excessive and hard regulatory and
managing adverse consequences. protective regimes.

14 These were the International Bank for 3 Globalization of Economic Activity

Reconstruction and Development (the - Economic activities are governed by
World Bank) and the International the domestic market and also the
Monetary Fund. world market.
- It stands for the process of
15 It has been facilitated by advances in integrating the domestic economy
technology which have reduced the with the world economies.
costs of trade, and trade negotiation
rounds, originally under the auspices of 4 Liberalization of Import-Export System
GATT, which led to a series of - It stands for liberating the import-
agreements to remove restrictions on export activity and securing the free
free trade. flow of goods and services across
borders.
16 Since World War II, barriers to
international trade have been
considerably lowered through
international agreements - General
 NATURES OF GLOBALIZATION
2 Economic globalization
- “free trade” and increasing relations
5. Privatization:
among members of an industry in
- Keeping the state away from different parts of the world
ownership of means of production and (globalization of an industry), with a
distribution. corresponding erosion of National
- letting the free flow of industrial, trade Sovereignty in economic sphere.
and economic activity across borders.
THE SIGNS OF GLOBALIZATION
6. Increased Collaborations

- Encouraging the process of

THE SIGNS
TRADE - Increase OF
in international trade
collaborations among entrepreneurs
GLOBALIZATION
at a faster rate than the economic
with a view
growth in the world economy.
- to secure rapid modernization,
development and technological
CAPITAL - Increase in the international
advancements.
flow of capital including foreign
domestic investment.
7.Economic Reforms:
TECHY - Greater trans-border data flow,
- Encouraging fiscal and financial using such technologies such as the
reforms with a view to give strength internet, communication satellites and
to free world trade, free enterprise, telephones.
and market forces.
CULTURE - Greater international cultural
1 Globalization accepts and advocates exchange, for example through the
the value of free trade, freedom of export of Hollywood and Bollywood
access to world markets and free flow films.
of investment across borders.
TERRORISTS - Some argue that even
2 It stands for integration and terrorism has undergone globalization.
democratization of the world’s culture, Terrorist now have attacked places all
economy and infrastructure through over the world.
global investments.
CHINA - Spreading of multiculturalism
GLOBALIZATION can mean: and better individual access to cultural
diversity, with on the other hand, some
1 The formation of a global village reduction in diversity through;
- closer contacts between different - assimilation
parts of the world, with increasing - hybridization
possibilities of personal exchange, - Westernization
mutual understanding and - Americanization
friendship between “world citizens”. - Sinosization of cultures.
 THE SIGNS OF GLOBALIZATION

ORG. - Erosion of national

THE SIGNS OF sovereignty • Globalization imposes credit based
and national boarders through
GLOBALIZATION economics, resulting in unsustainable
international agreements leading to growth of debt and debt crises.
organizations like the WTO and OPEC.
Pro-Globalization
TRAVELER - Greater international travel • Supporters of free trade point out that
and tourism. economic theories such as comparative
advantage suggests that free trade leads
MIGRATE - Greater immigration, to a more efficient allocation of
including illegal immigration. resources
• With all those involved in the trade
BUILD - Development of global benefitting.
telecommunication infrastructure. • In general, they claim that this leads to
lower prices, more employment and
FINANCE - Development of global better allocation of resources.
financial systems.

SHARE - Increase in the share of the ADVANTAGES OF GLOBALIZATION

world economy controlled by
multinational corporations.
• Peaceful Relations
ROLES - Increased roles of international - Most of the countries have resorted
organizations such as WTO, WIPO, IMF to trade relations with each other
that deal with international - In order to boost their economy,
transactions. leaving behind any bitter past
experience in any.
NUMBER - Increased in the number of
standards applied globally; e.g. • Employment
copyright laws - Considered as one of the most
crucial advantages, globalization has
led to the generation of numerous
ANTI-GLOBALIZATION VS. PRO-
employment opportunities.
GLOBALIZATION
- Companies are moving towards the
developing countries to acquire
Anti-Globalization
labor force.

• Many anti-globalization activists see

• Education
globalization as a promotion of a
- A very critical advantage that has
Corporate agenda.
aided the population is the spread
• Which is intent on constructing
of education.
individuals in the name of profit.
- With numerous educational
• They also claim that increasing
institutions around the globe, one
autonomy and strength of corporate
can move out of the country for
entities increasingly shape the political-
better opportunities elsewhere.
policy of nation states.
-
 ADVANTAGES OF GLOBALIZATION

• Product Quality • Free Trade

- The product quality has been - Free trade is a policy that a country
enhanced so as to retain customers. does not levy taxes, duties,
- Today the costumers may subsidies or quota on the
compromise with the price range import/export of goods or services
but not with the quality of the from other countries.
product. - These are countries which have
- Low or poor quality can adversely resolved to free trade in specific
affect customer satisfaction. regions. –
- This allows customers to buy goods
• Cheaper Prices and services, comparatively at lower
- Globalization has brought in fierce cost.
competition in markets.
• Travel and Tourism
• Communication - Globalization has promoted tourism
- Every single information is easily to great heights.
accessible from almost every corner - International trade among different
of the world circulation of countries also helps in increasing
information is no longer a tedious number of tourists that visit
task. different places around the world.
- The internet has significantly
affected the global economy, • External Borrowing
thereby providing direct access to - With the help of globalization,
information and products. there is opportunity for corporate,
national, and sub-national
• Transportation borrowers
- Considered as the wheel of every - To have better access to external
business organization, connectivity finance, with facilities such as
to various parts of the world is not a external commercial borrowing and
serious problem anymore. syndicated loans.
- Today with various modes of
transportation available, one can DISADVANTAGES OF GLOBALIZATION
conveniently deliver the products to
customers at any part of the world.
• Health Issues
• GDP Increase - Globalization has given the rise to
- Gross Domestic Product, commonly more health risks and presents new
known as GDP is the money value of threats and challenges for
the final goods and services epidemics
produced within the domestic - Food items are also transported to
territory of the country during an various countries, and this is a
accounting year. matter of concern, especially in case
of perishable goods.
-
• Loss of Culture • Cut-throat Competition
- With a large number of people - Opening the doors of international
moving into and out of the country, trade has given birth to intense
culture takes a backseat. competition.
- People may adapt to the culture of - This has affected local markets
the resided country. dramatically.
- They tend to follow the foreign - The local players thereby suffer
culture more, forgetting their own huge losses as they lack potential to
roots. This can give rise to cultural advertise or export their products
conflicts. on a larger scale. Therefore, the
domestic markets shrink.
• Uneven Wealth Distribution
- This is said that the rich are getting Globalization can be:
richer and the poor are getting
poorer. 1. Cultural
- In the real sense, globalization has 2. Economic
not been able to reduce poverty. 3. Political
4. Social
• Environmental Degradation 5. Industrial
- The industrial revolution has 6. Technological
changed the outlook of the 7. Ecological
economy. 8. Geographical
- Industries are using natural
resources by means of mining, 1. Cultural globalization
drilling, etc. which puts burden on - Is the transmission of ideas,
the economy. meanings, and values around the
world in such a way as to extend
• Disparity and intensify social relations.
- Though globalization has opened - This process is marked by the
new avenues for wider markets and common consumption of cultures
employment, there still exists a that have been diffused by the
disparity in development of the internet, popular culture media,
economies. and international travel.
- Structural unemployment owes to
the disparity created. 2. Economic globalization
- Developing countries are moving - refers to the increasing
their factories to foreign countries independence of world economies
where labor is cheaply available. - as a result of growing scale of cross-
boarder commodities and services,
• Conflicts flow of international capital and
- It has given rise to terrorism and rapid spread of technologies.
other forms of violence. Such acts
not only loss of human life but also
huge economic losses.
 Globalization can be:

3. Industrial globalization informational globalization process

- Specialization may be referred to as where the information flow has
the phenomenon of producing only dramatically increased between
that product in which the country geographically remote areas of the
has competitive advantage in terms world.
of cost.
- The countries exchange their 6. Social globalization
industrial product, which known as - refers to the sharing of ideas and
trade, and fulfill the requirements information between and through
of their people. different countries.
- Every country of the world today is - Good examples of social media
involved in trade and is dependent globalization could include
on some country one way or internationally popular films, books
another. and TV series.
- The US is the biggest economy in - The Harry Potter and Twilight films
the world and even that is and books have been successful all
depended on other countries for over the world, making the
many of its needs. Hence the characters featured globally.
industries as a whole.
7. Ecological globalization
4. Financial globalization - The effects of globalization in the
- It may be defined as the emergence ecology are still not completely
of worldwide financial markets and identified, though some studies
better access to external financing suggest that the process of
for corporate, national and sub- globalization has many
national borrowers. consequences in our ecology.
- They may be in the form of
international organizations or 8. Globalization and the Politics
independent investors. - Through globalization, political
- The IMF and the World Bank today issues such as the rights of women
give funds to various countries for and children are now currently
developmental projects. discussed, many laws are now
- The financial markets of the world already implemented regarding the
have united in such a way that issue.
finances are easily available
throughout the world. 9. Globalization with technology
- Technology plays a huge part in the
5. Informational globalization life of every individual.
- This aspect of globalization has - Through the advancement of
perhaps had the greatest impact of technology we can now already
the world today. communicate with each other
- Internet, television, telephone, fax, despite the distance that separate
etc. are some of the inventions that us.
may be considered as part of the
 - through our technology today, the - The human consciousness is critical
process of globalization is now on how they impact the growing
taking place much faster. outcomes and makers of
globalization.
10. Geographical - Their daily actions as global
- Globalization is moving towards the interdependence provides large
trend of a borderless world. scale implications to the norms and
- We can now explore different practices of the borderless world.
countries without having any
dangers.
GLOBALIZATION AND EDUCATION
QUALITIES AND CHARACTERISTICS
OF GLOBALIZATION - Education systems can be seen as
the core of the globalization
1. Creation and Multiplication process.
- Involves the creation of the new - Rinne (2000) emphasizes that
and multiplication of existing social educational policy has become an
networks and cultural activities, ever more important part of
thus breaking the traditional norms economic, trade, labor, and social
and practices in the political, policy in western countries.
economic, and cultural realms of - One concrete global development is
most communities. the development of mega-
universities, university network, and
2. Expansion and Stretching virtual universities that can offer
- Globalization is very evident in the competitive training programs for
expansion of stretching of social students recruited all over the
operations and connections, on world.
how financial markets and trading
around the globe like the Global Education and Globalization
- World Trade Organization,
- ASEAN Economic Community, - An education for globalization
- World Economic Forum should therefore nurture the higher
- European Union brought to the cognitive skills require for problem
expansion of local economies finding.
through opening theirs to other - Globalization links individuals and
parts of the world. institutions across the world with
unprecedented interconnection.
3. Consciousness and Awareness - While it may spread certain
- Globalization involves the human freedoms, higher living standards,
consciousness and awareness. and a sense of international
- People, as the primary actors of relatedness
globalization are the frontliners in - it also threatens the world with a
their experiences. "universal" economy and culture
rooted in North American and
 western ideals and interest. THE GLOBALIZATION OF WORLD
Globalization will remain dominant ECONOMICS
paradigm for the foreseeable
future.
- Global education traditionally aims Structures of Globalization
to do: extend students' awareness
of the world in which they live by a • Global Economy
diverse of human thoughts and • Market Integration
actions, and creativity.
- Emphasize on the changes in ECONOMIC GLOBALIZATION
communication and relationship (GLOBAL ECONOMY)
among people throughout the
world. 1. Economic globalization
- Refers to the increasing
GLOBALIZATION OR WESTERNIZATION? interdependence of world
economies as a result of the
1. For Westerners conception on term growing scale of cross-border trade
GLOBALIZATION
GLOBALIZATION OR
- scholars attributed it of commodities and services, flow
as WESTERNIZATION?
part of the growing imperialist of international capital and wide
mechanism of American and Western and rapid spread of technologies.
GLOBALIZATION OR
powers
- WESTERNIZATION?
Which they considered as the - It reflects the continuing expansion
building blocks of technological and and mutual integration of market
GLOBALIZATION OR
economic innovations. frontiers, and is an irreversible
WESTERNIZATION? trend for the economic
2. Westernization – development in the whole world at
- In which they strongly linked the the turn of the millennium.
global events to American
imperialism. - The rapid growing significance of
- The idea of Westernization is deeply information in all types of
rooted in the Western world where productive activities and
often associated with Western marketization are the two major
culture and values. driving forces for economic
globalization.
Future Outlook

- Globalization aims to benefit KEYNESIANISM/KEYNESIAN

individual economies around the ECONOMICS
world.
- By making markets more efficient,
Keynesian economics
increasing competition, limiting
- Is an economic theory of total
military conflicts, and spreading
spending in the economy and its
wealth more equally.
effects on output and inflation.
Keynesian economics was
developed by the British economist
 - John Maynard Keynes during the NEOLIBERALISM
1930s in an attempt to understand
the Great Depression. Neoliberalism
- Is a policy model that encompasses
- Keynes advocated for increased both politics and economics and
government expenditures and seeks to transfer the control of
lower taxes to stimulate demand economic factors from the public
and pull the global economy out of sector to the private sector.
the depression.
- Neoliberalism policies enhance the
workings of free market capitalism
- Subsequently, Keynesian economics and attempt to place limits on
was used to refer to the concept government spending, government
that optimal economic performance regulation, and public ownership.
could be achieved—and economic
slumps prevented—by influencing - Neoliberalism is often associated
aggregate demand through active with the leadership
stabilization and economic
intervention policies by the 1. Margaret Thatcher–the
government. prime minister of the U.K.
from 1979 to 1990 and
- Keynesian economics is considered leader of the Conservative
a "demand-side" theory that Party from 1975 to 1990
focuses on changes in the economy
over the short run. 2. Ronald Reagan, the 40th
president of the U.S. (from
• Keynesian Economics focuses on using 1981 to 1989). More
active government policy to manage recently, neoliberalism has
aggregate demand in order to address been associated with
or prevent economic recessions. policies of austerity and
attempts to cut government
• Keynes developed his theories in spending on social
response to the Great Depression, and programs.
was highly critical of classical economic
arguments that natural economic forces • The policies of neoliberalism typically
and incentives would be sufficient to support fiscal austerity, deregulation,
help the economy recover. free trade, privatization, and a reduction
in government spending.

• Active fiscal and monetary policy are • Neoliberalism is often associated with
the primary tools recommended by the economic policies of Margaret
Keynesian economists to manage the Thatcher in the United Kingdom and
economy and fight unemployment. Ronald Reagan in the United States.
 • There are many criticisms of 2. International Monetary Fund
neoliberalism, including its tendency to
endanger democracy, workers’ rights, - This is an international lending
and sovereign nations’ right to self- agency/organization based in
determination. Washington that provides short
term credit to its 184 members.

FACILITATORS OF GLOBALIZATION - Plans for IMF were drawn up in at

1944 at the Bretton Woods
1. World Trade Organization (WTO) Conference (New Hampshire) and
2. International Monetary Fund (IMF) began operation in 1947.
3. World Bank (WB)
- It's a specialized agency of the
1. World Trade Organization United Nations but in practice
Japan, UK, USA, Germany France
- WTO came into being January 1995 and Saudi Arabia govern the fund.
as replacement to GATT (in
existence since the formation of
The fund was established:
IMF and World Bank).
fund was established
Its main functions are:
- to encourage international
• administering WTO trade agreements cooperation in the monetary
• providing a forum for trade negotiations field and the removal of
• handling trade disputes foreign exchange restrictions
• monitoring national trade policies
• providing technical assistance and - to stabilize exchange rates
training for developing countries
• cooperation with other international - to facilitate a multilateral
organizations. BENEFITS OF WTO payments system between
• Helps promote peace member countries.
• Handles disputes constructively
• Rules make life easier for all
• Free trade reduces Cost of Living - In formative years it acted as a
• Provides more choice of products and meeting place for industrial
qualities nations to discuss their trade
• Trade raises incomes relationship and financial
• Trade stimulates economic growth dealings with one another.
• The basic principles make life more
efficient - Since 1970s it has shifted to
• Governments are shielded from the economic problems of
lobbying developing (third world
• System encourages good governance countries)
 - IMF worked to maintain provides long term loans to assist
orderly payment arrangements economic development.
between countries and to
promote growth of world - In its early years it was engaged in
economy without inflation. helping to finance the
reconstruction of war damaged
- It supports free trade in goods Europe.
and services.
- Nowadays, its main role is to
- To stabilize economies of its channel flows of capital from the
members, the IMF provides rich countries of Western Europe,
policy advice and short term North America, Japan and the rich
loans when a member oil prodders to the poor and mainly
encounters financial difficulty. agricultural countries of Africa, Asia
and South America.
- To receive loans members
must usually change national - It finances projects such as
economic policies like infrastructural development (road,
devaluing its currency so that communication, power "stations,
exports can be competitive in water supplies, irrigation and rural
world markets, cut social development, as well as health care,
welfare programs, reduce education etc.
budget deficit to reduce
inflation. - Its financial assistance takes the
form of long term loans. In addition
- This usually result in short to financial help it can offer a
term political unrest, economic variety of financial and technical
hardship within the country. services to developing countries. Its
On the other hand, the long engineers, surveyors, accountants,
term benefit includes economists and other experts help
stabilization of the economy, countries plan and implement their
less inflation helps to reassure development projects.
private banks and investors
about the safety of investing in
the country. Impact of Foreign AID

2. World Bank • Funds tied to SAP (Structural

- Also known as the International Adjustment Policies) where the
Bank for Reconstruction and Caribbean countries are forced to limit
Development, it came into being spending on 'non-productive'
following the Bretton Wood investments such as health, education,
Conference in 1944 and began social welfare programmes. This can
operation in 1946. World Bank jeopardize the quality of life of the
citizens.
 • Caribbean countries lose their sense - At the same time burgeoning
of autonomy as lending agencies has industrialization and urbanization
the main say in how the aid is spent e.g. further weakened the feudal
which tenders to accept for the project economy changing both the
political as well as the economic
• Provision of aid creates a cycle of structure of Europe.
dependency which becomes difficult to
Some of the factors contributing to
break out of.
these changes were:

• Aid is sometimes turned on and off 1. Protestant Reformation

depending on the political and strategic 2. Rise of Strong Nation States
agenda of the donor. This makes funds 3. The Enlightenment
unpredictable - interruption in
development programmes. 1. The Protestant Reformation

BIRTH OF THE GLOBAL ECONOMY note that industrialization began in

(MARKET INTEGRATION) northern Europe. Protestant work
ethic - fostered hard work, frugality,
sobriety and efficiency, virtues which
1. Birth of Capitalism facilitated capitalism.
- One can find examples of sustained
economic growth throughout 2. Rise of Strong Nation States
history, for example in the woolen
industry in 13th century Flanders, - 16th through 19th century. The rise
and in 14th century Florence. of strong nation-states created
conditions conducive to capitalism.
- Starting with the 11th century long
distance trading flourished - It provided domestic markets free
connecting thriving pockets of of barriers to trade, a uniform
growth, between Venice and the monetary system, contract and
Netherlands. However, by and property laws, police and militia
large, living standards remained at protection, as well as, basic
subsistence levels for the majority transportation and communications
of the world's population until the infrastructure. Initially absolute
middle of the 18th century. monarchs wrested power from
feudal lords and town authorities
Over the centuries as commerce grew, albeit and consolidated territory into
slowly, the power of the vassals of the feudal nation states.
system declined being replaced by merchants
and incipient capitalists. Innovations in sailing
led to long distance trading. The opportunities - Eventually, as the power of
and challenges of sending a vessel abroad for capitalists and the middle class or
years at a time brought about the institutions bourgeoisie rose, the monarchs
which facilitated the growth of the modern ceded power to a more
capitalist system. representative structure.
 Capitalism and Colonization
4. The Enlightenment
- During the 17th and 18th century - Capitalism as an economic system
there were great scientific and spread beyond Europe, mainly to
social advances. North America and Australia.

- Discoveries of oxygen, electricity, - One may ask why capitalism and

calculus, among many other new technologies did not spread
findings led to practical applications elsewhere.
in agriculture and industry.

- This period laid the scientific - One possible answer is that the
foundation for the industrial indigenous peoples of North
revolution. America and Australia were not
particularly numerous as compared
to other regions.
- Social thought as expounded by
David Hume, Adam Smith and
Thomas Jefferson stressed the - As the descendants of the English
rights and responsibilities of the and French colonists grew in
individual. number and with new immigrant
waves, primarily from Europe, the
European population overwhelmed
- This weakened the power of the indigenous peoples who were
institutions such as the church and (at best) pushed aside.
state, which had patronizing
relationships with the masses.
- The European immigrants using
their skills and by acquiring
- This liberal philosophy emphasizing technologies from their home
freedom from arbitrary authority countries embarked on creating
further led to the rise of the middle new industries.
class and the overthrow of the
landed gentry.
- However, in Africa, the Indian
Subcontinent, East Asia, and in Latin
- It eventually led to political America the indigenous peoples
revolutions in not only in the United were relatively numerous.
States, but also in England, Holland,
and France.
- Being greatly outnumbered, the
- The profits earned by capitalist colonist created an administrative
from international trade, and the structure, which encouraged or
flow of gold and silver from the more likely coerced, the indigenous
Americas, financed the peoples to produce primary
accumulation of capital that products for export to the home
furthered reinforced countries.
industrialization and capitalism.
- These primary products were then - The post WWI era was marked by a
transformed in the production resurgence of economic prosperity,
process into manufactured goods, particularly in the United States.
some of which were re-exported However, Germany saddled with
back to the colonies. Under these reparations, payments to Allied
conditions there was little incentive powers (France in particular) for
to create new industries in these damages caused during the war
colonies. faced devastating hardship.

Twentieth Century
- The Germany currency suffered a
- At the beginning of the 20th hyperinflation making it near
century the global economy was in worthless. At the end of the 1920s
turmoil. Financial crises were Germany began to get back up on
common. its economic feet.

- Policies to protect domestic - The US stock market crashed in

industries such as tariff measures 1929. Inappropriate policy
stifled trade. Political alliances in responses led to the Great
Europe divided the continent into Depression.
two camps.

- Its repercussions spread to Europe

- The assassination of Archduke as competitive policies of trade
Ferdinand in the Balkans sparked protection and currency
the century’s first World War. The devaluations were implemented in
advent of technology in warfare had vain attempts to protect domestic
devastating effects. economies.

- The machine gun, armored tanks, - The US Congress passed the Tariff
and the use of poisonous gas Act of 1930, better known as the
brought warfare to a new level of Smoot Hawley Tariff Act.
barbarity, shocking the world. In its
aftermath, President Woodrow
Wilson advocated a new-world - These measures raised tariffs on
order centered on the League of imports to an average of 50%. This
Nations. "beggar thy neighbor" policy led to
a vicious cycle of reciprocal tariffs
and other restraints to trade.
- While grand in concept the political
realities of the day made it
ineffective. The cost of WWI to - International trade came to a halt in
Britain resulted in the the mid-1930s deepening and
abandonment of the gold standard, lengthening the Great Depression
a system of exchange rates backed both here at home and abroad.
by gold.
 FINANCIAL CRISIS IMPORT SUBSTITUTION

- A financial crisis may have multiple 1. New nations adopted government

causes. Generally, a crisis can occur controlled economies that relied
if institutions or assets are on import substitution
overvalued, and can be industrialization strategies to
exacerbated by irrational or herd- achieve industrialization.
like investor behavior.
- For example, a rapid string of 2. Import substitution meant that
selloffs can result in lower asset these countries fostered the
prices, prompting individuals to growth of industries that
dump assets or make huge savings produced goods that were being
withdrawals when a bank failure is imported, usually from the former
rumored. colonialist.

• Banking panics were at the genesis of a 3. The basic premise for this policy
number of financial crises of the 19th, was that their former colonial
20th, and 21st centuries, many of which economic relationship was one in
led to recessions or depressions. which the colonialist exploit its
• Stock market crashes, credit crunches, colony by importing its raw
the bursting of financial bubbles, materials and then exporting high-
sovereign defaults, and currency crises valued manufactured goods back
are all examples of financial crises. to it.
• A financial crisis may be limited to a
single country or one segment of 4. This cycle of exploitation could be
financial services, but is more likely to broken if the colony used its raw
spread regionally or globally. materials itself to manufacture its
own goods. While the notion
Contributing factors to a financial might appear to be compelling, it
crisis include systemic failures, is a movement away from efficient
unanticipated or uncontrollable resource allocation.
human behavior, incentives to take
too much risk, regulatory absence or 5. Newly formed manufacturing
failures, or contagions that amount to industries in the young nations
a virus-like spread of problems from were relatively inefficient and
one institution or country to the next. required fairly high levels of
If left unchecked, a crisis can cause an protection from imports, mainly
economy to go into a recession or from the industrialized countries.
depression. Even when measures are
taken to avert a financial crisis, they 6. Behind protectionist barriers
can still happen, accelerate, or these industries did not have the
deepen. incentive to become efficient.
While import substitution policies
did initially succeed in producing
some economic growth, they were
not sustainable.
7. Many nations in Africa, South Asia
and Latin America saw their
economies stagnate after an initial 5. The surplus earnings, which were
growth spurt. denominated in US dollars, found
their way into the global financial
8. Several Southeast Asian nations, system. In other words, these
after initially implementing import petro-dollars were deposited in
substitution policies, adopted the major banks of the US and
export promotion strategies. Europe.

9. Here they would focus their 6. These banks now flush with new
industrial efforts on producing deposits had to find new
goods that were competitive in borrowers in order to remain
global markets. solvent.

10. They created industries whose 7. Many oil-importing developing

products had high world demand, countries had a great need for
required labor-intensive these resources in order to
production, and had economies of finance the now higher cost of oil.
scale. What was not consumed at
home could be exported. 8. Some oil-exporting developing
countries enacted development
OIL PRICE SHOCKS programs that outspent their oil
earnings. The size of many
1. The oil price shocks of the1970s developing countries debt
forced many Americans for the ballooned.
first time to realize that the US
economy was not independent INTERNATIONAL DEBT CRISIS
from the rest of the world.
1. Two events in the US precipitated
2. The recessions following the oil an international debt crisis. Mr.
crises of 1973 and in 1979 led to Paul Volker, then the Chairman of
both recession and inflation the Federal Reserve System,
simultaneously. instituted a very tight monetary
policy to fight the double-digit
3. The oil price shocks set into inflation in the US.
motion events that are still
present in today’s global 2. Reducing the money supply
economy. resulted in an increase in interest
rates. This increase in interest
rates increased the interest
4. Many oil exporting countries, payments that developing
especially in the Persian Gulf area, countries had to pay in order to
saw their export earnings rise service their huge debt.
faster than they could spend
them.
 the North American Free Trade
3. Secondly, President Ronald Agreement in 1994.
Reagan instituted a supply-side
economic policy plunging the US Globalization aims to benefit
economy into the worst recession individual economies around the
since the Great Depression. world by making markets more
efficient, increasing competition,
4. With the economy in the US in a limiting military conflicts, and
severe downturn the demand for spreading wealth more equally.
developing countries products fell.
Developing countries were now Economists suggest that nowadays,
between a rock and a hard place. cross-border investments are not
being made so much to build capital
5. On the one hand their debt infrastructure as they are to seek
service payments were rising countries with the lowest taxes.
while at the same time their
ability to earn the income to pay Some form of globalization may be
their debt obligations was falling. inevitable over the long-run, but the
historic bumps spurred by economic
6. Mexico, Argentina, Brazil and crises and other consequences suggest
many other developing countries that change is the only reliable
either defaulted on their debt or constant.
underwent IMF restructuring
programs requiring stringent
austerity measures. THE INTERSTATE SYSTEM

7. On group of countries, however,

weathered the storm. Export Interstate System
promoters allowed price
adjustments to shift their - It is the whole system of human
production away from energy interactions. The modern world-
intensive production. Countries system is structured politically as
who followed import-substituting an interstate system – a system of
policies stagnated. competing and allying states.

8. The 1980s is often referred to as - Political Scientists commonly call

the “lost decade” in Latin America. this the international system, and
Using the Asian Tigers of Korea, it is the main focus of the field of
Hong Kong, Taiwan and Singapore International Relations.
as a model, many import
substituting countries changed - The origins of the present-day
their policies. concept of sovereignty can be
traced back to the Treaty of
9. They became more market Westphalia, which set agreements
friendly, opening up their signed in 1648 to end the Thirty
economies to the global economy. Years’ war between the major
One major example is Mexico, continental powers of Europe.
who joined the US and Canada in After a brutal religious war
 between Catholics and Protestants, keep their systems of privilege, the
the Holy Roman Empire, Spain, royal powers created their new
France, Sweden, and the Dutch system that, in effect restored the
republic designed a system that Westphalian System.
would avert wars in the future by
recognizing that the treaty signers
exercise complete control over - The Concert of Europe was the
their domestic affairs and swear alliance of great powers – United
not to meddle in each other’s Kingdom, Austria, Russia and
affairs. Prussia – that sought to restore the
world of monarchical, hereditary,
and religious privileges of the time
- The Westphalian system provided before the French Revolution and
stability for the nations of Europe, the Napoleonic Wars.
until it faced its major challenge by
Napoleon Bonaparte. Bonaparte
believed in spreading principles of - More importantly, it was an alliance
the French Revolution – liberty, that sought to restore the
equality and fraternity – to the rest sovereignty of states. Under this
of Europe and thus challenged the Metternich System (named after
power of kings, nobility and the Austrian diplomat, Klemens
religion in Europe. von Metternich, who was the
system’s main architect), the
Concert’s power and authority
- The Napoleonic Wars lasted from lasted from 1815 to 1914, at the
1803-1815 with Napoleon and his dawn of World War I.
armies marching all over much of
Europe. In every country they
conquered, the French - Despite the challenge of Napoleon
implemented the Napoleonic Code to the Westphalian system and the
that forbade birth privileges, eventual collapse of the Concert of
encouraged freedom or religion, Europe after World War I, present-
and promoted meritocracy in day international system still has
government service. traces of this history.

- This system shocked the - Until now, some states are

monarchies and hereditary elites considered sovereign, and
of Europe and they mustered their Napoleonic attempts to violently
armies to push back against the impose system of government in
French emperor. other countries are frowned upon.

- Anglo and Prussian armies finally - Moreover, like the Concert system,
defeated Napoleon in the Battle of great powers still hold significant
Waterloo in 1815, ending the influence over world politics. For
latter’s mission to spread his example, the most powerful
liberal code across Europe. To keep grouping in the UN, the Security
and prevent another war and to Council, has a core of five
 permanent members, all having whose powers can vary from absolute
veto powers over the council’s to none at all.
decision making process.
4. Dictatorship
World politics today has four key A form of government where the
attributes. power rests entirely on one person or
a group of persons. This rule could be
• First, there are countries or states that acquired by inheritance of force & is
are independent and govern usually oppressive.
themselves.
• Second, these countries interact with Globalism vs Internationalism
each other through diplomacy.
• Third, there are international 1. Globalism means increasing
organizations, like the United Nations integration between different
(UN), that facilitate these interactions. economics of the world. The
• Fourth, beyond simply facilitating economic gap between different
meetings between states, international nations is reduced.
organization also take on lives of their
own. 2. This is achieved by removing all
restrictions between nations on
The UN for example apart from being the movement of: Goods,
a meeting ground for presidents and Services, Capital, Technology.
other heads of the state, also has task-
specific agencies like World Health 3. In other words, globalization
Organization(WHO) and the results in international division of
International Labor Organization(ILO). Labor. The present day world is
experiencing the Information
Types of Political System Technology Revolution.

1. Democracy 4. Every nation must keep its doors

Democracy means ‘rule of the people’ and windows open to the outside
The term today refers to a political world, i.e. it must take part in the
system in which the people or their international division of Labor.
elected representatives govern
themselves.
5. On the other hand,
2. Republic internationalism is only in the
A government whose authority is same line as Globalization, but to
based on citizen’s votes, which are limited field.
represented by elected or nominated
officials chosen in free elections. 6. Though internationalism is also a
process among countries but it is
3. Monarchy not as wide as Globalism for ex:
A government where supreme WTO agreements have effects of
authority is vested in a single & usually Globalization as it involves all
hereditary figure, such as a king, & economic players, whereas in
SAARC, the agreement will effect
 internationalism as limited to Kant’s concepts of “world citizenship”
some countries. and “universal hospitality” can
provoke us to think critically about
7. Likewise, NAFTA, G-8, APEC and peace, migration, and international
other regional trade organization relations.
and agreements falls under
Globalization. 2. Jeremy Bentham

Notable forms of Internationalism: - Bentham fathered the term

international law which was
1. Liberal Internationalism eventually to replace the older
- is a set of related concepts on how phrase law of nations.
to best organize international
relations between states and non- - Bentham explains in his text why
state actors that emphasizes a he preferred to invent a new word.
belief in; In discussing how jurisprudence
- international progress, may be classified, he suggests that
interdependence, it can be divided in terms of "the
- cooperation, political quality of the persons
- diplomacy, whose conduct is the subject of the
- multilateralism law" and he argues that "these (the
- support for international political persons) may ... be considered
structures and organizations. either as members of the same
state, or as members of different
Personages: states; in the first case, the law may
be referred to the head of internal,
1. Immanuel Kant in the second case, to that of
international jurisprudence". The
- In Perpetual Peace: A Philosophical older phrase law of nations,
Sketch (1795), he imagined a according to Bentham, refers to a
future secured by an international certain discursive space only
federation of republics. through the force of custom, or
convention.
- His ideas about Enlightenment
influence debates about education Socialist Internationalism is a
and free speech, and his concept of worldwide organization of political
international federalism can be parties which seek to establish
seen in the United Nations. democratic socialism. It consists
mostly of democratic socialist, social-
- Many scholars and activists still democratic and labor political parties
appeal to Kant to understand the and other organizations.
origins of some of our faultiest and
deeply entrenched ideas about
race.

- Finally, in a time of tightening

borders,
 Personage:

3. Karl Marx

- The need for internationalism flows

from the position of the working
class internationally.

- This in its turn has been developed

by capitalism through the
organization of world economy as
one single, indivisible whole.

- The interests of the working class

of one country are the same as the
interests of the workers of the
other countries.

- Because of the division of labor

established by capitalism, the basis
is laid for a new international
organization of labor and planned
production on a world scale.

- Thus, the struggle of the working

class in all countries forms the basis
for the movement towards
socialism.

- In the aphorisms of Marx “the

workers have no country” and
therefore “workers of the world
unite.”