GLOBALIZATION

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GLOBALIZATION DEVELOPING NATIONS
Economic globalization the formation of a
single worldwide economy could further
disadvantage the developing nations.

• Do exogenous growth models explain the poor
  growth rates of LDCs?
• Does international communitys (World Bank, IMF)
  development paradigm focus too much on GDP
  growth, not enough on well-being sustainable
  development?

• How best to assess genuine progress?
• How do domestic and international politics
  impeded economic reforms?
• What socio-cultural legal institutions hinder
  / help sustainable development?

Can anti-globalization protests (WTO, McDonalds)
compel creation of a New World Order? Or, will
MNC-dominated hegemony prevail?
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The Globalization Trifecta
Globalization refers to processes that increase
connectivity among societies their people,
institutions, organizations. Globalization
intertwines cultural, political, and economic
interdependencies that challenge traditional
arrangements.
The growing extensity, intensity, and velocity
of global interactions can be associated with
their deepening impact such that the effects of
distant events can be highly significant
elsewhere and specific local developments can
come to have considerable global consequences.
(Held et al. 1999)

• Communication transportation technologies
  compress and decouple time, geographic spaces,
  social distances (global village)
• National regional boundaries grow increasingly
  permeable
• Cultural / identity groups become detached from
  their traditional territorial bases (the
  diffusion of supraterritoriality)

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Cultural Globalization
Globalization institutionalizes the diffusion of
a secularized world culture, Western in origin,
that trumps all alternatives.
Globalization processes spread a legitimated
world cultural order of universally accepted,
rational, democratic ideas reshaping national
states, organizations, and individual
identities.
(John Meyer et al. 1997)

• World-cultural values norms creates isomorphism
  among
• National constitutions everywhere adopt common
  institutions citizenship rights, public
  education, health, pensions
• International organizations, especially the UN
  system
• Associations of scientific professional
  experts
• Voluntary associations social movement
  organizations

4
Political Globalization
The 1648 Treaty of Westphalia, ending the Thirty
Years War, destroyed the Holy Roman Empire and
loyalties based on religion. It created todays
system of sovereign nation-states.

• No governmental authority exists over nations
• National borders are absolute barriers against
  interference intervention by outsiders
• National security requires international
  balance-of-power (ultimately, by credible threats
  of war)

Is globalization slowly eroding nation-state
sovereignty? Are new supranational orgs (EU, UN,
NATO, World Court) constructing a multilateral,
intergovernmental system? Will international
orgs acquire enough legitimate authority to gain
control over the means of violence among nations?
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Economic Globalization
After World War II, trade negotiation rounds
under GATT drove economic globalization,
resulting in treaties to remove tariff barriers
to "free trade as now interpreted by World
Trade Org.

• Two definitions of economic globalization
• World Bank Freedom and ability of individuals
  and firms to initiate voluntary economic
  transactions with residents of other countries.
• IMF The growing economic interdependence of
  countries worldwide through increasing volume and
  variety of cross-border transactions in goods and
  services, freer international capital flows, and
  more rapid and widespread diffusion of
  technology.

Four key dimensions of economic globalization
involve the flows across national boundaries of
goods services financial capital (FDI) labor
(human migration) technology knowledge. What
explains the differential economic growth of
nations? Does ?GDP indicate well-being?
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Limits of Economic Growth Models
Developmental economics models try to explain
long-run growth
In the neoclassical Harrod-Dobar model, Growth
Rate s/ ß (where s saving rate ß
capital-output ratio). If unchanging technology
fixes the short-run capital-output ratio, only
saving rate will determine growth whatever a
nation can save will be invested.
Robert Solows exogenous growth model added
technological change to savings, to predict that
poor nations income levels would catch-up /
converge with the rich nations. But, the
evidence revealed divergence a positive slope
for the regression of 1960-90 average growth
rates against 1960 GDP per capita. The most
developed nations grew much faster than the LDCs!
(Japans rapid growth was a notable exception.)
Endogenous growth theories of 1980s proposed that
virtuous cycles could generate new technologies
and human capital Incentives to exploit
innovations would improve firm and worker
productivity. Then, innovative knowledge spills
over to other economic actors, who increase
their capacities to innovate. Hence,
governmental investing in education and
subsidizing RD could boost long-run growth
rates, even though aggregate saving rates might
be unchanged.
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Africas Decades of Negative Growth
As measured by changes in Gross Domestic
Products, many LDCs experienced stagnant,
lagging, or negative growth rates.
SOURCE UNCTAD 2004 Development and Globalization
In 2004, African nations grew 4.5, with 5.0
predicted for 2005, sufficient to increase real
per capita incomes.
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Africas Debt Burden
Two oil shocks structural adjustment programs
left African nations with massive external debt
burdens a barrier to savings, investment,
growth.
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MNC Water Barons at the Village Pump
MNCs commodify, commercialize, exploit all
sources of profit. For example, since 1990, six
water utility firms won contracts to privatize
public waterworks affecting 300M people in 56
countries.
These MNCs Bechtel (U.S.), Suez, Vivendi
Environnement, Saur (France) United Utilities
(UK), Thames Water (Germany) claim to be more
efficient in providing cheaper, clean water than
often-corrupt public utility companies.
Working with the World Bank, water barons lobby
governments, trade standards INGOs to change
municipal and trade laws. By 2020 these firms
may monopolize 67 of current public water.
Critics say they are predatory capitalists that
ultimately plan to control the worlds water
resources and drive up prices even as the gap
between rich and poor widens. The fear is that
accountability will vanish, and the world will
lose control of its source of life.
(Center for Public Integrity
www.icij.org)
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WTO Ensuring Free Trade?
The WTO, created in 1995, is a primary target of
activists in the anti-corporate globalization
movement.
The WTO is the only global international
organization dealing with the rules of trade
between nations. At its heart are the WTO
agreements, negotiated and signed by the bulk of
the worlds trading nations and ratified in their
parliaments. The goal is to help producers of
goods and services, exporters, and importers
conduct their business.
ltwww.wto.orggt
The WTO multilateral trading system is negotiated
and signed by governments. These contracts
guarantee member nations trade rights bind
governments to keep trade policies within agreed
limits. Their purpose is to ensure that trade
flows as predictably and freely as possible, by
helping producers, exporters, and importers of
goods and services conduct their business
smoothly.
Core WTO principles are Trade without
Discrimination Promoting Fair Competition
among nations.
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WTO A New Evil Empire?
Anti-globalists criticize the WTO for its
allegedly undemocratic decision-making and lack
of openness in reaching agreements. They claim
the 25 richest developed nations manipulate trade
deals to the disadvantage of 120 poor developing
countries.
LDCs often lack staff and expertise to win
favorable tariff reductions. Textile quotas
block clothing imports from low-wage countries.
US, EU, and Japanese subsidy rates are 20,000
per farmer.

• What should be a level playing field in
  free-trade talks?
• Should all nations have equal access and status
  in trade disputes? How can poor nations afford
  negotiators experts?
• Should negotiations produce actually equal
  outcomes and implementation? Would genuine trade
  fairness require a massive transfer of wealth
  from the richest to poorest nations?

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A Genuine Progress Indicator
Some analysts denigrate GDP as economic-growth
indicator it fails to measure national
well-being sustainable development.
(1) GDP omits nonmonetary activities serving
basic life needs homecare, volunteering, leisure
time, (2) ignores environmental degradation /
depletion costs (3) adds expenses for
diminished well-being (medical security costs),
disaster clean-ups (hurricanes),
(See slide note on GPI measurement)
Genuine Progress Indicator (GPI), based
distributive justice and sustainable development
ideas, encompasses uneconomic / harmful growth.
The GPI measures whether changes in amount of
goods services really improve or degrade
national welfare. GPI growth 0, when increased
costs of crime, family breakdown, pollution,
offset growing GDP of goods services.
What public policy implications might flow from
GPI as a measure national development? Identify
necessary changes in taxes, fees, fines to
redirect resources away from costly to beneficial
activities?
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Sustainable Development Efforts
The Bruntland Commission defined sustainable
development as meeting the needs of the present
generation without compromising the ability of
future generations to meet their needs (Our
Common Future 1987).
The intensified and unsustainable demand for
land, water marine and coastal resources
resulting from the expansion of agriculture and
uncontrolled urbanization lead to increased
degradation of natural ecosystems and erode the
life supporting systems that uphold human
civilization. Caring for natural resources and
promoting their sustainable use is an essential
response of the world community to ensure its own
survival and well being. (UN Sustainable
Management Use of Natural Resources)
Some UN and INGO initiatives promote sustainable
development in ecology using forests for
wildlife tourism, not poaching and burning trees
for charcoal. Others seek economic development
of African and Asian nations, typically by
sponsoring small-scale demonstration projects in
health, education, agriculture, finance,
technical assistance.
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Microcredit in Bangladesh
A classic case of sustainable development is the
Grameen Bank, created in 1976 by Prof. Muhammad
Yunus, that makes tiny loans to poor Bangladeshi
women for starting small crafts businesses.
Five borrowers from a village form group, but
only two are initially eligible to receive
100-300 loans. After both borrowers repay
principal plus interest within 50 weeks, then the
other group members become eligible for loans.
Peers pressure members to repay all loans thus,
collective responsibility serves effectively as
collateral and social control
Despite interest rates of 20, more than 98 of
loans are repaid. By 2003, Grameen Banks 1,195
branches served 43,681 villages, or 60 of rural
Bangladesh. Grameen has granted 4.18B in small
loans to 3.12 million Bangladeshis. Grameen
claims members incomes are 50 higher than
nonmembers, while only 20 live below poverty
line vs. 56 of nonmembers. A 1998 World Bank
study found that extreme poverty (less than 1
per day) among Grameen Banks borrowers fell by
70 percent within five years.
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Millennium Development Goals
UN Millennium Development Goals were adopted in
2002 by a consensus of experts from the UN
Development Programme, OECD, IMF, and World Bank.
The goals for 2015 1. Cut extreme poverty
hunger in half 2. Achieve universal primary
education 3. Promote gender equality empower
women 4. Reduce under-five mortality by 2/3rds 5.
Reduce maternal mortality by 3/4ths 6. Reverse
spread of HIV/AIDS, malaria, TB 7. Ensure
environmental sustainability 8. Global
development partnership - aid, debt
Are these goals Utopian? Cost estimates for
meeting most MDGs by 2015 would require
additional 50B/year in official development
assistance doubling current aid levels. No G-7
nation has reached agreed target of 0.7 of
developed countries GNP (only Scandinavia
Netherlands have).
Donor resources can play an important role in
strengthening the ability to use resources
effectively. This is a focus of UNDP work in many
countries in partnership with governments,
donors, and civil society.
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UNs Civil Society Concept
United Nations Development Programmes Civil
Society Division works with a differentiated
conceptual framework. The new task of UNDP is
to identify and work with all parts of the
private sphere that can contribute effectively to
social human development.

• Dynamic fuzzy boundaries of CSOs reached at the
  interfaces with
• Regime in power
• Public institutions gov bureaucracy
• Governance system (the way politics and
  government interact)
• Market and its actors
• Affinities obligations of (extended) families

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Fuzzy Boundaries
Civil society develops at the interstices of
several subsystems
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Where Should Econ Soc Go From Here?
Summing up the complex field of economic
sociology isnt possible. Weve much to learn,
also much to contribute to economic knowledge.
What direction should theory construction take?
Should economic sociology seek to maximize its
differentiation from mainstream neoclassical
economics? Or should it build on economics
utility-maximizing insights, while extending its
explanatory power by identifying important
origins of social action?
How can economic sociology become more
legitimated and institutionalized within
sociology, and the social sciences in general?
What can you do in your career to popularize and
promote this specialty to your colleagues and
students? How might you, as economic
sociologists, influence public policy makers to
make wise decisions for global well-being?