Contents

1. Preface

2. introduction to globalization

3. History

4. Globalization versus regionalization Page

5. Globalization of the world economy and potential

benefits and costs:

I. Globalization of the World Economy: An

Interpretation
II. Impacts of Globalization on National Economies
III. The Benefits of Globalization Stemming from
Competition
IV. The Costs of Globalization and Potential
Conflicts
V. The Role of Global Cooperation in Dealing with
Global threats and in Creating a New Post
Cold War System

6. Social impacts of globalization

7. The Important Reform Measures (Step Towards

Globalization)

8. Impact on India

9. Globalization and poverty

10. Effects of globalization

I. cultural effects
II. negative effects

11. Bibliography

1
 ACKNOWLEDGEMENT

We are deeply grateful to my respected guide

_________________________, Department of Applied Sciences for his
constant encouragements, tireless and invaluable guidance during
the course of the present work. Without his constant motivation,
meticulous scrutiny and support it would not have had been
possible to bring out the thesis in the present form.

Last but not the least I would like to thank all, who directly
or indirectly contributed in bringing this work to its present form.

2
Preface

Globalization the process of continuing integration of the countries in the

world is strongly underway in all parts of the globe. Supported by
accelerating pace of technological change, by price and trade liberalization,
and by growing importance of supranational rules, globalization has exposed
national economies to much more intense competition than ever before. In
countries in transition, the process of their integration into global economy has
been characterized by at least two region specific features. First, this is the
only region in the world that was practically de-linked from other parts of
the world before the late 1980s. Second, the countries of the region have
been faced with a highly challenging process of transition from centrally-
planned socialist-type economy into a full-fledged market economy based on
private ownership.

The combination of transition and globalization processes affects overall

development of transition economies in most fundamental ways. Rapid
advancement
in the process of transition accompanied by full participation in the global
economy
enables countries in a region and their economic agents to seize the new
opportunities and reap benefits of globalization. Without basic developmental
capabilities and the appropriate policy framework, however, economic actors
in countries in transition will find themselves unable both, to advance
efficiently the process of transition and to compete successfully in the global
environment.

3
What is Globalization?

There are nearly as many definitions of globalization as authors who write on the
subject. A classification of at least five broad sets of definitions:

Globalization as internationalization. The “global” in globalization is viewed “as

simply another adjective to describe cross-border relations between countries.” It
describes the growth in international exchange and interdependence.

Globalization as liberalization. Removing government imposed restrictions on

movements between countries.

Globalization as universalization. Process of spreading ideas and experiences to

people at all corners of the earth so that aspirations and experiences around the
world become harmonized.

Globalization as westernization or modernization. The social structures of

modernity (capitalism, industrialism, etc.) are spread the world over, destroying
cultures and local self-determination in the process.

Globalization as deterritorialization. Process of the “reconfiguration of

geography, so that social space is no longer wholly mapped in terms of territorial
places, territorial distances and territorial borders.” Although the debates on the
definition and importance of globalization have been vigorous over time, we believe
that the truly relevant policy questions today are about who benefits and who does
not; how the benefits and the costs of these processes can be shared fairly; how the
opportunities can be maximized by all; and how the risks can be minimized. In
addressing these questions, one can understand globalization to be a complex set of
dynamics offering many opportunities to better the human condition, but also
involving significant potential threats. Contemporary globalization manifests itself
in various ways, three of which are of particular relevance to policy-makers. They
also comprise significant environmental opportunities and
risks.

1.

4
1. Globalization of the economy. The world economy globalizes as national
economies integrate into the international economy through trade; foreign direct
investment; short-term capital flows; international movement of workers and people
in general; and flows of technology. This has created new opportunities for many;
but not for all. It has also placed pressures on the global environment and on natural
resources, straining the capacity of the environment to sustain itself and exposing
human dependence on our environment.6 A globalized economy can also produce
globalized externalities and enhance global inequities. Local environmental and
economic decisions can contribute to global solutions and prosperity, but the
environmental costs, as well as the economic ramifications of our actions, can be
externalized to places and people who are so far away as to seem invisible.

2. Globalization of knowledge. As economies open up, more people become

involved in the processes of knowledge integration and the deepening of non-
market connections, including flows of information, culture, ideology and
technology. New technologies can solve old problems, but they can also create new
ones. Technologies of environmental care can move across boundaries quicker, but
so can technologies of environmental extraction. Information flows can connect
workers and citizens across boundaries and oceans (e.g., the rise of global social
movements as well as of outsourcing), but they can also threaten social and
economic networks
at the local level. Environmentalism as a norm has become truly global, but so has
mass consumerism.

3. Globalization of governance. Globalization places great stress on existing

patterns of global governance with the shrinking of both time and space; the
expanding role of non-state actors; and the increasingly complex inter-state
interactions. The global nature of the environment demands global environmental
governance, and indeed a worldwide infrastructure of international agreements and
institutions has emerged and continues to grow. But many of today’s global
environmental problems have outgrown the governance systems designed to solve
them. Many of these institutions, however, struggle as they have to respond to an
ever-increasing set of global challenges while remaining constrained by institutional
design principles inherited from an earlier, more state-centric world.

Globalization is a powerful real aspect of the new world system, and it represents
one of the most influential forces in determining the future course of the planet. It

5
has many dimensions: economic, political, social, cultural, environmental, security,
and others. The focus here will be on the concept of "globalization" as applied to
the world economy. This concept is one that has different interpretations to different
people. Partly as a result of these different interpretations, there are very different
reactions to "globalization," with some seeing it as a serious danger to the world
economic system while others see it as advancing the world economy

History

The historical origins of globalization are the subject of on-going debate. Though
some scholars situate the origins of globalization in the modern era, others regard it
as a phenomenon with a long history.
Perhaps the most extreme proponent of a deep historical origin for globalization
was Andre Gunder Frank an economist associated with dependency theory. Frank
argued that a form of globalization has been in existence since the rise of trade links
between Sumer and the Indus Valley Civilization in the third millenium B.C. Critics
of this idea point out that it rests upon an overly-broad definition of globalization.
An early form of globalized economics and culture existed during the Hellenistic
Age, when commercialized urban centers were focused around the axis of Greek
culture over a wide range that stretched from India to Spain, with such cities as
Alexandria, Athens, and Antioch at its center. Trade was widespread during that
period, and it is the first time the idea of a Cosmopolitan culture (from Greek
"Cosmopolis", meaning "world city") emerged.
Others have perceived an early form of globalization in the trade links between the
Roman Empire, the Parthian Empire, and the Han Dynasty. The increasing
articulation of commercial links between these powers inspired the development of
the Silk Road, which started in western China, reached the boundaries of the
Parthian empire, and continued onwards towards Rome.
The Islamic Golden Age was also an important early stage of globalization, when
Jewish and Muslim traders and explorers established a sustained economy across the
Old World resulting in a globalization of crops, trade, knowledge and technology.
Globally significant crops such as sugar and cotton became widely cultivated across
the Muslim world in this period, while the necessity of learning Arabic and
completing the Hajj created a cosmopolitan culture
The advent of the Mongol Empire, though destabilizing to the commercial centers
of the Middle East and China, greatly facilitated travel along the Silk Road. This
permitted travelers and missionaries such as Marco Polo to journey successfully
(and profitably) from one end of Eurasia to the other. The so-called Pax Mongolica
of the thirteenth century had several other notable globalizing effects. It witnessed
the creation of the first international postal service, as well as the rapid transmission
of epidemic diseases such as bubonic plague across the newly-unified regions of

6
Central Asia. These pre-modern phases of global or hemispheric exchange are
sometimes known as archaic globalization. Up to the sixteenth century, however,
even the largest systems of international exchange were limited to the Old World.
The Age of Discovery brought a broad change in globalization, being the first
period in which Eurasia and Africa engaged in substantial cultural, material and
biologic exchange with the New World. It begun in the late 15th century, when the
two Kingdoms of the Iberian Peninsula - Portugal and Castile - sent the first
exploratory voyage. around the Horn of Africa and to the Americas, "discovered" in
1492 by Christopher Columbus. Shortly before the turn of the 16th century,
Portuguese started establishing trading posts (factories) from Africa to Asia and
Brazil, to deal with the trade of local products like gold, spices and timber,
introducing an international business center under a royal monopoly, the House of
India.] Global integration continued with the European colonization of the Americas
initiating the Columbian Exchange the enormous widespread exchange of plants,
animals, foods, human populations (including slaves), communicable diseases, and
culture between the Eastern and Western hemispheres. It was one of the most
significant global events concerning ecology, agriculture, and culture in history.

Colonial empires in 1800

This phase is sometimes known as proto-globalization. It was characterized by the
rise of maritime European empires, in the 16th and 17th centuries, first the
Portuguese and Spanish Empires, and later the Dutch and British Empires. In the
17th century, globalization became also a private business phenomenon when
chartered companies like British East India Company (founded in 1600), often
described as the first multinational corporation, as well as the Dutch East India
Company (founded in 1602) were established. Because of the large investment and
financing needs and high risks involved in international trade, the British East India
Company became the first company in the world to share risk and enable joint
ownership of companies through the issuance of shares of stock: an important driver
for globalization.

Great Britain grew rich in the 19th century as the first global economic superpower,
because of its superior manufacturing technology and improved global
communications such as steamships and railroads.
The 19th century witnessed the advent of globalization approaching its modern
form. Industrialization allowed cheap production of household items using
economies of scale, while rapid population growth created sustained demand for
commodities. Globalization in this period was decisively shaped by nineteenth-
century imperialism. After the Opium Wars and the completion of British conquest
of India, vast populations of these regions became ready consumers of European
exports. It was in this period that areas of sub-Saharan Africa and the Pacific islands
were incorporated into the world system. Meanwhile, the conquest of new parts of
the globe, notably sub-Saharan Africa, by Europeans yielded valuable natural

7
resources such as rubber, diamonds and coal and helped fuel trade and investment
between the European imperial powers, their colonies, and the United States. Said
John Maynard Keynes,

The first phase of "modern globalization" began to break down at the beginning of
the 20th century, with the first World War. The novelist VM Yeates criticised the
financial forces of globalisation as a factor in creating World War I.The final death
knell for this phase came during the gold standard crisis and Great Depression in the
late 1920s and early 1930s.
In the middle decades of the twentieth century globalization was largely driven by
the global expansion of multinational corporations based in the United States and
Europe, and worldwide exchange of new developments in science, technology and
products, with most significant inventions of this time having their origins in the
Western world according to Encyclopedia Britannica. Worldwide export of western
culture went through the new mass media: film, radio and television and recorded
music. Development and growth of international transport and telecommunication
played a decisive role in modern globalization.
In late 2000s, much of the industrialized world entered into a deep recession. Some
analysts say the world is going through a period of deglobalization after years of
increasing economic integration. Up to 45% of global wealth had been destroyed by
the global financial crisis in little less than a year and a half. China has recently
become the world’s largest exporter surpassing Germany

8
Globalization versus regionalization
Globalization is now a forceful process that is unlikely to be reversed. The
future policy alternatives for countries and regions have thus to be analysed in
the
context of the global economy with free trade of goods and services, free
movement of capital, technology and skills and with improvements in
transportation and communication links. The solution to current problems at the
global level depends to a great extent on the decisions taken within a rather
narrow group of industrialized countries, primarily within the G-7 countries. Other
countries and regions, and particularly developing countries and countries in
transition, are de facto second league players and their ability to influence
prevailing world trends is rather limited. The challenge for these countries and
regions therefore is to find their own responses to the overall trend of
globalization.

Are globalization and regionalization processes that substitute or complement each

other? Should countries enter immediately into the global economy or should
they opt for regional integration as a first step that will later on be followed by
more
complete global integration. Responses to these questions are country specific and
depend on geography, history and culture of the particular country as well as on the
level and structural patterns of its economy. In spite of the differences, there
are convincing arguments that call each region of the world to be involved in a
broad and deep debate on the behaviour of the present globalizing world and to
design a strategy on how to cope with the challenges of globalization.

This strategy has two components, a national one and a regional one. A
prerequisite for a region to be effective in this globalization debate is that
each country of the region puts its own house in order. Macroeconomic balance
(effective monetary and fiscal policy and sustainable balance of payments
position) together with effective resource utilization are necessary conditions
for both, broadening the margin of manoeuvre for governments and for
achieving sustainable development. The second element of this strategy at the
national level is that the role of governments should be redefined (Emmerij, p.
12)). The policy objective is not to dismantle or shrink government, but to
strengthen those public policy instruments that promote development and equity
as the market itself does not solve these problems. As will be discussed later
(see chapter 2.3.), left to its own mechanism, market actually worsens social
imbalances and tensions.

9
GLOBALIZATION OF THE WORLD
ECONOMY:POTENTIAL BENEFITS AND
COSTS

1. Globalization of the World Economy: An Interpretation

"Globalization" will be understood here to mean major increases in worldwide
trade and exchanges in an increasingly open, integrated, and borderless international
economy. There has been remarkable growth in such trade and exchanges, not only in
traditional international trade in goods and services, but also in exchanges of currencies;
in capital movements; in technology transfer; in people moving through international
travel and migration; and in international flows of information and ideas. One measure of
the extent of globalization is the volume of international financial transactions, with some
$1.2 trillion flowing through New York currency markets each day, and with the volume
of daily international stock market transactions exceeding this enormous amount.

Globalization has involved greater openness in the international economy, an

integration of markets on a worldwide basis, and a movement toward a borderless world,
all of which have led to increases in global flows. There are several sources of
globalization over the last several decades. One such source has been technological
advances that have significantly lowered the costs of transportation and communication
and dramatically lowered the costs of data processing and information storage and
retrieval. The latter stems from developments over the last few decades in electronics,
especially the microchip revolution. Electronic mail, the Internet, and the World Wide
Web are some of the manifestations of this new technology, where today's $2,000 laptop
computer is many times more powerful than a $10 million mainframe computer of
twenty years ago.

A second source of globalization has been trade liberalization and other forms of
economic liberalization that have led to reduced trade protection and to a more liberal
world trading system. This process started in the last century, but the two World Wars
and the Great Depression interrupted it. It resumed after World War II through the most-
favored-nation approach to trade liberalization, as embodied in the 1946 General
Agreement on Tariffs and Trade (GATT) and now in the World Trade Organization

10
(WTO). As a result, there have been significant reductions in tariffs and other barriers to
trade in goods and services. Other aspects of liberalization have led to increases in the
movement of capital and other factors of production. Some have suggested that
globalization is little more than a return to the world economy of the late nineteenth
century and early twentieth century, when borders were relatively open, when there were
substantial international capital flows and migrations of people, and when the major
nations of Europe depended critically on international trade. This is particularly the view
of some British scholars, looking back to the period of British imperial dominance of the
world economy. While there are some similarities in terms of trade and capital
movements, the period of a century ago did not have some of the major technological
innovations that have led to a globalized world economy today that is qualitatively
different from the international economy of the last century.

A third source of globalization has been changes in institutions, where

organizations have a wider reach, due, in part, to technological changes and to the more
wide-ranging horizons of their managers, who have been empowered by advances in
communications. Thus, corporations that had been mainly focused on a local market have
extended their range in terms of markets and production facilities to a national,
multinational, international, or even global reach. These changes in industrial structure
have led to increases in the power, profits, and productivity of those firms that can
choose among many nations for their sources of materials, production facilities, and
markets, quickly adjusting to changing market conditions. Virtually every major national
or international enterprise has such a structure or relies on subsidiaries or strategic
alliances to obtain a comparable degree of influence and flexibility. As one measure of
their scale, almost a third of total international trade now occurs solely within these
multinational enterprises. With the advent of such global firms, international conflict has,
to some extent, moved from nations to these firms, with the battle no longer among
nations over territory but rather among firms over their share of world markets. These
global firms are seen by some as a threat to the scope and autonomy of the state, but,
while these firms are powerful, the nation state still retains its traditional and dominant
role in the world economic and political system.

Non-government organizations, the NGO's, have also taken a much broader

perspective that, as in the case of the global firms, is often multinational or global. Even
international organizations, such as the United Nations, the International Monetary Fund
and World Bank, and the new World Trade Organization have new global roles. Overall,
multinational enterprises and other such organizations, both private and public, have
become the central agents of the new international globalized economy.

A fourth reason for globalization has been the global agreement on ideology, with
a convergence of beliefs in the value of a market economy and a free trade system. This
process started with the political and economic changes that started in the 1978 reforms
in China and then involved a “falling dominoes” series of revolutions in Eastern and
Central Europe starting in 1989 that ended with the dissolution of the Soviet Union in
December 1991. This process led to a convergence of ideology, with the former division
between market economies in the West and socialist economies in the East having been
replaced by a near-universal reliance on the market system. This convergence of beliefs
in the value of a market economy has led to a world that is no longer divided into market-

11
oriented and socialist economies. A major aspect of this convergence of beliefs is the
attempt of the former socialist states to make a transition to a market economy. These
attempted transitions, especially those in the former Soviet Union and in Eastern and
Central Europe have, however, been only partially successful. The nations involved and
their supporters in international organizations and advanced western market economies
have tended to focus on a three-part agenda for transition, involving: 1) stabilization of
the macroeconomy, 2) liberalization of prices, and 3) privatization of state-owned
enterprise. Unfortunately, this “SLP” agenda fails to appreciate the importance of
building market institutions, of establishing competition, and of providing for an
appropriate role for the government in a modern mixed economy.

A fifth reason for globalization has been cultural developments, with a move to a
globalized and homogenized media, the arts, and popular culture and with the widespread
use of the English language for global communication. Partly as a result of these cultural
developments, some, especially the French and other continental Europeans, see
globalization as an attempt at U.S. cultural as well as economic and political hegemony.
In effect, they see globalization as a new form of imperialism or as a new stage of
capitalism in the age of electronics. Some have even interpreted globalization as a new
form of colonialism, with the U.S. as the new metropole power and with most of the rest
of the world as its colonies, supplying it not only with raw materials, as in earlier forms
of European colonialization, but also with technology; production facilities; labor,
capital, and other inputs to the production process; and markets on a global basis.

Whether one sees globalization as a negative or as a positive development, it must

be understood that it has clearly changed the world system and that it poses both
opportunities and challenges. It is also clear that the above technological, policy,
institutional, ideological, and cultural developments that have led to globalization are still
very active. Thus, barring a radical move in a different direction, these trends toward
greater globalization will likely continue or even accelerate in the future. One important
aspect of these trends will be the growth in international trade in services that has already
increased substantially but promises even greater growth in the future, especially in such
areas as telecommunications and financial services. The result will be continued moves
toward a more open and a more integrated world as it moves closer and closer to a planet
without borders and to a more integrated, open, and interdependent world economy. The
result will be even greater worldwide flows of goods, services, money, capital,
technology, people, information, and ideas.

2. Impacts of Globalization on National Economies

Globalization has had significant impacts on all economies of the world, with
manifold effects. It affects their production of goods and services. It also affects the
employment of labor and other inputs into the production process. In addition, it affects
investment, both in physical capital and in human capital. It affects technology and
results in the diffusion of technology from initiating nations to other nations. It also has
major effects on efficiency, productivity, and competitiveness.

Several impacts of globalization on national economies deserve particular

mention. One is the growth of foreign direct investment (FDI) at a prodigious rate, one

12
that is much greater than the growth in world trade. Such investment plays a key role in
technology transfer, in industrial restructuring, and in the formation of global enterprises,
all of which have major impacts at the national level. A second is the impact of
globalization on technological innovation. New technologies, as already noted, have been
a factor in globalization, but globalization and the spur of competition have also
stimulated further advances in technology and speeded up its diffusion within nations
through foreign direct investment. A third is the growth of trade in services, including
financial, legal, managerial, and information services and intangibles of all types that
have become mainstays of international commerce. In 1970, less than a third of foreign
direct investment related to the export of services, but today that has risen to half and it is
expected to rise even further, making intellectual capital the most important commodity
on world markets. As a result of the growth of services both nationally and
internationally, some have called this "the age of competence," underscoring the
importance of lifelong education and training and the investment in human capital in
every national economy.

3. The Benefits of Globalization Stemming from Competition

It has already been noted that globalization has both positive and negative effects.
This section will focus on its positive effects of globalization, stemming from
competition, while the next will focus on its negative effects, which could lead to
potential conflicts. Finally, the last section will consider the potential for international
cooperation to diminish or to offset the negative effects of globalization.

Globalization has led to growing competition on a global basis. While some fear
competition, there are many beneficial effects of competition that can increase production
or efficiency. Competition and the widening of markets can lead to specialization and the
division of labor, as discussed by Adam Smith and other early economists writing on the
benefits of a market system. Specialization and the division of labor, with their
implications for increases in production, now exist not just in a nation but on a worldwide
basis. Other beneficial effects include the economies of scale and scope that can
potentially lead to reductions in costs and prices and are conducive to continuing
economic growth. Other benefits from globalization include the gains from trade in
which both parties gain in a mutually beneficial exchange, where the "parties" can be
individuals, firms and other organizations, nations, trading blocs, continents, or other
entities. Globalization can also result in increased productivity as a result of the
rationalization of production on a global scale and the spread of technology and
competitive pressures for continual innovation on a worldwide basis.

Overall, these beneficial effects of competition stemming from globalization show

its potential value in improving the position of all parties, with the potential for increased
output and higher real wage levels and living standards. The result is a potential for
greater human well being throughout the world. Of course, there is the distributional or
equity issue of who does, in fact, gain from these potential benefits of globalization.

4. The Costs of Globalization and Potential Conflicts

13
 Globalization involves not only benefits, but also has costs or potential problems
that some critics see as great perils. These costs could lead to conflicts of various types,
whether at the regional, national, or international level. One such cost or problem is that
of who gains from its potential benefits. There can be substantial equity problems in the
distribution of the gains from globalization among individuals, organizations, nations,
and regions. Indeed, many of the gains have been going to the rich nations or individuals,
creating greater inequalities and leading to potential conflicts nationally and
internationally. Some have suggested the possibility of convergence of incomes globally
based on the observation that the poor nations are growing at a faster rate than the rich
nations. The reality, however, is that a small group of nations, the "tiger economies" of
East Asia, have been growing at rapid rates, while the least developed nations of Africa,
Asia, and South and Central America have been growing at a slower rate than the rich
nations. These poor nations are thus becoming increasingly marginalized. The result has
been not a convergence but rather a divergence or polarization of incomes worldwide,
with the rapid-growth economies joining the rich nations, but with the poor nations
slipping even further behind. This growing disparity leads to disaffection and possibly
even international conflicts as nations seek to join the club of rich nations and have-not
nations struggle with the have nations for their share of world output. This issue of
distribution is a major challenge in the process of the globalization of the world
economy.

A second cost or problem stemming from globalization is that of major potential

regional or global instabilities stemming from the interdependencies of economies on a
worldwide basis. There is the possibility that local economic fluctuations or crises in one
nation could have regional or even global impacts. This is not just a theoretical possibility
as seen in the exchange rate and financial crisis in Asia, starting in Thailand in 1998 and
then spreading to other Southeast Asian economies and even to South Korea. These
linkages and potential instabilities imply great potential mutual vulnerability of
interconnected economies. A worldwide recession or depression could lead to calls to
break the interdependencies that have been realized through the globalization process, as
happened in the Great Depression of the 1930's, with competitive devaluations, beggar-
my-neighbor policies, escalating tariffs, other forms of protectionism, etc. The result
could be economic conflict, gravitating to economic warfare and possibly to military
conflict, repeating the history of the interwar period leading to the largest war in human
history.

A third type of problem stemming from globalization is that the control of

national economies is seen by some as possibly shifting from sovereign governments to
other entities, including the most powerful nation states, multinational or global firms,
and international organizations. The result is that some perceive national sovereignty as
being undermined by the forces of globalization. Thus globalization could lead to a belief
among national leaders that they are helplessly in the grip of global forces and an attitude
of disaffection among the electorate. The result could be extreme nationalism and
xenophobia, along with calls for protectionism and the growth of extremist political
movements, ultimately leading to potential conflicts.

14
 It is sometimes alleged that a cost of globalization is unemployment in the high
wage industrialized economies. The low unemployment rates in many high wage nations
and their high rates in many low wage nations disprove this allegation. National policy
and technological trends are much more important determinants of employment than
global factors. A related myth is that globalization is threatening the social welfare
provisions of some states, but other factors are much more important, including domestic
fiscal policy and demographic trends. In both cases, globalization is a convenient
scapegoat for failures of national policy.

It is important also to appreciate that the economic aspects of globalization are but
one component of its effects. There are potential noneconomic impacts of globalization
involving great risks and potential costs, even the possibility for catastrophe. One is that
of security, where the negative effects of globalization could lead to conflicts, as
suggested above, or the very process of globalization leading to integration of markets
could make conflicts escalate beyond a particular region or raise the stakes of conflict, for
example, from conventional weapons to weapons of mass destruction. A second
noneconomic area in which globalization could lead to catastrophic outcomes is that of
political crises, that could escalate from local to large-scale challenges and, if unresolved,
to a catastrophic outcome. A third such area is that of the environment and health, where
the greater interconnectedness stemming from globalization could lead again to
catastrophic outcomes, such as those stemming from global environmental impacts, such
as global warming, and pandemics.

5. The Role of Global Cooperation in Dealing with Global Threats and

in Creating a New Post Cold War System
The last two sections have highlighted both the benefits and the costs stemming
from globalization. Some could see globalization as a very dangerous negative
development by focusing on the costs and the potential for conflict while others could see
it as a positive development offering unprecedented opportunities. Both of these views
contain some elements of truth, but each should be offset by the other in order to gain a
full understanding of the impacts of globalization. There are twin myths here, the
optimistic one that globalization leads to only positive outcomes and the pessimistic one
that globalization leads only to negative outcomes. Any objective treatment or net
assessment, however, would have to recognize both the benefits and costs of
globalization.

What is the net result of globalization, when taking both benefits and costs into
account? The answer depends crucially on the nature of the world system. In a world
beset by conflicts, globalization would probably have a net negative impact. Conversely,
in a cooperative world, globalization would probably have a net positive impact. Thus,
globalization represents a major challenge and at the same time an unprecedented
opportunity in terms of the possibilities for conflict or cooperation. The challenge is to
create a new world system in the aftermath of the cold war and the movements toward
globalization that would enhance its generally beneficial effects and that would minimize
its actual or potential costs. The key to such a world system will be cooperation among

15
the nations of the world and dynamic innovation, including the establishment of new
institutions.

The challenge of the present globalized and post cold war economy is comparable
to the challenge facing the winning nations in World War II. The old world had been
destroyed and a new world had to be created. Not one, but two world systems were
created, one in the West and the other in the East. Both involved the creation of new
institutions that would replace the ones that had been destroyed in the war. Each side had
its own ideology and organization, that in the West being market oriented and that in the
East being socialist. Now, of course, the ideological divide has dissolved, where there is a
convergence of ideology on the value of a market economy.

A small group of Americans helped create a new world system for the West
during the period from 1945 to 1955. One of the major participants was Dean Acheson,
the U.S. Secretary of State during part of this period. His memoirs are aptly named
Present at the Creation, given his role in creating this new world system. Another was
Will Clayton, who developed the blueprints for both the Marshall Plan and the General
Agreement on Tariffs and Trade. These people, together with President Truman, George
Marshall, and others created the institutions that brought the devastated nations of Europe
into the world community. These institutions included GATT, which evolved into the
WTO; the United Nations; the World Bank and the IMF; the Marshall Plan and OEEC
(later to evolve into the OECD); NATO; and others. These institutions and the new world
system that they helped create was most successful in bringing the nations of Europe,
including both former enemies and devastated allies, into this new world system and in
promoting reconstruction and growth.

The present post Cold War period has some similarities to the one after World
War II in that a new world system must be created. Such a system that would have to
take account of the new situation of a world not divided by ideology and becoming
increasingly integrated. The sequence of revolutions that began in Eastern Europe in
1989 led directly or indirectly to the end of the Cold War, the demise of the Warsaw
Pact, the unification of Germany, the dissolution of the Soviet Union, and the attempted
transition of the former socialist states to democracy and a market economy, with only
mixed success. The West for its part has largely failed to establish structures such as
those developed after World War II to bring Russia, other former Soviet states, and
Central and Eastern Europe into the world economic and political system. In some
respects the treatment of Russia in the current period is similar to the treatment of
Germany after World War I rather than its treatment after World War II. NATO
expansion is perhaps the most serious error made in the post Cold War period, in that it
isolated Russia and added little to European security but at enormous expense. The total
cost of NATO expansion will, in fact, be of the same order of magnitude as the current
value of the Marshall Plan, some $90 billion. A new Marshall Plan for the former
socialist nations of Europe could have promoted their transition and growth through
institution building, industrial restructuring, investment and capital inflows, their
integration into the world economy, and their cooperation. These would have contributed
more to European security than the acquisition of advanced fighter jets and other military
equipment by some of these nations that have been admitted into NATO.

16
 Overall, the challenge of globalization will require truly cooperative efforts of the
great nations, especially among the new great powers of the European Union, the United
States, Canada, Japan, Russia, China, India, Brazil, and others. Their joint activity in
establishing new political arrangements and institutions could go a long way to solving
global problems, including the economic and other problems stemming from
globalization. As was true in the earlier period of the creation of a new world, it will be
necessary to revamp existing institutions or to create new ones so as to deal with
economic challenges, such as the problems of distribution and mutual vulnerability
stemming from globalization. These institutions must have global perspectives and
responses and they will require substantial resources and enforcement mechanisms,
including some elements of supranational decision making and authority, along with
appropriate transparency and accountability.

Consider how global cooperation and new international institutions can treat the
several problems identified earlier as costs or problems of globalization. The first of these
problems was that of the distribution of income and specifically the gains from
globalization both within and between nations. A supranational institution based on
global cooperation could address this problem. It would, in effect, tax the nations gaining
from globalization and use the proceeds to provide financial and technical assistance to
those losing from globalization. This is already being done in a somewhat haphazard way
through the World Bank and, in particular, its soft lending arm, the International
Development Association (IDA) that provides subsidized loans to poor nations on more
favorable terms than the World Bank could give. It should be done, however, on a more
systematic basis, which would require either a new international institution or an
expansion and change in the nature of the World Bank. The rich nations should be
expected to support the establishment of such an institution as an investment in global
stability, if they recognize the dangers of serious disparities in the worldwide distribution
of income.

The second of the problems identified earlier as stemming from globalization was
the fragility of the international economic system, leading to mutual vulnerability. Again,
international cooperation and the development of new institutions or the expansion of
existing institutions could address this problem. The International Monetary Fund could
be instrumental in dealing with this problem. The IMF has played a key role in providing
support to nations that have experienced instabilities, as in its support for Mexico during
the peso crisis and its agreement to support South Korea during the East Asia financial
crisis. A more credible insurance against these risks would require a substantial
augmentation of the resources of the IMF, the assets of which have not grown at the same
rate as international financial exchanges. International cooperation could also lead to the
implementation of the Tobin tax, a small tax on foreign exchange transactions that could
play a valuable role in limiting destabilizing currency speculation and, at the same time,
provide funding for international organizations.

The third of the problems identified earlier as stemming from globalization was
that of the perceived loss of sovereignty of national governments and political leaders.
This development could lead to fear of the loss of ability of nations to determine their
economic policies, political disaffection, and the rise of extremist politicians and political
movements. The process of globalization, however, need not lead to a loss of

17
sovereignty. Once again, international cooperation can play a role in ensuring the
sovereignty of national governments and the proper role for political leaders, drawing a
firm line between what is in the province of these governments and their leaders on the
one side and what is in the province of international organizations and multinational or
global enterprise on the other. Participation in the establishment of the needed institutions
to deal with these and other problems stemming from globalization will, by itself, help
political leaders to regain a sense of control over their futures and positions in the global
community. For example, the regulatory regimes of nations and even international
organizations have become more porous and more easily overcome through advances in
technology. Examples include the lack of regulation of the global integrated capital
market, of trade in information services that is widely expected to grow enormously, and
of labor and environmental safeguards. Cooperation among nations and international
organizations could offset these developments by themselves taking advantage of recent
technological advances and using them to reassert control through cooperative activities.

Overall, there are several possible vehicles for cooperation as a way of responding
to the challenges of globalization. One is the strengthening of existing international
institutions. Another is the establishment of new institutions, as in the case of the World
Trade Organization, which has a binding dispute settlement mechanism of a
supranational character. A third is the establishment of larger entities, such as the
European Union, or loose combinations of nations to treat certain economic issues, such
as the G-8 or the Asian Pacific Economic Cooperation (APEC).

Global cooperation through formal or informal institutions provides an

increasingly important mechanism to ensure the proper treatment of global problems,
including those stemming from globalization. Through such global cooperation it should
be possible to ensure equity and stability in a globalized world, leading to economic
growth for all, the transition to a market economic for former socialist states, and
economic development for the poorer nations. Such cooperation is also the way to treat
the noneconomic problems of globalization, including those of environmental and health
protection on a world-wide basis, freedom from political crises or instability, and global
peace and security for the planet.

18
SOCIAL IMPACTS OF GLOBALIZATION

“Globalization” is currently a popular and controversial issue, though often

remaining a loose and poorly-defined concept. Sometimes too comprehensively, the
term is used to encompass increases in trade and liberalization policies as well as
reductions in transportation costs and technology transfer. As far as its impact is
concerned,
discussion of globalization tends to consider simultaneously its effects on economic
growth, employment and income distribution - often without distinguishing between
countries and within-country inequalities – and other social impacts such as
opportunities for poverty alleviation, human and labour rights, environmental
consequences and so on. Moreover, the debate is often confused from a
methodological point of view by the interactions between history, economics,
political science and other social sciences. Partially as a consequence of the lack of
clear definitions and methodological choices, the current debate is characterized by
an harsh divide between the supporters and the opponents of globalization, where
both groups appear to be ideologically committed and tend to exploit anecdotes
(successfully or unsuccessfully respectively), rather than sound, comprehensive
empirical evidence to support their cause .Since the debate appears quite confused
and the issues overlapping, one of the aims of this contribution is to select some
precisely-defined topics and to give an account of theories and applied approaches
which have really contributed to the understanding of the social impact of
globalization in developing countries (DCs). With this purpose in mind, it is
therefore important to clarify the limitations of the discussion put forward in the
following sections.

Definition.

An ex-post measurable and objective definition of globalization has been used,

namely increasing trade openness and FDI. The purpose is to discuss whether the
actual increase in trade and FDI inflows is favoring or damaging DCs engaging in
globalization. In this context, we will not address liberalization policies; these are
ex-ante proposals which may be announced and not implemented or implemented
but not effective. When evaluating the effect of globalization, what is really
important is not the impact of (often ineffective) policies but the consequences of

19
the actual increase in measurable globalization indexes such as trade openness and
FDI. An important limitation of the subsequent analysis is that some aspects of
globalization will not be treated (see for instance migration) or only marginally
discussed (see for instance financial and portfolio flows).

Countries and period.

We will only discuss the consequences of globalization (as defined above ) on DCs
over the last two decades. Although there is much wider economic literature
available on the impact of globalization in developed countries, here we will only
focus on DCs .

Methodology.

While this subject may also be fruitfully studied from a historical, sociological,
demographical or political viewpoint, here the adopted methodology will be only
economic, with particular attention devoted to the applied approaches.

Scope.

Only some particular aspects of the social consequences of globalization in DCs

will
be treated, namely the impact of increasing trade and FDI upon domestic
employment, within-country income inequality (WCII) and poverty reduction.

20
 Impact on India

India opened up the economy in the early nineties following a major crisis that led
by a foreign exchange crunch that dragged the economy close to defaulting on
loans. The response was a slew of Domestic and external sector policy measures
partly prompted by the immediate needs and partly by the demand of the
multilateral organisations. The new policy regime radically pushed forward in
favour of amore open and market oriented economy.
Major measures initiated as a part of the liberalisation and
globalisation strategy in the early nineties included scrapping of the industrial
licensing regime, reduction in the number of areas reserved for the public sector,
amendment of the monopolies and the restrictive trade practices act, start of the
privatisation programme, reduction in tariff rates and change over to market
determined exchange rates.
Over the years there has been a steady liberalisation of the
current account transactions, more and more sectors opened up for foreign direct
investments and portfolio investments facilitating entry of foreign investors in
telecom, roads, ports, airports, insurance and other major sectors.
The Indian tariff rates reduced sharply over the decade from a
weighted average of 72.5% in 1991-92 to 24.6 in 1996-97.Though tariff rates went
up slowly in the late nineties it touched 35.1% in 2001-02. India is committed to
reduced tariff rates. Peak tariff rates are to be reduced to be reduced to the
minimum with a peak rate of 20%, in another 2 years most non-tariff barriers have
been dismantled by march 2002, including almost all quantitative restrictions.
The liberalisation of the domestic economy and the
increasing integration of India with the global economy have helped step up GDP
growth rates, which picked up from 5.6% in 1990-91 to a peak level of 77.8% in
1996-97. Growth rates have slowed down since the country has still bee able to
achieve 5-6% growth rate in three of the last six years. Though growth rates has
slumped to the lowest level 4.3% in 2002-03 mainly because of the worst droughts
in two decades the growth rates are expected to go up close to 70% in 2003-04. A
Global comparison shows that India is now the fastest growing just after China.
This is major improvement given that India is
growth rate in the 1970's was very low at 3% and GDP growth in countries like

21
Brazil, Indonesia, Korea, and Mexico was more than twice that of India. Though
India's average annual growth rate almost doubled in the eighties to 5.9% it was still
lower than the growth rate in China, Korea and Indonesia. The pick up in GDP
growth has helped improve India's global position. Consequently India's position in
the global economy has improved from the 8th position in 1991 to 4th place in 2001.
When GDP is calculated on a purchasing power parity basis.

Globalisation and Poverty:

Globalisation in the form of increased integration though trade and investment is an

important reason why much progress has been made in reducing poverty and global
inequality over recent decades. But it is not the only reason for this often
unrecognised progress, good national polices , sound institutions and domestic
political stability also matter.
Despite this progress, poverty remains one of the most serious international
challenges we face up to 1.2 billion of the developing world 4.8 billion people still
live in extreme poverty.
But the proportion of the world population living in poverty has been
steadily declining and since 1980 the absolute number of poor people has stopped
rising and appears to have fallen in recent years despite strong population growth in
poor countries. If the proportion living in poverty had not fallen since 1987 alone a
further 215million people would be living in extreme poverty today.
India has to concentrate on five important areas or things to
follow to achieve this goal. The areas like technological entrepreneurship, new
business openings for small and medium enterprises, importance of quality
management, new prospects in rural areas and privatisation of financial institutions.
The manufacturing of technology and management of technology are two different
significant areas in the country.
There will be new prospects in rural India. The growth of
Indian economy very much depends upon rural participation in the global race.
After implementing the new economic policy the role of villages got its own
significance because of its unique outlook and branding methods. For example food
processing and packaging are the one of the area where new entrepreneurs can enter
into a big way. It may be organised in a collective way with the help of co-
operatives to meet the global demand.
Understanding the current status of globalisation is necessary
for setting course for future. For all nations to reap the full benefits of globalisation
it is essential to create a level playing field. President Bush's recent proposal to
eliminate all tariffs on all manufactured goods by 2015 will do it. In fact it may
exacerbate the prevalent inequalities. According to this proposal, tariffs of 5% or

22
less on all manufactured goods will be eliminated by 2005 and higher than 5% will
be lowered to 8%. Starting 2010 the 8% tariffs will be lowered each year until they
are eliminated by 2015.

GDP Growth rate:

The Indian economy is passing through a difficult phase caused by several

unfavourable domestic and external developments; Domestic output and Demand
conditions were adversely affected by poor performance in agriculture in the past
two years. The global economy experienced an overall deceleration and recorded an
output growth of 2.4% during the past year growth in real GDP in 2001-02 was
5.4% as per the Economic Survey in 2000-01. The performance in the first quarter
of the financial year is5.8% and second quarter is 6.1%.

Export and Import:

India's Export and Import in the year 2001-02 was to the extent of 32,572
and 38,362 million respectively. Many Indian companies have started becoming
respectable players in the International scene. Agriculture exports account for about
13 to 18% of total annual of annual export of the country. In 2000-01 Agricultural
products valued at more than US $ 6million were exported from the country 23% of
which was contributed by the marine products alone. Marine products in recent
years have emerged as the single largest contributor to the total agricultural export
from the country accounting for over one fifth of the total agricultural exports.
Cereals (mostly basmati rice and non-basmati rice), oil seeds, tea and coffee are the
other prominent products each of which accounts fro nearly 5 to 10% of the
countries total agricultural exports.

Where does Indian stand in terms of Global Integration?

23
India clearly lags in globalisation. Number of countries have a clear lead among
them China, large part of east and far east Asia and eastern Europe. Lets look at a
few indicators how much we lag.

• Over the past decade FDI flows into India have averaged around 0.5% of
GDP against 5% for China 5.5% for Brazil. Whereas FDI inflows into China
now exceeds US $ 50 billion annually. It is only US $ 4billion in the case of
India

• Consider global trade - India's share of world merchandise exports increased

from .05% to .07% over the pat 20 years. Over the same period China's
share has tripled to almost 4%.

• India's share of global trade is similar to that of the Philippines an economy

6 times smaller according to IMF estimates. India under trades by 70-80%
given its size, proximity to markets and labour cost advantages.

• It is interesting to note the remark made last year by Mr. Bimal Jalan,
Governor of RBI. Despite all the talk, we are now where ever close being
globalised in terms of any commonly used indicator of globalisation. In fact
we are one of the least globalised among the major countries - however we
look at it.

• As Amartya Sen and many other have pointed out that India, as a
geographical, politico-cultural entity has been interacting with the outside
world throughout history and still continues to do so. It has to adapt,
assimilate and contribute. This goes without saying even as we move into
what is called a globalised world which is distinguished from previous eras
from by faster travel and communication, greater trade linkages, denting of
political and economic sovereignty and greater acceptance of democracy as
a way of life.

24
The Important Reform Measures (Step Towards Globalization)

Indian economy was in deep crisis in July 1991, when foreign currency reserves had
plummeted to almost $1 billion; Inflation had roared to an annual rate of 17 percent;
fiscal deficit was very high and had become unsustainable; foreign investors and
NRIs had lost confidence in Indian Economy. Capital was flying out of the country
and we were close to defaulting on loans. Along with these bottlenecks at home,
many unforeseeable changes swept the economies of nations in Western and Eastern
Europe, South East Asia, Latin America and elsewhere, around the same time.
These were the economic compulsions at home and abroad that called for a
complete overhauling of our economic policies and programs. Major measures
initiated as a part of the liberalisation and globalisation strategy in the early nineties
included the following:

Devaluation: The first step towards globalization was taken with the announcement
of the devaluation of Indian currency by 18-19 percent against major currencies in
the international foreign exchange market. In fact, this measure was taken in order
to resolve the BOP crisis

Disinvestment-In order to make the process of globalization smooth, privatization

and liberalisation policies are moving along as well. Under the privatization
scheme, most of the public sector undertakings have been/ are being sold to private
sector

Dismantling of The Industrial Licensing Regime At present, only six industries

are under compulsory licensing mainly on accounting of environmental safety and
strategic considerations. A significantly amended locational policy in tune with the
liberalized licensing policy is in place. No industrial approval is required from the
government for locations not falling within 25 kms of the periphery of cities having
a population of more than one million.

Allowing Foreign Direct Investment (FDI) across a wide spectrum of industries

and encouraging non-debt flows. The Department has put in place a liberal and
transparent foreign investment regime where most activities are opened to foreign
investment on automatic route without any limit on the extent of foreign ownership.
Some of the recent initiatives taken to further liberalise the FDI regime, inter alias,
include opening up of sectors such as Insurance (upto 26%); development of

25
integrated townships (upto 100%); defence industry (upto 26%); tea plantation
(upto 100% subject to divestment of 26% within five years to FDI); enhancement
of FDI limits in private sector banking, allowing FDI up to 100% under the
automatic route for most manufacturing activities in SEZs; opening up B2B e-
commerce; Internet Service Providers (ISPs) without Gateways; electronic mail and
voice mail to 100% foreign investment subject to 26% divestment condition; etc.
The Department has also strengthened investment facilitation measures through
Foreign Investment Implementation Authority (FIIA).

Non Resident Indian Scheme the general policy and facilities for foreign direct
investment as available to foreign investors/ Companies are fully applicable to NRIs
as well. In addition, Government has extended some concessions specially for NRIs
and overseas corporate bodies having more than 60% stake by NRIs

Throwing Open Industries Reserved For The Public Sector to Private

Participation.
Now there are only three industries reserved for the public sector

Abolition of the (MRTP) Act, which necessitated prior approval for capacity
expansion

The removal of quantitative restrictions on imports.

The reduction of the peak customs tariff from over 300 per cent prior to the 30
per cent rate
that applies now.

26
 Effects of globalization
Globalization has various aspects which affect the world in several different ways
such as:
• Industrial - emergence of worldwide production markets and broader access
to a range of foreign products for consumers and companies. Particularly
movement of material and goods between and within national boundaries.
International trade in manufactured goods increased more than 100 times
(from $95 billion to $12 trillion) in the 50 years since 1955. China’s trade
with Africa rose seven-fold during 2000-07 alone.
• Financial - emergence of worldwide financial markets and better access to
external financing for borrowers. By the early part of the 21st century more
than $1.5 trillion in national currencies were traded daily to support the
expanded levels of trade and investment. As these worldwide structures
grew more quickly than any transnational regulatory regime, the instability

27
 of the global financial infrastructure dramatically increased, as evidenced by
the financial crisis of 2007–2009.

As of 2005-2007, the Port of Shanghai holds the title as the World's busiest port.
• Economic - realization of a global common market, based on the freedom of
exchange of goods and capital. The interconnectedness of these markets,
however meant that an economic collapse in any one given country could
not be contained.
• Political - some use "globalization" to mean the creation of a world
government which regulates the relationships among governments and
guarantees the rights arising from social and economic globalization.
Politically, the United States has enjoyed a position of power among the
world powers, in part because of its strong and wealthy economy. With the
influence of globalization and with the help of The United States’ own
economy, the People's Republic of China has experienced some tremendous
growth within the past decade. If China continues to grow at the rate
projected by the trends, then it is very likely that in the next twenty years,
there will be a major reallocation of power among the world leaders. China
will have enough wealth, industry, and technology to rival the United States
for the position of leading world power
• Informational - increase in information flows between geographically
remote locations. Arguably this is a technological change with the advent of
fibre optic communications, satellites, and increased availability of
telephone and Internet.
• Language - the most popular language is Mandarin (845 million speakers)
followed by Spanish (329 million speakers) and English (328 million
speakers).
o About 35% of the world's mail, telexes, and cables are in English.
o Approximately 40% of the world's radio programs are in English.
o About 50% of all Internet traffic uses English.
• Competition - Survival in the new global business market calls for improved
productivity and increased competition. Due to the market becoming
worldwide, companies in various industries have to upgrade their products
and use technology skillfully in order to face increased competition
• Ecological - the advent of global environmental challenges that might be
solved with international cooperation, such as climate change, cross-
boundary water and air pollution, over-fishing of the ocean, and the spread
of invasive species. Since many factories are built in developing countries
with less environmental regulation, globalism and free trade may increase
pollution. On the other hand, economic development historically required a

28
 "dirty" industrial stage, and it is argued that developing countries should not,
via regulation, be prohibited from increasing their standard of living.

The construction of continental hotels is a major consequence of globalization

process in affiliation with tourism and travel industry, Dariush Grand Hotel, Kish,
Iran
• Cultural - growth of cross-cultural contacts; advent of new categories of
consciousness and identities which embodies cultural diffusion, the desire to
increase one's standard of living and enjoy foreign products and ideas, adopt
new technology and practices, and participate in a "world culture". Some
bemoan the resulting consumerism and loss of languages. Also see
Transformation of culture.
o Spreading of multiculturalism, and better individual access to
cultural diversity (e.g. through the export of Hollywood and, to a
lesser extent, Bollywood movies). Some consider such "imported"
culture a danger, since it may supplant the local culture, causing
reduction in diversity or even assimilation. Others consider
multiculturalism to promote peace and understanding between
peoples. A third position gaining popuilarity is the notion that
multiculturalism to a new form of monoculture in which no
distinctions exist and everyone just shift between various lifestyles in
terms of music, cloth and other aspects once more firmly attached to
a single culture. Thusly not mere cultural assimilation as mentioned
above but the obliteration of culture as we know it today.
o Greater international travel and tourism. WHO estimates that up to
500,000 people are on planes at any one time. In 2008, there were
over 922 million international tourist arrivals, with a growth of 1.9%
as compared to 2007.
o Greater immigration, including illegal immigration. The IOM
estimates there are more than 200 million migrants around the world
today. Newly available data show that remittance flows to
developing countries reached $328 billion in 2008.
o Spread of local consumer products (e.g., food) to other countries
(often adapted to their culture).
o Worldwide fads and pop culture such as Pokémon, Sudoku, Numa
Numa, Origami, Idol series, YouTube, Orkut, Facebook, and
MySpace. Accessible to those who have Internet or Television,
leaving out a substantial segment of the Earth's population.
o Worldwide sporting events such as FIFA World Cup and the
Olympic Games.

29
 o Incorporation of multinational corporations in to new media. As the
sponsors of the All-Blacks rugby team, Adidas had created a parallel
website with a downloadable interactive rugby game for its fans to
play and compete.
• Social - development of the system of non-governmental organisations as
main agents of global public policy, including humanitarian aid and
developmental efforts.
• Technical
o Development of a Global Information System, global
telecommunications infrastructure and greater transborder data flow,
using such technologies as the Internet, communication satellites,
submarine fiber optic cable, and wireless telephones
o Increase in the number of standards applied globally; e.g., copyright
laws, patents and world trade agreements.
• Legal/Ethical
o The creation of the international criminal court and international
justice movements.
o Crime importation and raising awareness of global crime-fighting
efforts and cooperation.
o The emergence of Global administrative law.
• Religious
o The spread and increased interrelations of various religious groups,
ideas, and practices and their ideas of the meanings and values of
particular spaces

Cultural effects

Japanese McDonald's fast food as an evidence of corporate globalization and the

integration of the same into different cultures.
Culture is defined as patterns of human activity and the symbols that give these
activities significance. Culture is what people eat, how they dress, beliefs they hold,
and activities they practice. Globalization has joined different cultures and made it
into something different. As Erla Zwingle, from the National Geographic article
titled “Globalization” states, “When cultures receive outside influences, they ignore
some and adopt others, and then almost immediately start to transform them.”

30
One classic culture aspect is food. Someone in America can be eating Japanese
noodles for lunch while someone in Sydney, Australia is eating classic Italian
meatballs. India is known for its curry and exotic spices. France is known for its
cheeses. America is known for its burgers and fries. McDonalds is an American
company which is now a global enterprise with 31,000 locations worldwide. Those
locations include Kuwait, Egypt, and Malta. This company is just one example of
food causing cultural influence on the global scale.
Meditation has been a sacred practice for centuries in Indian culture. It calms the
body and helps one connect to their inner being while shying away from their
conditioned self. There are more Americans meditating and practicing yoga now .
Some people are even traveling to India to get the full experience themselves.
Another common practice brought about by globalization is Chinese symbol tattoos.
These tattoos are popular with today’s younger generation despite the fact that, in
China, tattoos are not thought of as cool Also, the Westerners who get these tattoos
often don't know what they mean,making this an example of cultural appropriation.
The internet breaks down cultural boundaries across the world by enabling easy,
near-instantaneous communication between people anywhere in a variety of digital
forms and media. The Internet is associated with the process of cultural
globalization because it allows interaction and communication between people with
very different lifestyles and from very different cultures. Photo sharing websites
allow interaction even where language would otherwise be a barrier.

Negative effects

Globalization has been one of the most hotly debated topics in international
economics over the past few years. Globalization has also generated significant
international opposition over concerns that it has increased inequality and
environmental degradation. In the Midwestern United States, globalization has
eaten away at its competitive edge in industry and agriculture, lowering the quality
of life in locations that have not adapted to the change.
Globalization, the flow of information, goods, capital and people across political
and geographic boundaries, has also helped to spread some of the deadliest
infectious diseases known to humans Modern modes of transportation allow more
people and products to travel around the world at a faster pace, they also open the
airways to the transcontinental movement of infectious disease vectors. One
example of this occurring is AIDS/HIV.
Opportunities in richer countries drives talent away, leading to brain drains. Brain
drain has cost the African continent over $4 billion in the employment of 150,000
expatriate professionals annually. Indian students going abroad for their higher
studies costs India a foreign exchange outflow of $10 billion annually.

31
A study by the World Institute for Development Economics Research at United
Nations University reports that the richest 1% of adults alone owned 40% of global
assets in the year 2000. The three richest people possess more financial assets than
the poorest 10% of the world's population, combined . In 2001, 46.4% of people in
sub-Saharan Africa were living in extreme poverty. Nearly half of all Indian
children are undernourished.
The Worldwatch Institute said the booming economies of China and India are
planetary powers that are shaping the global biosphere. In 2007, China has
overtaken the United States as the world's biggest producer of CO2. Thriving
economies such as China and India are quickly becoming large oil consumers.
China has seen oil consumption grow by 8% yearly since 2002, doubling from
1996-2006. Crude oil prices in the last several years have steadily risen from about
$25 a barrel in August 2003 to over $140 a barrel in July 2008. The State of the
World 2006 report said the two countries' high economic growth hid a reality of
severe pollution. The report states:
The world's ecological capacity is simply insufficient to satisfy the ambitions
of China, India, Japan, Europe and the United States as well as the
aspirations of the rest of the world in a sustainable way
Without more recycling, zinc could be used up by 2037, both indium and hafnium
could run out by 2017, and terbium could be gone before 2012. It said that if China
and India were to consume as much resources per capita as United States or Japan
in 2030 together they would require a full planet Earth to meet their needs. In the
longterm these effects can lead to increased conflict over dwindling resources and
in the worst case a Malthusian catastrophe.
The head of the International Food Policy Research Institute, stated in 2008 that the
gradual change in diet among newly prosperous populations is the most important
factor underpinning the rise in global food prices. From 1950 to 1984, as the Green
Revolution transformed agriculture around the world, grain production increased by
over 250%. The world population has grown by about 4 billion since the beginning
of the Green Revolution and most believe that, without the Revolution, there would
be greater famine and malnutrition than the UN presently documents
(approximately 850 million people suffering from chronic malnutrition in 2005).
It is becoming increasingly difficult to maintain food security in a world beset by a
confluence of "peak" phenomena, namely peak oil, peak water, peak phosphorus,
peak grain and peak fish. Growing populations, falling energy sources and food
shortages will create the "perfect storm" by 2030, according to the UK government
chief scientist. He said food reserves are at a 50-year low but the world requires
50% more energy, food and water by 2030. The world will have to produce 70%
more food by 2050 to feed a projected extra 2.3 billion people and as incomes rise,
the United Nations' Food and Agriculture Organisation (FAO) warned.
The United Nations Office on Drugs and Crime (UNODC) issued a report that the
global drug trade generates more than $320 billion a year in revenues. Worldwide,
the UN estimates there are more than 50 million regular users of heroin, cocaine
and synthetic drugs. The international trade of endangered species is second only to

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drug trafficking. Traditional Chinese medicine often incorporates ingredients from
all parts of plants, the leaf, stem, flower, root, and also ingredients from animals
and minerals. The use of parts of endangered species (such as seahorses, rhinoceros
horns, saiga antelope horns, and tiger bones and claws) has created controversy and
resulted in a black market of poachers who hunt restricted animals.

The implications of globalisation for a national economy are many. Globalisation

has intensified interdependence and competition between economies in the world
market. This is reflected in Interdependence in regard to trading in goods and
services and in movement of capital. As a result domestic economic developments
are not determined entirely by domestic policies and market conditions. Rather,
they are influenced by both domestic and international policies and economic
conditions. It is thus clear that a globalising economy, while formulating and
evaluating its domestic policy cannot afford to ignore the possible actions and
reactions of policies and developments in the rest of the world. This constrained the
policy option available to the government which implies loss of policy autonomy to
some extent, in decision-making at the national level.

Bibliography

Archibugi, Daniele and Michie, Jonathan, Editors, Technology, Globalisation and

Economic Performance, Cambridge: Cambridge University Press, 1997.

Bhagwati, Jagdish N., The Wind of the Hundred Days: How Washington
Mismanaged Globalization, Cambridge, MIT Press, 2001.

Brittan, Sir Leon , "Globalization vs. Sovereignty? The European Response," the
Rede Lecture, Cambridge University, 20 February 1997.

McGrew, Anthony G., Paul G. Lewis, et al., Global Politics: Globalization and the
Nation-State, Oxford, Cambridge, Mass.: Blackwell Publishers, 1992.

Micklethwait, John and Adrian Wooldridge, A Future Perfect: The Challenge and
Hidden Promise of Globalization, Times Books, 2000.

Mittelman, James H., The Globalization Syndrome: Transformation and Resistance,

Princeton: Princeton University Press, 2000.

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