De-globalization: is the world flat or not

Today, most political and economic analysts claim that the world got "flatter" and more globalized, but few can agree on how and why it has happened. In fact, the integration of production and technologies indeed are the measurements of globalization.

Рубрика Международные отношения и мировая экономика
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American University in Bulgaria

De-globalization: is the world flat or not

Jahan B. Taganova

Today, most political and economic analysts claim that the world got “flatter” and more globalized, but few can agree on how, when, and why it has happened. Common economic thought claims that globalization has brought people, countries and markets closer, as a result of which people all over the world are eating McDonald's and drinking Coca-Cola. However, precise look at the current events, economic and historic data reveals “a world that's just a fraction as integrated as the one we thought we knew.” Historically, global poverty and inequality is probably the most pervasive example of de-globalization. This example clearly illustrates that it is impossible to create a world where every state enjoys developed and integrated economies. In other words, economic streaming of the globalization has bigger costs and can not be sustained any longer. Merely discussing the global economic streaming is not sufficient, thus, to fully elucidate the consequences of de-globalization, it is essential to look at the world's economic integration, migration pace, and use of technological innovations.

In fact, the spread and integration of production, companies, communication, and technologies indeed are the measurements of globalization. In greater prospect, however, intensive data analysis of these aspects is more inclined towards de-globalization rather than globalization. To begin with, globalists argue that states are obliterating borders, which results in integration of national economies through international trade, direct investment, capital flows and formation of ever increasing number of trade unions. Today, major actors in international financial arena--Hong Kong, New York, London, Frankfurt are on the verge of global integration; which is to say that they are all moderately well attached to each other. However, when one examines the numbers, the big picture is one that reveals excessive connectivity at the local level, rather than global. For instance, activities such as management cases, issuing patents, and private charity comprise less than 10% of internationalization across industries around the globe. In other words, this data indicates that many types of economic activities that could be carried out abroad are still domestically centered (Ghemawat, 2007, p.56).

“There are no boundaries to an investment” has become a favorite phrase for the proponents of the globalization in the latter decade of the 21st century, states Pankaj Ghemawat (2007, p.56), professor at Harvard Business School. According to this notion, there is a great amount assets being invested all over the states around the world. However, when one discovers the amount of all the funds that is being invested across the globe, the message becomes clear. In fact, the amount of the entire world's assets that comes from Foreign Direct Investment (FDI) has been less than 10% during the years 2003-2005. Simply put, more than 90% of all the investment around the world is still domestic. And even though the number fluctuates from time to time, the percentage has never reached more than 20% (Ghemawat, 2007, p.56-57). Essentially/ultimately, the underlying reason for the low percentage in FDI can be explained through the fact that companies encounter great risks when they are investing in foreign countries; risks such as political instability of the nations as well as the economic stance of these states where the investment is to be made. Many aspects considered, the world is far from being flawlessly globalized, its market for goods, capital and labor appear to have become extensively fragmented. For instance, after creation of the North American Free Trade Agreement (NAFTA) trade now takes place within America, Canada and Mexico. Ironically, creation of NAFTA at first glance seems to be a consequence of the globalization between North American countries; on the contrary, it appeared to be a separator of mentioned countries from the rest of the world. Moreover, the same situation happens within the European Union; most of the trade takes place within member states of Europe. As a result, open trade across the world has been injured. Thus, the portrait that emerges from the states' interaction is a world that has only started to realize the potential of true global integration. According to World Bank report, exports from China, Japan, Mexico, Russia, and the United States fell by 25 percent and are expected to fall more in the year leading up to February of 2009 (Altman, 2009, p.5).All of the above mentioned factors have one thing in common; they show that countries around the world are not economically integrated and the “borderless” world is only existent in theoretical terms.

The increasing number of immigrant workers abroad is another prominent argument made by the advocates of the globalization. The upshot of all is that large number of immigrant workers has played a major role in the very beginning of the globalization process. For instance, it is not surprising to see Mexican, Jamaican, Chinese immigrant workers across the most restaurant and hotel businesses, who have succeeded in spreading their culture as well as cuisine in the U.S. Hence, looking at this, it does seem that the world is interconnected and labor forces are among the main driving force of globalization. Nevertheless, the number of discriminatory policies against immigrant workers are arising and they are returning back home massively. According to the International Labor Organization, around 52 million people could be victims of job losses across the world due to populist sentiment and new protectionist policies (Bajora, 2009, para.1). For instance, “Japan and Spain are offering them [immigrants] cash to leave, and Malaysia is forcing them out,” states Roger Altman (2009, p.5) in his work “Further Geopolitical Consequences of the Financial Crisis.” Furthermore, in 2009 the U.S passed a law that restricts hiring of immigrant workers by companies bailed out by the government. Indeed, there is worldwide spread of discriminatory acts against the immigrant workers such as in Britain, where large-scale protests were held against the use of foreign workers at oil refiner (Bajora, 2009, para.2). Even more, many cartoons have depicted spread of protest against immigrant workers (see fig. 2). In brief, above-mentioned consequences of the globalization demonstrate that this phenomenon is in retreat, thus, endorsing opposite side of it--de-globalization.

Fig. 2. A cartoon illustrates protests against immigrant workers (Matt).

Besides, the prophets of globalization emphasize the rise of globalization pointing out the relocation of the multiple companies with different branches and headquarters all over the world. For instance, brands like Coca-Cola, Benetton, and Apple become part of people's lives. Regardless:

Some [firms] relocate production in order to keep costs to a bare minimum, while others relocate in an effort to service new markets or to upgrade technological competitiveness. These different motivations and dynamics-races to the bottom versus climbs to the top--again call `flatterning' trends into question (Mosley, 2006, p.772).

It is often argued that long distance calls and internet revenues are inseparable parts of an increasingly globalized world. If “there was one realm in which borders should be rendered meaningless and the globalization proponents should be correct in their overly optimistic models, it should be the internet,” states Ghemawat (2007, p.58). Indeed, internet and phone calls are considered to be an important means by which ideas and information are spread across the national borders. For instance, the telephone calls and electronic communication can easily substitute one's presence at a time when travel has become intricate. Closer look at the statistical data, however, suggests contradictory evidence. Various indicators of Internet use and access points out that significant gap exists within intercontinental use of it. Google, for example, the most globalized search engine, supports more than one hundred languages; however “Google's operation in Russia reaches only 28 percent of the market there, versus 64 percent for the Russian market leader in search services such as Yandex, and 53 percent of Rambler” (Ghemawat, 2007, p.58). Hence, local traffic has increased much faster than international traffic. In addition, domestic telephone calls also continue to expand. According to the article Globalization's Last Hurrah, “[international] call rates are falling 20 percent per year,” nevertheless, this fact has not led to an increase in the number of people who use international call rates (Kearney, 2002, para.51). Because, most of the phone activities are happening locally, rather than internationally. Furthermore, in reference to the research made by Ghemawat (2007, p.58), the level of internationalization in phone call revenues is less than 10 percent. In a thoroughly globalized environment, one could expect these numbers to be much higher--about 90 percent for instance. Thus, phone call and internet revenues are peculiar and reliable examples that show the shift from globalization towards de-globalization as the proponents of globalization claim.

All aspects considered one can realize that the phenomenon of de-globalization has reversing consequences on people's life, country's development, international relations, and market economy. For instance, the world that is “flattening” is not capable of formulating growth of GDP and FDI anymore as proponents of globalization claim. What is worse, even after the world-wide crisis went downward, stimulating growth of poverty and inequality among people are still existent on a high level. Hence, economic streaming of the globalization has greater costs and can not be continued any longer. As a result, major fundamentals of globalization are eroding. In this regard, precise exploration of measurements of globalization through updated statistical data reveals that components of globalization and their consequences is leading more towards de-globalization.

References

globalization production integration economic

Ghemawat, P. (2007). Why the world isn't flat?. Foreign Policy, 159, 54-60.

Retrieved November 25, 2010, from http://www.ebscohost.com

Altman, R. (2009). Globalization in Retreat. Foreign affairs, 88(4), 2-7.

Retrieved November 25, 2010, from http://www.ebscohost.com

Bajoria, J. (2009, March 16). The Dangers of 'Deglobalization' - Council on Foreign

Relations. Council on Foreign Relations. Retrieved November 25, 2010, from

http://www.cfr.org/publication/18768

Kearney, A. (2002). SikhSpectrum.com Monthly Globalization's Last Hurrah?.

SikhSpectrum.com Quarterly. Retrieved November 25, 2010, from

http://www.sikhspectrum.com/1

Mosley, L. (2006). A Brief History of the Twenty-first Century. North American Security and Prosperity: Annual John W. Holmes Issue on Canadian Foreign Policy, 61, # 3, Matt. (2009, January 31). Matt cartoons witty political cartoons and satirical sketches - Matt. (2009, January 31). Matt cartoons witty political cartoons and satirical sketches - Telegraph. Telegraph.co.uk - Telegraph online, Daily Telegraph and Sunday Telegraph

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