Globalization

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Published on 14 Apr 2011
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Lecture #12 Final Review
April 4th, 2011
Globalization
Development & democracy is an old question; but how does globalization
effect it now?
oGenerally, the mechanism that is driving both development and
democracy is globalization operating as context and mechanism
Trade, FDI and capital flows globalization
oQuestion is is globalization producing or undermining democracy
and or development?
Refining the definition: Is globalization leading to development?
oIf development is defined as increasing exports, then yes
oBut if development is defined as increasing wealth and well-0being
among the poorest not leading to development
Globalization and the strengthening of Democracy Nita Rudra
Situates argument within larger body of literature that makes the same
argument
Why would anyone think that it would produce democratization?
oGlobalization Rudra defines it as free trade and the Washington
consensus
Principles of liberalism and neo-liberalism
oAssumption trade and financial liberalization encourages
developing countries to become more democratic, why?
1. Theoretical point argument some kind of organic symmetry between free
markets and democracy
oFreedom in the political sphere can only be sustained if there is
freedom in the economic sphere
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oIf there is commitment into freedom, then it translates into political
democracy and economic free market
2. Capital market development can unseat authoritarian governments by
preventing their rent-seeking activities and increasing the bargaining power
of business (bottom of p.736)
oISI close links between government and business; business
leaders/elites are dependent on government for preferential treatment
on trade, quotes and certificates for imports, etc.
oDependency of government and business; revenue comes from this
source. This system of rent-seeking behaviour of making money from
transaction, which would otherwise be free if there were zero
government intervention
oBusiness is no longer dependent on government, and that source of
revenue from rent-seeking dries up when capital market is developed
Explains why authoritarian government will be weaker, but doesnt explain
why a democratic government would be the replacement as a result of this
oBut, strong business sector will demand democracy and it makes sense
oBusiness demands democracy because higher confidence rating will be
assigned to countries that are democratic
Globalization (increases in capital and trade flows) increases
democracy (political and civil liberties) when government increase
social spending (on health, education, and pensions)
oMechanism is this globalization produces elite skisms (elite with
diverging interests);
1. State no longer able to control business sector interest of
state and business are diverging
2. Globalization leads to social unrest and elites disagree with
how to deal with this social unrest
Disagree over repression or liberalization
If elites can increase social spending to lower unrest
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If elites dont spend, then repression will ensue
oBut when not accompanied by social spending, globalization leads to
repression
Whether there is social spending makes all the difference
Increase in social spending = democracy
No increase = repression
oWhy is social spending the crucial intervening variable?
Globalization as a mechanism of development generates very
unequal development
Produces increases in inequality; generally speaking, rich will
get richer and poor will get poorer leads to social unrest
Globalization is highly correlated with high levels of protests
and demonstrations (IMF protests)
Government response is often repression prohibit a lot of
public activities and clamp down on civil society to maintain
stability to attract foreign investment and to keep a hold on
power
oGlobalization without social spending = instability
No social safety net = free market will lead to repression
oTwo ways:
1. Globalization no social safety net/social spending =
repression
2. Globalization social spending democracy
oThe result rests with the local elites; intervening variable matters is
the social spending
Globalization undermines Democracy
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Document Summary

 development & democracy is an old question; but how does globalization effect it now: generally, the mechanism that is driving both development and democracy is globalization  operating as context and mechanism.  refining the definition: is globalization leading to development: if development is defined as increasing exports, then yes, but if development is defined as increasing wealth and well-0being among the poorest  not leading to development.  situates argument within larger body of literature that makes the same argument.  why would anyone think that it would produce democratization: globalization  rudra defines it as free trade and the washington consensus. If elites can increase social spending to lower unrest www. notesolution. com. If elites don"t spend, then repression will ensue: but when not accompanied by social spending, globalization leads to repression.  whether there is social spending makes all the difference.  globalization as a mechanism of development generates very unequal development.

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