FINAL TEST STUDY GUIDE AND EXAMS
GLOBALIZATION FROM ABOVE
Globalization (define, main features, winners & losers, impact on Third World dev.)
Globalization: A process (or set of processes) which embodies a transformation in the spatial
organization of social relations and transactions-assessed in terms of their extensity, intensity,
velocity and impact-generating transcontinental or interregional flows and networks of activity,
interaction and the exercise of power.
● For these reasons globalization has to be understood as a process which both unites and
divides peoples and communities; it does not automatically follow that humanity is becoming
a single global community of fate.
- Deepening of global independence (economic, political, cultural)
- Increased flow of commodities and cultural products (such as trade in an unprecedented way)
- Emergence of global institutions and bureaucracy to mandate exporting
- Increased power of TNC’s (trans-national corp.)
- Emergence of global cities (certain cities are noble points in the emerging global city. They
play a key role in promoting globalization
- Global spread of Western-style consumerism
- Time and space compression.
Winners and Loser (North/South Divide)
North- Enjoys a greater share of global economic activity
- Represents 20% of world population, shares 80% of global economic activity, and receives 65% of
all foreign investment.
South- Growing differentiation with TW
- Only 10 countries account for most economic activity.
● The global system is very exclusive. It excludes citizens across the world from having access
to the global market.
● It excludes people as producers but also as consumers. In the so-called global shopping mall
most people are only window shoppers.
● The gap between the haves and the have-not is widening, leading to greater inequalities.
● So globalization has not delivers in sharing economic qualities. In this respect globalization is
reordering developing counties into clear winners and loser such that it operates to the
advantage of the ‘more dynamic and powerful countries in the north and south
Impact on Third World- Globalization has impacted the third world in variety of different ways
1 ● Bringing down barriers to allow for trade
● Interaction with foreign countries to build the economic structure (Industrialization)
● However there have also been negative implications such as exploitation, and increased prices
of certain goods.
Globalization from above (impact on development)
Since globalization is a highly uneven process: it results in clear winners and losers not just between
countries but within and across them. For the most affluent it may very well entail a shrinking world-
jet travel, global tv, and the world wide web but for the majority of people it tends to be associated
with a profound sense of disempowerment as their fate is sealed by deliberations and decision-
making in chancelleries, boardrooms, and bureaucratize many thousands of miles away. For
example, the East Asian crisis demonstrates, the IMF and WB are literally oceans apart from the
communities whose destiny they shape. Globalization nurtures a sense of alienation that power is
elsewhere and untouchable. Globalization significantly erodes the sovereignty and autonomy of
states. National governance in this view are the thus fast becoming a transnational mode of
organization for managing economic affairs. In this new world order, the triumph of global
capitalism, reinforce by the institutions of global economic governance such as the IMF and the G7
has intensified the exploitation of the third world. Today half of the world’s population and two
thirds of its governments are subject to the disciplines of the IMF or the WB either through formal
IMF economic stabilization programs as in the case of some East Asian economies following the
great crash or through World Bank lending. This does not mean that states are becoming less
important or less powerful. On the contrary their roles and function are changing as they seek
coherent strategies for engaging with a globalizing world and an emerging framework of multi-
layered governance, in which governments share the political stage with a host of other public and
private agencies, domestic and transnational, from green peace and the world developments
movement to General Motors and the World Health Organization. In this respect globalization is held
to be transforming state power and with it the global context of development.
New Global Division of Labour (main features)
1. Geographical expansion of manufacturing production
- many other countries are now producers, which are exported to developed nations
- emergence of global assembly factories )global assembly line, means there are a number of
components from a variety of countries that come together to be produced in a central location
2. Highly centralized management of global production
- Efficient managers of global factories are TNC’s
3. Growing concentration/monopolization/ economic resources and power by TNC’s
- If you look at the top 100 eager producers 51 are producers 50 are countries. Thus proving that
corporations are becoming increasingly powerful.
4. Global economic activity is not evenly distributed
- Illustrated in the North/South Divide.
Core, Periphery and Semi-Periphery
2 Core= 1 world, Periphery= 3 world.
By comparison many radical accounts conclude that the core and periphery (1 world and 3 World) rd
remain very much fundamental reality of the contemporary world order. This is especially so today
as most of the world’s population and the majority of developing economies are becoming
increasingly excluded from global affluence.
The old North-South hierarchy is arguably giving way to a new global division of labour in which the
“familiar pyramid of the core-periphery hierarchy is no longer a geographic but a social division of
the world economy.
To talk of North and South, or 1 world and 3 world, is to overlook the ways in which globalization
is transforming old hierarchies by forgiving new patters of inclusion and exclusion which cut into
and reach across all the countries and regions of the world.
Semi-periphery are countries that have developing/ industrialized markets like china and India.
Example of semi-periphery countries: China, Thailand, Argentina, and Brazil
Liberalism and Neoliberalism (Compare and Contrast).
Liberalism is an economic theory in favour of laissez-faire, the free market, and the gold standard.
Liberalism is a European political and social philosophy that came about from the rule of the
monarch but eventually changed into a parliamentary democracy which supports the notion of
welfare state. Stressed individual freedoms and minimal roles of the state. The role of the state is
simply to protect individual rights and freedoms. Also supports the notion of individual freedom to
own property, freedom to engage in market transaction and individual freedom from government
interference. Laissz-faire capitalism equals free market capitalism and the market equals key
institutions to allocate resources in society.
Neoliberalism principles apply to transnational capitalism which supports the notion of stress-free
markets and free trade to promote free flow of capital and goods. Neoliberalism just stresses the
market, it also stresses the concept in which the market has to regulate society. Neoliberalists want
the market to decided what has to be done on all levels, they basically want the market to rule every
part of human life.
Basically liberalism is human oriented whereas neoliberalism is market oriented. Liberalism is all for
individual rights, freedoms and democracy whereas neoliberalism is all about the market, meaning
that its all for the market governing every aspect of peoples lives.
Structural Adjustment Policies:
* These have been greatly influenced by the World Bank and the IMF.
State-led development model (main features, compare and contrast Asian and Latin American
After seeing the legacies of colonialism and the impact it had on their countries, state leaders made
attempts to overcome dependency and consequently boost the economy. Nationalism began to rise
and the legacies of colonialism were becoming minimal as state leaders took matters into their own
3 The TW realized that they must adapt a new development strategy:
● Nationalism began to rise → country had the right to nationalize any corporation within their
● Imposed tariffs on imported goods so that good will cost more in local market; therefore, the
domestic goods were relatively cheaper.
● Developmental state: a state fully involved in promoting industrial development
saw state as primary agent of development
promoting economic activities
State led industrialization had two models: inward-oriented industrialization and outward-oriented
industrialization In the case of Asia outward oriented industrialization took place; whereas in Latin
America it was inward oriented industrialization.
Latin America attempted to industrialize through:
1. Planning and regulation:
● Protectionism → by imposing tariffs; taxing imported goods as much as they can
● Provided incentives, such as credits and loans to local entrepreneurs
● Stimulate the local demand → public spending
● Creation of state owned industries, where the state takes full of ownership of industries and
● Foreign enterprises nationalized
● Provided resources such as subsidies and actual wages to the urban poor → food subsidies for
poor and elderly; the poor now had extra income to buy what Latin America was producing.
These subsidies were efficient because the people citizens now had enough income to buy
domestic products as opposed to exported products, which were relatively higher in price due
to the tariffs. → As for the wages, the state regulated and increased wages; another way to
ensure people were making enough income
● State focussed on social spending by spending money on essential social services such as
education and healthcare
● Develop an internal market → weren’t dependent on other countries to grow and develop
This model of industrialization was faced with mixed results. Some of the positive aspects include
the development of the infrastructure and the diversified economies. Although the people were given
incentives, there was not enough to help them innovate and integrate. Also, there was technological
dependency and of course the growth of bureaucracy, because the government turned out to be
profiting way more than the people. This model adapted by L.A somewhat isolated them from the
world economy, because the more inward an economy was, the more detachment. Last and most
importantly, L.A experienced an economic crisis→ debt, inflation.
The Asian Case
Contrary to Latin America, Asia attempted to industrialize by using the outward oriented model.
They believed that in order to industrialize, they must depend heavily on exports. Whereas Latin
America did not welcome exports, Asia welcomed exports. Asia welcomed foreign investment and
consequently experienced greater integration into the global economy.
4 State Policies:
● Tariffs were selective and short term, if tariffs were imposed at all
● There was less emphasis on state ownership
● Imposed low wages in order to make products more competitive (abroad)
● Trade Union rights limited
● Centralized, authoritarian, undemocratic
● Adapted “authoritarian capitalism
“Asian Miracle”: Asia was more successful in industrializing because they welcomed foreign
investment whereas Latin America opposed this. It was the foreign investment and the exports that
determined Asia’s success.
Connection global capitalism, neolibralism and SAP.
Neoliberalism and Global Capitalism seem almost to go hand in hand when you consider the
requirements of both structures.
● Is a market lead orientation for its people.
● Liberal principles are applied to trans-national capital
● Stress free market and free trade (emphasized by many advocates for this model)
● To promote free flow of capital and goods (across national boundaries)
- Free flow of capital and goods
- Freedom to invest capital anywhere
- Freedom to re-locate profit
- Freedom to move goods across nation borders.
- These are attempts to destroy existing models of development. intentional
- SAP’s gave rise to neoliberal agenda, because they were forced to open up boundaries.
Trade/Foreign investment. Therefore SAP’s was a major vehicle for neoliberalism.
A multinational corporation by definition produces in more than one country, including its home
country. Such firms therefore have multi-country production operations. Most multinationals have
their headquarters and research and development functions in their country of origin and are
effectively controlled from there. The retention of a home base in their country of origin is a defining
characteristic of a multinational firm.
Transnational Corporations characteristic that is frequently referred to, nonetheless, is the integration
of its economic activities-research, design, purchasing, marketing sales and production-at a global
scale. On this view TNC will locate their activities, including headquarters or research and design
functions, wherever is the most favourable economically. This may involve geographical separation
of functions to take advantage of what different places have to offer or an overlapping set of
5 activities wherever they have market presence. To have market presence in each of the major regions
of the world requires a different form of organization one that has shed any association it may have
had with a particular country. It is in this sense that TNCs may be characterized as footloose, willing
to locate and relocate their activities anywhere on the globe.
TNCs and MNCs (compare and contrast).
A multinational corporation by definition produce in more than one country, including its home
country. Such firms therefore have multi- country production operations. The use of the term “
production “ here is rather loose as it can include economic activity in factories , mines or plantations
as well as bank , hotels and offices . Yet although such production may take place in numerous
countries, with major firms employing people of diverse nationalities across the globe, most
multinationals have their headquarters effectively controlled from there. The retention of a home
base in their country of origin is a defining characteristic of a multinational firm. Some companies,
such as Royal Dutch Shell, which is jointly owned and controlled by British and Dutch interests,
have spilt headquarters, but this the exception rather than the rule.
Transnational Corporation (TNCs):
TNC s appearance is more recent on the world stage. One characteristic that is frequently referred to ,
nonetheless , is the integration of its economic activities – research , design , purchasing ,
marketing , sales and production at a global scale . On this view, TNC s will locate their activities,
including headquarters or research and design function s, whenever is the most favourable
economically .This may involve geographical separation of functions to take advantage of what
different place have to offer or an overlapping set of activities wherever they have a market presence.
In either case, the headquarters – dominated model of multinational organization is no longer
adequate to meet the strategy of purchasing , producing and marketing at a global level. To have a
market presence in each major economic regions of the world requires a different from of
organization , one the has shed any association it may have had with a particular country . It is this
sense that TNC may be characterized as
“ footless” , willing to locate and relocate their activities anywhere on globe .
Shifts in World Economy (according to J. Allen).
The main, focus is on overseas investment rather than international trade, as the former has been the
hallmark of recent change in the world economy, especially since the early 1980s. The increased
diversity of the firms which invest abroad, the shift in the geographical direction and character of
their overseas investment as well as the changing form of their involvement worldwide. For example,
there are between 17500 and 20,000 firms engaed in foreign direct investment (FDI). That is
investment which takes place outside of the investing firm’s home country, yet remains within the
control of that company. Usually, the investment will take the form of a branch plant or subsidiaries
company in another country, although exclusively so. The investment itself may be made up of a
bundle of components, including finance, technology, skills and other assets. There is a rapid
increase in the number of firms investing abroad. There is a greater dependency upon their foreign
subsidiaries for their prosperity.
World recession and the international debt crisis took its toll on investment flows in the first half of
the 1980s, although by the end of the decade they had risen fourfold, what was significant, however,
6 was not so much the rate of growth of foreign direct investment as the altered geography of the
flows. There are a number of trends that lie behind a rather complex geography. In the late 1980s
there was an increase in foreign investment. More countries became overseas investors: that is, they
were the source of foreign direct investment. Up to the 1980s around half of the outward investment
flow was accounted for by US firms. By the end of the 1980s, however, Japanese firms had come
from remarkably low base to become, like the US, a major source overseas investment. As before,
the UK continued to be a significant source of foreign direct investment, although it was joined in the
1980s by Germany, France, Canada and the Netherlands. Interestingly, by the late 1980s Western
Europe as a whole had become the world’s largest source of overseas investment. Second, with the
exception of Japan, most of these countries were investing in one another. Western Europe played
host too much US investment in the latter half of the 1980s. At the same time, the UK, followed by
the Netherlands, France and Germany were major investors in the US. Significantly, around half of
Japans dramatic burst in foreign investment went to the US. The major shift in investment flows was
away from the developing countries, in particular Latin America, and much of it has been towards
the US. With the continuing recession in the developed economies in the early 1990s, whoever, this
concentration of investment in the three global regions has fallen somewhat, but not sufficiently to
detract from the overall pattern. Third, although the share of worldwide investment in the developing
countries continued to fall over the 1980s, the exception was a select group of East and South East
Asian countries, namely Singapore, Hong Kong, Malaysia, South Korea, Thailand and Taiwan,
which became a major target for foreign investors throughout the 1980s. Over the same decade,
however, investment by overseas firms in the whole of Africa dropped to just over two per cent of
world FDI, and in the sub-Saharan Africa is neglible.
International and Global Economy (Compare and Contrast).
Global economy implies a qualitative shift in the structure in organization of the economy
International Economy: From a European standpoint, it has been possible to talk of an international
economy since at least the seventeenth century, when trade between nations represented the major
economic activity across borders. Whether goods, or services, the exchange is between economic
actors embedded within national economics and it is the national economy which represents the
fundamental unit of an international economy. In an international economy there are barriers to
cross-border flows, whether they are of capital. Labour, goods or services and the maintenances of
those barriers, direct and indirect, rests with the nation-state.
International trade remains a significant feature of the global economy, but the key activity is the
orchestration of investment flows by TNCs across the globe. As the major players, TNS direct
investment and production on a worldwide basis, with limited regard for national boundaries or any
particular allegiance to a nation-state, simply a concern to secure a profitable return on their
activities. Moreover, the markets that are important to them are global rather than national, In
contrast, a global economy is one in which the stress is placed upon the erosions of national barriers
and the movement of economic activities across national boundaries. International trade remains a
significant feature of the global economy, but the key activity is the orchestration of investment
flows by trans-national corporations across the globe.
Bretton Woods Conference:
7 The Bretton Woods conference was held on July 1944. The conference resulted in the creation of the
the International Monetary Fund, to promote international monetary cooperation, and of the
International Bank for Reconstruction and Devlopment. By Dec., 1945, the required number of
governments had ratified the treaties creating the two organizations, and by the summer of 1946 they
had begun operation. The two organizations were set up essentially to regulate the global economy
under the sponsorship and direction of the US, initially with the acute needs of war damaged Europe
World Bank, IMF (origins, initials purpose, current roles).
Purpose: The World Bank was set up in 1944 as an institution for development assistance. It got
started mostly by giving loans for rebuilding Western Europe after World War II, and began giving
development loans to poor countries in the1960s. The World Bank is now the world's largest source
of development assistance, and most of the money that it lends (75%) is raised in financial markets.
Influence in decision-making depends on the contributions of member countries, with industrialized
economies accounting for the largest share. It faced a lot of criticism as a result of the structural
adjustment programs it imposed as a condition for assistance in the 1980s, as well as for managing
big development projects that were completely inappropriate to local conditions.
Current roles: It has since tried to improve its performance by working more closely with developing
countries and somewhat distancing itself from the positions of the International Monetary Fund.
However because of interests rates, and the cycle of dependency that is created from accepting World
Bank loans many of these developing countries continue to struggle with high debt rates, and an
Purpose: It was established to promote international monetary cooperation, exchange stability, and
orderly exchange arrangements; to foster economic growth and high levels of employment; and to
provide temporary financial assistance to countries to help ease balance of payments adjustment.
World Trade Organization (powers and attributions, policies; impact).
The General Agreement on Tariffs and Trade (GATT) was an international organization created in
1947 to reduce trade barriers through multilateral negotiations. In January 1995, the GATT was
replaced by a stronger World Trade Organization (WTO), the result of eight years of GATT
negotiations. Today, member countries number 125 (nearly the whole world except China, some
former communist countries, and a number of small nations) and WTO rules apply to over 90 percent
of international trade. Although still a little-known and little-understood institution, the WTO has
become increasingly controversial as it has expanded the scope of its work from its original narrow
GATT focus on reducing tariffs on manufactured goods. The WTO now also works to eliminate
nontariff barriers, and can be used to challenge environmental, health, and other regulations that may
serve legitimate social goals but may be regarded as impediments to international trade. The 1995
replacement of GATT by the WTO heightened concern among critics because its stronger
enforcement powers represent a further shift in power from citizens and national governments to a
8 global authority run by unelected bureaucrats. Business, academic, and government supporters
applaud the WTO as a more muscular sheriff of the world trading system.
Principle of “policy conditionality”.
Was initially used by the IMF but then became a form of structural adjustment in which rules and
regulations were imposed in order for countries to get loans.
Water: commodity or public good? (compare and contrast) :
- As the worlds water supply depletes, water has quickly become a hot commodity – water is a ‘great
commodity’ because demand never falters
-We have applied the ‘supply and demand’ model to water – What are the problems with this?
-A number of water funds market themselves as environmentally or socially friendly – (i.e.
bluewashing of Ethos water at starbucks) – but their privatization and profit-making agenda is clear
- There is a desperate need for public oversight and control of the world’s declining water supply
- “Simply put, the answer to the world’s water crisis rests on the principles of conservation, water
justice and democracy. No global corporation… can operate on these principles”
1) There is no profit in conservation
2) Rich people can pay high costs for water – so that is who they will gear their market towards
3) They will commodify nature if they can – aka if governments don’t regulate the industry
Privatization of water (impact on Human development)
- Fighting against the privatization of the commons
- “Water for All”
Global Water Justice Movement
- Companies can increase cost of water, and lower quality standards, once they have privatized the
system which has caused huge backlash in Asia, Africa and Latin America (but increasingly in the
States and Canada as well)
Resistance to privatization is difficult because of:
1) Some governments commitments to neoliberal ideology and policy (i.e. Chile),
2) Debt and conditionalities,
3) Lack of recognition of access to water as a right,
4) Water inequality – some people benefit, others suffer (i.e. South Africa)
National and Transnational movement against the privatization of water
(i.e. “Quit India” Coca-Cola campaign has received transnational attention)
- A mature international water justice movement has been forged and is shaping the future of the
- “The growth of a democratic water justice movement is a critical and positive development that
9 will bring needed accountability, transparency and public oversight to the water crisis as conflicts
over water loom on the horizon”
GLOBALIZATION FROM BELOW
Globalization from below(main features, aims demands, organization).
Globalization From Below: Below refers to