Name | Leons-Eunice (1276355) |
Module Title:(e.g. [title] ): | Should government intervene in shaping the globalization of the world economy or should the market forces decide how globalization should proceed? |
Coursework no(e.g. 1 or 2) & type (essay, etc.), if applicable | 1 | Coursework Title:(can be abbreviated) | IPE |
Deadline: | 18th April, 2013 |
Date Submitted: | 18th April, 2013 |
Word Count: | 4171 |
Should government intervene in shaping the globalization of the world economy or should the market forces decide how globalization should proceed?
What is globalization?
"The concept of globalisation refers both to the compression of the world and the intensification of consciousness of the world as a whole" - Benedikt Kiesenhofer
Economic "globalization" is a historical process, the result of human innovation and technological progress. It refers to the increasing integration of economies around the world, particularly through the movement of goods, services, and capital across borders. The term sometimes also refers to the movement of people (labour) and knowledge (technology) across international borders. There are also broader cultural, political, and environmental dimensions of globalization.
The term "globalization" began to be used more commonly in the 1980s, reflecting technological advances that made it easier and quicker to complete international transactions—both trade and financial flows. It refers to an extension beyond national borders of the same market forces that have operated for centuries at all levels of human economic activity—village markets, urban industries, or financial centres.
It has been given positive connotations by those who advocate greater economic integration across national borders, while it has been fiercely criticized by those who perceive it as a threat to social cohesion and as the advancement of unfettered capitalism, which undermines the Welfare State.
With reference to the topic of this essay that questions the necessity of government intervention in the process of globalization, in my opinion the animosity surrounding the debate requires a holistic approach while analysing this issue. Globalisation is a subject matter that must be looked at in all its manifestation, through different angles and perspectives. Examining its various aspects from how the transformation to a global free market came about, its historical progression, its operations in various nation-states, the role of the government in its operations, international organizations that came into being to operate market forces, the extent to which government should intervene in this process are all crucial aspects which will be addressed in this essay with the objective of exploring various factors that can potentially favour the globalization of the world economy.
HISTORY OF GLOBALIZATION
The history of globalization can be traced back in terms of two different fields of history and politics, however its history can be stated as the increasing trade between nations based on stable institutions that allow firms in different nations to exchange goods and services with minimal friction.
Four distinct phases of globalisation can be discerned in modern history. The first phase began in the sixteenth century with the passing of pre-modern localism, improvements in maritime technology, discovery and mercantilism, the European Renaissance, centralising tendencies associated with absolute monarchy and the emergence of modern nation states following the Peace of Westphalia of 1648, and the spread of the ideals of the American and French Revolutions from the eighteenth century.
The second phase from the late eighteenth century was marked by the spread of the Industrial Revolution and vast improvements in human technology, inanimate traction, productivity and demand, which led to mass production and conveyance of merchandise goods and people, cross-border integration through bulk long-distance trade, colonial plunder, investment flows and empire during a phase of European imperial expansion which saw the flag follow trade across the globe. The Industrial Revolution opened up a rapidly widening income gap between Europe and America on the one hand, and the rest of the world on the other. The globalising trend was halted by the two great wars of the twentieth century, and an 'autarchic' anti-imperial 'nationalist' interlude, which actually saw a decline in international trade and capital flows as a percentage of global GDP. Even as trade and flags disengaged, the per capita income between developed countries and the erstwhile colonies continued to diverge.
During the third phase, merchandise trade resumed its triumphant march as the engine of hyper growth in East Asia from the 1970s. International trade/GDP ratios recovered to their late 19th century level by the last decade of the 20th century. But whereas the globalisation thrust in the second phase in the nineteenth century involved, in the main, the export of mass-produced merchandise to the colonies, this time round the export dynamism came from the erstwhile colonies. This globalisation thrust was led by transnational corporations (TNCs) that endeavoured to disseminate international trade and modern technology to every flag on earth.
Globalisation arguably entered a frenetic fourth phase from the end of the twentieth century, in which developed and developing countries are becoming more equal partners in the flow of cross border trade and investment, as per capita income between the developed world and the developing world rapidly converged, galvanised by the awakening of the ancient sleeping giants, China and India.
TRANSFORMATION TO THE GLOBAL FREE MARKET
It was in the mid-19thcentury that England was the subject of a far reaching experime...