The Lexus and the Olive Tree: Understanding Globalization - Assignment Example

Politics of Development Globalization is one of the most controversial and debatable problems today. Globalization processes bring benefits and opportunities to the modern business and nations, thus it hides many threats and dangers for low developed countries and geographically isolated regions. Globalization can be defined as "the expansion and the stretching of social relations, activities, and interdependencies" (Wade et al 2006, p. 5). Today's financial markets stretch around the globe, and electronic trading occurs around the clock. Gigantic shopping malls have emerged on all continents, offering those consumers who can afford it commodities from all regions of the world - including products whose various components were manufactured in different countries. Globalization reduces rather than contributes to inequalities giving low developed nations a chance to progress and grow, acquire new technologies and innovations in all spheres of life. Globalization has both positive and negative impact on the third world countries identified by the development stage and economic possibilities. For the third world countries, positive effects of globalization involve free trade and integrated economic relations, low barriers to trade and cultural communication, political unity and easy travel, technology transfer and labor turnover. Governments take measures to make their economies more or less attractive to global investors. In addition, nation-states have retained control over education, infrastructure, and, most importantly, population movements. Indeed, immigration control, together with population registration and monitoring, has often been cited as the most notable exception to the general trend towards global integration. (Friedman 2000). Although only 2% of the world's population live outside their country of origin, immigration control has become a central issue in most advanced nations. Many governments seek to restrict population flows, particularly those originating in the poor countries of the global South. Even in the United States, annual inflows of about 600,000 immigrants during the 1990s reached only half the levels recorded during the first two decades of the 20th century (Stiglitz 2002). Finally, the series of drastic national security measures that were implemented worldwide as a response to the terrorist attacks of 9/11 reflect political dynamics that run counter to the hyper-globalizers' predictions of a borderless world. Some civil rights advocates even fear that the enormous resurgence of patriotism around the world might enable states to re-impose restrictions on the freedom of movement and assembly (Wade et al 2006). At the same time, however, the activities of global terrorist networks have revealed the inadequacy of conventional national security structures based on the modern nation-state system, thus forcing national governments to engage in new forms of international cooperation (Hirst and Thompson 1999). Following Stiglitz (2002): "Globalization can further be defined as the arrival of 'self-generating capital' at the global level: that is, capital as capital, capital in the form of the TNC, free of national loyalties, controls, and interests. This is different from the mere internationalization of capital, which assumes a world of national capitals and nation states; it is the supersession by capital of the nation state (p. 10). At the outset of the 21st century, the world finds itself in a transitional phase between the modern nation-state system and postmodern forms of global governance (Yip 1995). Regional clubs and agencies have sprung up across the world, leading some observers to speculate that they will eventually replace nation-states as the basic unit of governance. Starting out as attempts to integrate regional economies, these regional blocs have, in some cases, already evolved into loose political federations with common institutions of governance. On a global level, governments have formed a number of international organizations, including the UN, NATO, WTO, and OECD. Full legal membership of these organizations is open to states only, and the decision-making authority lies with representatives from national governments (Levitt 1983). The proliferation of these transworld bodies has shown that nation-states find it increasingly difficult to manage sprawling networks of social interdependence. Kenichi Ohmae (1985) states: "The global economy is becoming so powerful that it has swallowed most consumers and corporations, made traditional national borders almost disappear, and pushed bureaucrats, politicians, and the military toward the status of declining industries" (p. 45). Another benefit of globalization is that it reduces inequalities as it involves the intensification and acceleration of social exchanges and activities. The Internet relays distant information in mere seconds, and satellites provide consumers with real-time pictures of remote events. The intensification of worldwide social relations means that local happenings are shaped by events occurring far away, and vice versa. In other words, the seemingly opposing processes of globalization and localization actually imply each other. The 'local' and the 'global' form the endpoints of a spatial continuum whose central portion is marked by the 'national' and the 'regional' (Brown and Lauder 2001). The creation, expansion, and intensification of social interconnections and interdependencies do not occur merely on an objective, material level. Globalization processes also involve the subjective plane of human consciousness. Hence, economists underline that globalization also refers to people becoming increasingly conscious of growing manifestations of social interdependence and the enormous acceleration of social interactions (Brown and Lauder2001). Their awareness of the receding importance of geographical boundaries and distances fosters a keen sense of becoming part of a global whole. Reinforced on a daily basis, these persistent experiences of global interdependence gradually change people's individual and collective identities, and thus dramatically impact the way they act in the world (Bhagwati 2004). In spite of benefits and opportunities proposed by integrated world, there are some weaknesses and threats of globalization. Globalization leads to exploitation of labor in third world countries, it ruins national identity and promotes international (American) values and traditions (Levitt 1983). Globalization prevents weak nations from development opportunities and allows developed nations to exploit their natural resources. A group of globalization skeptics highlights the central role of politics in unleashing the forces of globalization, especially through the successful mobilization of political power. In their view, the rapid expansion of global economic activity can be reduced neither to a natural law of the market nor to the development of computer technology. After all, economic forms of interdependence are set into motion by political decisions, but these decisions are nonetheless made in particular economic contexts. The economic and political aspects of globalization are profoundly interconnected. There is no question that recent economic developments such as trade liberalization and deregulation have significantly constrained the set of political options open to states, particularly in the global South. For example, it has become much easier for capital to escape taxation and other national policy restrictions. For example, "tribal areas in India where poverty is acute may not be connected sufficiently to the mainstream economy where growth occurs" (Bhagwati 2004, p. 57). Following Stiglitz (2002) globalization reduces rather than contributes to inequalities because economic processes lie at the core of globalization. Others privilege political, cultural, or ideological aspects. Still others point to environmental processes as the essence of globalization. Like the blind men in the parable, each globalization researcher is partly right by correctly identifying one important dimension of the phenomenon in question. However, their collective mistake lies in their dogmatic attempts to reduce such a complex phenomenon as globalization to a single domain that corresponds to their own expertise. Some scholars consciously limit the historical scope of globalization to the last four decades of postindustrialism in order to capture its contemporary features (Bhagwati 2004). Others are willing to extend this timeframe to include the ground-breaking developments of the 19th century. Still others argue that globalization really represents the continuation and extension of complex processes that began with the emergence of modernity and the capitalist world system some five centuries ago. And a few remaining researchers refuse to confine globalization to time periods measured in mere decades or centuries (Asgary and Walle 2002). While the short chronology outlined below is necessarily fragmentary and general, it nonetheless gives us a good sense that globalization is as old as humanity itself. This brief historical sketch identifies five distinct historical periods that are separated from each other by significant accelerations in the pace of social exchanges as well as a widening of their geographical scope. In this context, it is important to bear in mind that my chronology does not necessarily imply a linear unfolding of history, nor does it advocate a conventional Eurocentric perspective of world history (Perraton 2008). Some globalization researchers (Yip1995) believe that political globalization might facilitate the emergence of democratic transnational social forces anchored in this thriving sphere of global civil society (Perraton 2003). Predicting that democratic rights will ultimately become detached from their narrow relationship to discrete territorial units, these optimistic voices anticipate the creation of a democratic global governance structure based on A number of less optimistic commentators have challenged the idea that optical globilization is moving in the direction of cosmopolitian democracy. Most criticism boil down to the charge that such a vision indulges in an abstract idealism that fails to engage current political developments on the level of public policy. Skeptics have also expressed the suspicion that the proponents of cosmopolitanism do not consider in sufficient detail the cultural feasibility of global democracy. In other words, the worldwide intensification of cultural, political, and economic interaction makes the possibility of resistance and opposition just as real as the benign vision of mutual accommodation and tolerance of differences. Developed nations assure the public that the elimination or reduction of trade barriers among nations will enhance trade and economic integration, increase wealth of developing nations and secure peaceful international relations (Ohmae, 1985). Structural adjustment to do in this case is to create a new (but not necessarily any more level) ground for the relations between the local core and its local periphery. The shock of structural adjustment seems in most cases to have increased the divide rather than narrowed it, and the peripheral firms have become even more peripheral or even degenerated into day to day crisis management, although exceptions can be found. The core firms have either adjusted quickly utilizing their own, often considerable, resources, or if they were extremely dependent on or even owned by the state, more or less folded down, leaving the way free for imported substitutes (Wade 2000). Globalization and integration are the main tendencies in the modern world. The concept of globalization is one of the most complex ones including all spheres of human activities and performance. Globalization deals with economic and social relations, determines political and cultural life of the nations and geographical regions. In spite of the apparent benefits of the globalized world, some critics reject opportunities and strengths of globalization (Bhagwati 20004). Globalization distinguishes between "interdependence of markets and production in different countries;" "(perception of) living and working in a world-wide context;" and a "process that affects every aspect in the life of a person, community or nation" (Brown & Lauder 43 cited Yip 1995, p. 65). However, as the after-effects of the shock die down, possibilities emerge for entrepreneurs to take advantage of the situation, as documented in numerous studies (Germov and Poole 2008). Yet, this area remains underresearched if only because the long-term effects of structural adjustment in combination with other developments in the global economy have not yet manifested themselves fully. This issue therefore remains a major concern for a future research agenda, not least the question whether structural adjustment regimes will, in the medium term, encourage subcontracting and therefore, increased integration of core and periphery, in spite of the opposite trends in the immediate aftermath of the shock, observed by virtually all the economists (Yip 1995). There are also producers who receive their orders from other producers in the cluster whenever the orders they accept exceed their own production capacity. In contrast, there are traditional producers who sell directly to final consumers. In these cases, they organize the transport of tiles to the customer by truck drivers (Stiglitz, 2002). Each of these concepts stresses the importance of clustering, innovation and co-operation among firms. However, the mechanism assumed to stimulate innovation differs. In the flexible specialization paradigm, innovation is the result of the combination of skilled labor, multi-purpose equipment and an innovative mentality (Stiglitz 2002). Further, much of the earlier research on flexible specialization, clustering of small enterprises and networks of small entrepreneurs has had a very local focus, and although the economists transcend this partially through their emphasis on the effects of global economic processes and of nationally constructed economic programs, much work remains to be done in order to facilitate comparative analysis (The Globalization Debate 2008). It is therefore imperative to go beyond flexible specialization and industrial districts cum ideal types and focus the attention of researchers squarely on the components or to put it another way, the basic mechanisms of growth, and how they operate in different contexts (Van Krieken et al 2006). One can ask, for example, what is the role of the concentration of economic activities, and focus on that, and ignore for the moment, for example, whether craft production is prevalent or not. Innovations and their dissemination is another possible candidate for comparative study as well as querying the role of different networking strategies (Stiglitz 2002). Innovation diffusion cannot be understood without noting patterns of inter-firm linkages. Technological indivisibilities are the key to understand the deepening of these linkages, while the emergence of traders and large firms, which are placing large orders, have stimulated the development of a flexible but skilled labor force (Stiglitz 2002). In sum, for the third world countries globalization brings both opportunities and threats to modern countries caused by their economic and political stage of development. Te emerging structure of global governance is also shaped by 'global civil society', a realm populated by thousands of voluntary, non-governmental associations of worldwide reach. Globalization reduces inequalities proposing low developed nations and regions an opportunity to innovate and adopt new technologies and innovative processes in all spheres of life. The new market is highly dynamic but unstable which has stimulated early adopters to develop flexible employment strategies and certain traditional producers become their additional wage workers during peak periods. In the third world countries, the innovation adoption process is in this case characterized by the introduction of new designs and gradual upgrading of equipment allowing step-by-step improvement of the quality of output. In general, marketing new output was indeed a barrier that had to be overcome since new products could no longer be marketed through the local village market. Consequently a much more active approach is required to reach new groups of urban and, occasionally, international buyers in the third world countries. Bibliography Asgary, N, & Walle, A. 2002, Cultural impact of globalisation: economic activity and social hange', Cross Cultural Management, 9 (3), pp. 58-75. Bhagwati, J. 2004, In Defense of Globalization. Oxford: Oxford University Press. Brown, P. and Lauder, H. 2001, Capitalism and Social Progress: The Future of Society in a Global Economy, London: Palgrave. Friedman, Th.2000, The Lexus and the Olive Tree: Understanding Globalization. Anchor; 1 Anchor edition. Hirst, P. and Thompson, K. 1999, Globalization in Question: The International Economy and the Possibility of Governance, Second Edition; Cambridge: Polity Press. Levitt, Theodore. 1983, "The Globalization of Markets." Harvard Business Review, May-June, pp. 92-102. Ohmae, Kenichi. 1985, Triad Power - The Coming Shape of Global Competition. New York: Freepress. Perraton, J. The Scope and Implications of Globalisation' in Jonathan Michie (ed.), The Handbook of Globalisation, Edward Elgar Publishers, Northampton, MA. 2003. Stiglitz, J. 2002, Globalization and its Discontents, London: Allen Lane. Wade, R., Kambhampati, U. S., Guista, M. D. 2006, Critical Perspectives on Globalization. Edward Elgar Publishing. Yip, George S. 1995, Total Global Strategy - Managing for Wordwide Competitive Advantage. Prentice Hall, New Jersey. Read More