Thinkers on Globalization: Hyperglobalist and Skeptical Views - Case Study Example

Key Debates and Thinkers on Globalization: Hyperglobalist and Skeptical Views May 12, Outline: Introduction………………………………………………………………………………….. 3 Understanding of Global Economy and Globalization……………………………………… 3 Global Economy……………………………………………………………………... 3 Globalization…………………………………………………………………………. 4 Key Approaches to Globalization……………………………………………………………. 5 Hyperglobalist Approach…………………………………………………………….. 6 Skeptical Approach…………………………………………………………………... 8 Conclusion……………………………………………………………………………………. 9 Introduction Globalization was considered as the wave of the future when it first appeared to unite countries into one global economy for the mutual benefits, which presumed global integration and interdependence in the technological, economic, social, cultural, ecological and political spheres. The core intention of promoting globalization among countries had positive purposes and tasks to make the world more mature, connected and interdependent. The supporters of globalization influenced many government policy makers, economists, businessmen and journalists into believing that globalization is inevitable and everyone involved should do their best to smooth the process of financial, political and cultural development and integration (Bridges, 2007; Stiglitz, 2006). However, financial and corporate globalization overcame the globalization of production and cultural development. In reality it occurred to be an opportunity for powerful imperialist countries to freely intrude into the economies of other countries and use their financial, natural and labor resources for their own benefits (Kohler, 2001; Rao, 1998). Despite global economy has grown rapidly due to globalization, such international problems like poverty, inequality, illegal immigration and global environment degradation still exist and become even worse year after year. The current paper will determine the meanings of global economy and globalization in addition to discussing and comparing different approaches to globalization, mainly skeptical and hyperglobalist. By better understanding the map of rhetorical formations in widely-read texts regarding globalization, it might be possible to understand better the concerns and intentions of these opposite viewpoints on globalization and recent global changes. Understanding of Global Economy and Globalization Global Economy Global economy is related to an integrated world economy with unified market of unrestricted and free movement of goods, services and labor produced and provided across the world, which becomes increasingly interconnected (Rao, 1998). Domestic producers have an opportunity to expand and raise capacity according to global demands while domestic consumers are now able to choose from a wide variety of imported goods. One of the main purposes of a global economy is to rationalize prices of all the products globally. In the past, restrictions of World Trade Organization (WTO) prevented such an opportunity, but with the recent reduction in the level of tariffs and quotas free flow of goods and services between the developed and the developing countries has become a distinct possibility (Plane, 2005). With the WTO, World Bank and IMF acting as institutional conduits for economic and political policy dictation, the globalizing states and corporations are now able to bypass most states forcing them into compliance with rules and regulations they have had no part in making, and making governments abandon long-held traditions of economy and society. As a result of global economy and globalization, transnational companies or multinational companies (MNCs) emerged leading to a shifting of jobs from the developed countries to the third world countries as wage rates are much lower there. MNCs started growing exponentially using the “outsourcing” services to by producing products in one country to be exported to the second country for designing, which may be subsequently used in the final product of the third country to be supplied across the world. Globalization Globalization may be defined as the integration of production and consumption in all markets across the world through uninhibited trade, financial flows, and mutual exchange of technology and knowledge with the free inter-country movement of labor (Jones, 2010; Watkins and Fowler, 2003). Globalization has intensified interdependence and competition between economies in the world market having a favorable impact on the overall growth rate of the economy. The process of globalization presumes opening up of world trade, internationalization of financial markets, development of advanced means of communication, growing importance of MNCs, population migration and the increased mobility of goods, capital, data, ideas and people (Ritzer, 2010). Due to globalization not only the GDP has increased, but the direction of growth in the sectors has also been changed. Earlier the maximum part of the GDP in the economy was generated from the primary sector, but now the service industry is devoting the maximum part of the GDP (Rao, 1998). There are many debates on whether globalization has positive or negative effects and whether countries should move forward in this direction or make necessary steps to prevent further influence of globalization. Since globalization consists of various aspects that affect the world in different ways, it is rather hard to come into one common conclusion whether globalization is good or bad. Though, it is obvious that mainly globalization of the economy was able to succeed due to the emergence of worldwide financial and production markets and better access to financial and manufacturing procedures (Jones, 2010). Integration of financial markets, capital flows, international trade and human migration are the main components of economic globalization to increase economic interdependence of the countries worldwide (Watkins and Fowler, 2003). Key Approaches to Globalization There are several main approaches to globalization, including skeptics, globalists, hyperglobalists, neo-liberals, radicals and transformationalists. The main difference between these approaches is their perception of the world rather than perception of the facts. The current paper discusses two of these approaches, mainly skeptical and hyperglobalist approaches. Hyperglobalist Approach Hyperglobalists view globalization as causal historically developed a new epoch of human history characterized by global economy, integration and open free trade. They perceive politics as global governance or neo-liberalism with the decline of nation-state and loss of national sovereignty and homogenized culture. According to hyperglobalists, economic globalization leads to “denationalization” of economies through the establishment of transnational networks of production, trade and finance (Ritzer, 2010). Under such “borderless” economy, national governments are transferred to little more than transmission belts for global capital or simple intermediate institutions squeezed between increasingly powerful local, regional and global mechanisms of governance. According to Robert Reich (1991), people are living “through a transformation that will rearrange the politics and economics of the coming century. There will be no “national” products or technologies, no national corporations, no national industries, at least as we have come to know that concept, the very idea of an American economy is becoming meaningless…” Hyperglobalists are convinced that economic globalization is creating new forms of social organization that are replacing or eventually will replace traditional nation-states as the primary economic and political units of world society. Hyperglobalists suggest that because of the role of capital mobility, economic interdependence and multinational corporations national economies are much less or no longer significant nowadays (Martell, 2010). Large amounts of money can be transferred almost immediately with little constraints within national boundaries, which occurred as a result of reduced political restrictions on the movement of money and technological change in the form of the computerization of financial transactions (Ritzer, 2010). Hyperglobalists view corporations as multinational rather than national in their ownership with international production facilities, workforces and consumers in different parts of the world. Coca-Cola, British American Tobacco, McDonalds, Nikon, BMW, BP and Nokia are among numerous MNCs working today. MNCs became more attracted by the emerging markets (EMs) with their enormous opportunities for sustainable development than by the saturated established markets, where high competition prevents from high profits. It was logical to address the wealthy elite top of the economic pyramid in the emerging markets as the first main target for MNCs products and services. However, recently large corporations realized that there is a huge untapped market potential at the base of the economic pyramid (Goodman, 2005). By presenting the fastest-growing segment of the world’s population, merely four billion people in those markets present both large opportunities and unique challenges for MNCs. The emerging economies of such countries as China, Argentina, India, Mexico, Egypt, Ukraine and others are the key locations for the future development and growth of MNCs. According to Hitt et al. (2000), it is very clear that in the case of the developing countries MNCs consider reputation and motivation to share proficiency before they choose their partner organizations. In the same way, Frost (2001) mentioned that bigger parents and local subsidiaries that have great resources are considered as more convincing to replace partners. Moreover, they have greater chances for reciprocity. Hyperglobalists state that economic globalization is now generating a new pattern of winners and losers in the global economy. The old North–South division is argued to be an increasing anachronism as a new global division of labor replaces the traditional core–periphery structure with a more complex architecture of economic power. Against this background, governments have to ‘manage’ the social consequences of globalization, or those who ‘having been left behind, want not so much a chance to move forward as to hold others back’ (Ohmae, 1995, p. 64). However, they also have to manage increasingly in a context in which the constraints of global financial and competitive disciplines make social democratic models of social protection untenable and spell the demise of associated welfare state policies (J. Gray, 1998). Globalization may be linked with a growing polarization between winners and losers in the global economy. But this need not be so, for, at least in the neoliberal view, global economic competition does not necessarily produce zero-sum outcomes. While particular groups within a country may be made worse off as a result of global competition, nearly all countries have a comparative advantage in producing certain goods which can be exploited in the long run. Neo-Marxists and radicals regard such an ‘optimistic view’ as unjustified, believing that global capitalism creates and reinforces structural patterns of inequality within and between countries. But they agree at least with their neoliberal counterparts that traditional welfare options for social protection are looking increasingly threadbare and difficult to sustain. Skeptical Approach As an opposition to hyperglobalist approach to globalization, there occurred a more sober set of accounts with skepticism arguing that globalization is not new and that probably the processes being described by hyperglobalists are not very global either (Hirst and Thompson 1996; Krugman 1996). For example, according to Hirst and Thompson (1992), “we do not have a fully globalised economy; we do have an international economy and national policy responses to it”. For skeptics, globalization is a discourse and internationalization is effect of other causes (Held et al, 2005). Their empirical approach to globalization views international economy as triadic, regional and unequal because there is always state intervention and protectionism. On the contrary to hyperglobalists, skeptics do not view globalization as something new. They are confident that nation-states with regional blocks are those to keep power and control all fields of the society (Held et al, 2005). Skeptics are mainly concerned with the abstract nature of globalist perspectives and see evidence of the continuing role of nation-states, both within their own boundaries and as agents of the transnational processes of globalization, through which they maintain as much as lose power (Murray, 2006). Skeptics argue that national identities cannot be replaced by global identities because states at the local national level keep having strong power and influence; for example, states in the North America and Europe. Skeptics consider that contemporary levels of economic interdependence are by no means historically unprecedented and the historical evidence confirms only heightened levels of internationalization and interactions between predominantly national economies (Hirst and Thompson, 1996). Skeptics argue that globalization is a myth relying on a wholly economist conception of globalization, associating it with a perfectly integrated global market. As Hirst and Thompson (1996) wrote, skeptics are free to conclude that the extent of contemporary “globalization” is wholly exaggerated. In such a way, they consider the hyperglobalist thesis as fundamentally flawed and politically naive because it underestimates the enduring power of national governments to regulate international economic activity. Rather than being out of control, the forces of internationalization themselves depend on the regulatory power of national governments to ensure continuing economic liberalization (Hirst and Thompson, 1996). Conclusion Due to globalization, people are no longer live in a “closed” community without influencing or being influenced by other nations. Problems, disasters and events that happen on a long distance have an important and immediate impact and appropriate reaction. People can no longer stay indifferent to the increased number of crimes and diseases in another country, emergence of uncontrolled migration and terrorism, usage of drugs and worsened environmental situation. The two opposite approaches to globalization discussed in the current paper provided different perspectives and views on the influence of global economy and globalization toward the economic, political, social, cultural, technological, and ecological issues around the world. Identifying the critical issues in the debate between hyperglobalists and skeptics creates an intellectual foundation for thinking about how globalization might best be conceptualized. References: Bridges, E. (2007). Transforming a Globalized World. WorldView Journal, New York: August 3. Clark. D. (2003). Urban world/Global city. 2nd edition. Routledge. Frost, T.S. (2001). The geographic sources of foreign subsidiaries innovations. Strategic Management Journal, 22(2), pp: 101–123. Goodman, E. (2005). Globalization and Globalism. New York Press. Held, D. et al. (2005). Debating Globalization. Polity. Hitt, M.A., Dacin, M.T., Levitas, E., Arregle, J.-L. and Borza, A. (2000). Partner selection in emerging and developed market contexts: resource-based and organizational learning perspectives. Academy of Management Journal, 43(3), pp: 449–467. Jones, A. (2010). Globalization: Key Thinkers. Polity. Kohler, H. (2001). Promoting Stability and Prosperity in a Globalized World. 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