Chapter 8:Chapter 8:Globalization, Globalization, Inequality, and Inequality, and DevelopmentDevelopment

Melanie Hatfield Melanie Hatfield

Soc 100Soc 100

The Triumphs and The Triumphs and Tragedies of GlobalizationTragedies of Globalization

International communication has become International communication has become easy and inexpensive. In 1930, a 3-minute easy and inexpensive. In 1930, a 3-minute New York to London phone call cost more New York to London phone call cost more than $250 in today’s dollars and only a than $250 in today’s dollars and only a minority of Americans had telephones in their minority of Americans had telephones in their homes. In 2009, the same call cost as little as homes. In 2009, the same call cost as little as 15 cents and telephones, including cell 15 cents and telephones, including cell phones, seem to be everywhere.phones, seem to be everywhere.

Between 1982 and 2006, when the world’s Between 1982 and 2006, when the world’s population increased by 41%, the number of population increased by 41%, the number of international tourists increased by 205%.international tourists increased by 205%.

The Triumphs and The Triumphs and Tragedies of GlobalizationTragedies of Globalization

International trade and investment have International trade and investment have increased rapidly. From 1982 to 2006, increased rapidly. From 1982 to 2006, worldwide investment across national borders worldwide investment across national borders increased by 2,114%.increased by 2,114%.

Many more international organizations and Many more international organizations and agreements now span the globe. In 1981, about agreements now span the globe. In 1981, about 14,000 international organizations existed. By 14,000 international organizations existed. By 2006, there were three-and-a-half times as 2006, there were three-and-a-half times as many. Individual nation-states give up some of many. Individual nation-states give up some of their independence wen they join international their independence wen they join international organizations or sign international agreements. organizations or sign international agreements.

The Triumphs and The Triumphs and Tragedies of GlobalizationTragedies of Globalization

The Internet did not exist in 1982, The Internet did not exist in 1982, but in 2006 it comprised 439 million but in 2006 it comprised 439 million servers connecting people from servers connecting people from around the world through e-mail, file around the world through e-mail, file transfers, websites, and transfers, websites, and videoconferencing. videoconferencing.

Foreign Visitors to Top Ten Foreign Visitors to Top Ten Visited CountriesVisited Countries

Many people oppose globalization Many people oppose globalization because…because…

Inequality between rich and poor Inequality between rich and poor countries remains and is also increasing.countries remains and is also increasing.

It may be hurting local cultures and the It may be hurting local cultures and the natural environment.natural environment.

Some suggest that globalization is a form Some suggest that globalization is a form of imperialism, which is the economic of imperialism, which is the economic domination of one country by another.domination of one country by another.

It contributes to the “homogenization” of It contributes to the “homogenization” of the world, the cultural domination of less the world, the cultural domination of less powerful by more powerful countries.powerful by more powerful countries.

Sources of Globalization: Sources of Globalization: TechnologyTechnology

Technological progress has made it possible to Technological progress has made it possible to move objects and information over long move objects and information over long distances quickly and inexpensively.distances quickly and inexpensively.

The introduction of commercial jets radically The introduction of commercial jets radically shortened the time necessary for international shortened the time necessary for international travel, and the cost of such travel dropped travel, and the cost of such travel dropped dramatically after the 1950s.dramatically after the 1950s.

Similarly, various means of communication, Similarly, various means of communication, such as telephone, fax, and e-mail, allow us to such as telephone, fax, and e-mail, allow us to reach people around the globe inexpensively reach people around the globe inexpensively and almost instantly.and almost instantly.

Sources of Globalization: Sources of Globalization: PoliticsPolitics

Politics are important in bringing people from Politics are important in bringing people from far away together in both micro and macro far away together in both micro and macro ways.ways.

Case in point: North Korea and South KoreaCase in point: North Korea and South Korea Both countries are the same distance away from the Both countries are the same distance away from the

US, yet we have many ties with South Korea and no US, yet we have many ties with South Korea and no ties to North Korea.ties to North Korea.

The South Korean government has been a close ally The South Korean government has been a close ally of the US since the Korean War in the early 1950s of the US since the Korean War in the early 1950s and has sought greater political, economic, and and has sought greater political, economic, and cultural integration with the outside world.cultural integration with the outside world.

North Korea, in an effort to preserve its North Korea, in an effort to preserve its authoritarian political system and socialist authoritarian political system and socialist economic system, has remained isolated from the economic system, has remained isolated from the rest of the world.rest of the world.

Sources of Globalization: Sources of Globalization: EconomicsEconomics

Transnational corporations are the most Transnational corporations are the most important agents of globalization in the world important agents of globalization in the world today.today.

They are different from traditional corporations They are different from traditional corporations in 5 ways:in 5 ways:

1.1. Traditional corporations rely on domestic labor Traditional corporations rely on domestic labor and domestic production. Transnational and domestic production. Transnational corporations depend increasingly on foreign corporations depend increasingly on foreign labor and foreign production.labor and foreign production.

2.2. Traditional corporations extract natural Traditional corporations extract natural resources or manufacture industrial goods. resources or manufacture industrial goods. Transnational corporations increasingly Transnational corporations increasingly emphasize skills and advances in design, emphasize skills and advances in design, technology, and management.technology, and management.

Transnational Corporations Transnational Corporations Differences (Cont.)Differences (Cont.)

3.3. Traditional corporations sell to domestic Traditional corporations sell to domestic markets. Transnational corporations markets. Transnational corporations depend increasingly on world markets.depend increasingly on world markets.

4.4. Traditional corporations rely on established Traditional corporations rely on established marketing and sales outlets. Transnational marketing and sales outlets. Transnational corporations depend increasingly on corporations depend increasingly on massive advertising campaigns.massive advertising campaigns.

5.5. Traditional corporations work with or under Traditional corporations work with or under national governments. Transnational national governments. Transnational corporations are increasingly autonomous corporations are increasingly autonomous from national governments.from national governments.

Globalization Causing Globalization Causing HomogenizationHomogenization

Globalization is homogenizing the world.Globalization is homogenizing the world. Many economic and financial institutions Many economic and financial institutions

around the world now operate in roughly the around the world now operate in roughly the same way – much like the US.same way – much like the US.

McDonaldization: “the process by which the McDonaldization: “the process by which the principles of the fast-food restaurant are principles of the fast-food restaurant are coming to dominate more sectors of American coming to dominate more sectors of American society as well as the rest of the world.”society as well as the rest of the world.”

Because of McDonalization, the values of Because of McDonalization, the values of efficiency, calculability, and predictability efficiency, calculability, and predictability have spread from the US to the entire planet have spread from the US to the entire planet and from fast-food restaurants to virtually all and from fast-food restaurants to virtually all spheres of life.spheres of life.

Levels of Global Levels of Global InequalityInequality

The richest 1% of the world’s population earns as The richest 1% of the world’s population earns as much income as the bottom 57%.much income as the bottom 57%.

The top 10% of US income earners earn as much as The top 10% of US income earners earn as much as the poorest 2 billion people in the world.the poorest 2 billion people in the world.

Of the world’s 6.5 billion people, around 1 billion Of the world’s 6.5 billion people, around 1 billion live on less than $1 a day and 2.6 billion live on less live on less than $1 a day and 2.6 billion live on less than $2 a day.than $2 a day.

The citizens of 20 rich, highly industrialized The citizens of 20 rich, highly industrialized countries spend more on cosmetics or alcohol or ice countries spend more on cosmetics or alcohol or ice cream or pet food than it would take to provide cream or pet food than it would take to provide basic education, or water and sanitation, or basic basic education, or water and sanitation, or basic health and nutrition for everyone in the world.health and nutrition for everyone in the world.

Just 10% of the world trade in narcotics or 5% of Just 10% of the world trade in narcotics or 5% of world military spending could supply these world military spending could supply these necessities to the world’s desperately poor.necessities to the world’s desperately poor.

Gross Domestic Product per Gross Domestic Product per Capita, World RegionsCapita, World Regions

Modernist Theory: A Modernist Theory: A Functionalist Approach Functionalist Approach

Modernist theory beliefs: Modernist theory beliefs: Global inequality results form various Global inequality results form various

dysfunctional characteristics of poor societies.dysfunctional characteristics of poor societies. They lack a Western mentality: values that stress They lack a Western mentality: values that stress

the need for savings, investment, innovation, the need for savings, investment, innovation, education, high achievement, and self-control in education, high achievement, and self-control in having children.having children.

People living in rich countries can best help poor People living in rich countries can best help poor countries by transferring Western culture and countries by transferring Western culture and capital to them and eliminating the dysfunctions.capital to them and eliminating the dysfunctions.

Only then will the poor countries be able to cap Only then will the poor countries be able to cap population growth, stimulate democracy, and population growth, stimulate democracy, and invigorate agricultural and industrial production.invigorate agricultural and industrial production.

Dependency Theory: A Dependency Theory: A Conflict ApproachConflict Approach

Dependency theory beliefs:Dependency theory beliefs: For the past 500 years, the most powerful For the past 500 years, the most powerful

countries in the world deliberately countries in the world deliberately impoverished the less powerful countries.impoverished the less powerful countries.

An adequate theory of global inequality An adequate theory of global inequality should not focus on the internal should not focus on the internal characteristics of poor countries characteristics of poor countries themselves.themselves.

Instead it ought to follow the core Instead it ought to follow the core principles of conflict theory and focus on principles of conflict theory and focus on patterns of domination and submission. patterns of domination and submission.

Dependency Theory: A Dependency Theory: A Conflict Approach (Cont.)Conflict Approach (Cont.)

Beginning around 1500, the armed forces of the Beginning around 1500, the armed forces of the world’s most powerful countries subdued and then world’s most powerful countries subdued and then annexed or colonized most of the rest of the world.annexed or colonized most of the rest of the world.

Around 1780, the Industrial Revolution began.Around 1780, the Industrial Revolution began. It enabled the Western European countries, Russia, It enabled the Western European countries, Russia,

Japan, and the US to collect enormous wealth, Japan, and the US to collect enormous wealth, which they used to extend their global reach.which they used to extend their global reach.

They forced their colonies to become a source of They forced their colonies to become a source of raw materials, cheap labor, investment raw materials, cheap labor, investment opportunities, and markets for conquering nations.opportunities, and markets for conquering nations.

Exploitation by direct political control was soon Exploitation by direct political control was soon replaced by new means of achieving the same end: replaced by new means of achieving the same end: substantial foreign investment, support for substantial foreign investment, support for authoritarian governments, and mounting debt.authoritarian governments, and mounting debt.

Do foreign investment and liberalized trade Do foreign investment and liberalized trade policies have positive or negative effects today?policies have positive or negative effects today?

Modernization theoristsModernization theorists want more foreign want more foreign investment in poor countries and freer trade.investment in poor countries and freer trade. They strongly believe that following these policies will They strongly believe that following these policies will

promote economic growth and general well-being.promote economic growth and general well-being. They want trade and investment barriers to be dropped so They want trade and investment barriers to be dropped so

free markets can bring prosperity to everyone.free markets can bring prosperity to everyone. Dependency theoristsDependency theorists dramatically oppose this dramatically oppose this

strategy.strategy. They think foreign investment drains the wealth out of poor They think foreign investment drains the wealth out of poor

countries.countries. Therefore, they want the poor countries to rebel against Therefore, they want the poor countries to rebel against

the rich countries, throw up barriers to free trade and the rich countries, throw up barriers to free trade and investment, and find their own path to well-being.investment, and find their own path to well-being.

Core, Periphery, and Core, Periphery, and SemiperipherySemiperiphery

Immanuel Wallerstein argues that Immanuel Wallerstein argues that capitalist development resulted in a capitalist development resulted in a world system composed of three tiers:world system composed of three tiers: core capitalist countriescore capitalist countries - major - major

sources of capital and technologysources of capital and technology peripheral countriesperipheral countries - major sources of - major sources of

raw materials and cheap laborraw materials and cheap labor semiperipheral countriessemiperipheral countries - former - former

colonies that are becoming prosperouscolonies that are becoming prosperous

The semiperipheral countries differ The semiperipheral countries differ from the peripheral countries in 4 from the peripheral countries in 4 main ways:main ways: Type of colonialismType of colonialism Geopolitical positionGeopolitical position State policyState policy Social structureSocial structure

Neoliberal GlobalizationNeoliberal Globalization

Neoliberal globalization is a policy that Neoliberal globalization is a policy that promotes private control of industry promotes private control of industry and minimal government interference and minimal government interference in the running of the economy.in the running of the economy.

Advocates of neo liberal globalization Advocates of neo liberal globalization also support foreign investment and also support foreign investment and the removal of taxes, tariffs, and the removal of taxes, tariffs, and restrictive regulations that discourage restrictive regulations that discourage the international buying and selling of the international buying and selling of goods and services.goods and services.

Four types of actions of globalization Four types of actions of globalization reform: reform: Foreign aidForeign aid Debt cancellationDebt cancellation Tariff reductionTariff reduction Democratic globalization. Democratic globalization.

Foreign AidForeign Aid Foreign aid is often accompanied by high Foreign aid is often accompanied by high

administrative and overhead costs.administrative and overhead costs. It is often given on condition that it be used It is often given on condition that it be used

to buy from donor countries goods that are to buy from donor countries goods that are not necessarily high-priority items for not necessarily high-priority items for recipient countries.recipient countries.

Foreign aid can be beneficial with oversight Foreign aid can be beneficial with oversight to ensure that foreign aid is not wasted and to ensure that foreign aid is not wasted and is directed to truly helpful projects.is directed to truly helpful projects.

Increasing the amount of foreign aid Increasing the amount of foreign aid and and redesigning its delivery redesigning its delivery can help mitigate can help mitigate some of the excesses of neoliberal some of the excesses of neoliberal globalization.globalization.

Debt CancellationDebt Cancellation

Many analysts argue that the world’s rich Many analysts argue that the world’s rich countries and banks should write off the debt countries and banks should write off the debt owed to them by developing countries in owed to them by developing countries in recognition of historical injustices.recognition of historical injustices.

They reason that the debt burden of the They reason that the debt burden of the developing countries is so burdensome that it developing countries is so burdensome that it prevents them from focusing on building prevents them from focusing on building economic infrastructure, improving health an economic infrastructure, improving health an education of their populations, and education of their populations, and developing economic policies that can help developing economic policies that can help them emerge from poverty.them emerge from poverty.

Tariff ReductionTariff Reduction

The reduction of tariffs by rich The reduction of tariffs by rich countries because these tariffs countries because these tariffs prevent developing countries from prevent developing countries from exporting goods that could earn exporting goods that could earn them money for investment in them money for investment in agriculture, industry, and agriculture, industry, and infrastructure.infrastructure.

Democratic GlobalizationDemocratic Globalization Research shows that democracy lowers Research shows that democracy lowers

inequality and promotes economic growth.inequality and promotes economic growth. Democracies make it more difficult for elite Democracies make it more difficult for elite

groups to misuse their power and enhance groups to misuse their power and enhance their wealth and income at the expense of their wealth and income at the expense of the less well to do.the less well to do.

They increase political stability, so to They increase political stability, so to provide a better investment climate.provide a better investment climate.

They tend to enact policies that are more They tend to enact policies that are more responsive to people’s needs and benefit a responsive to people’s needs and benefit a wide range of people from all social classes.wide range of people from all social classes.