BSED Major in English-I

ECONOMIC GLOBALIZATION
Introduction

The attack on America raised so many questions, among them, questions about the
dangers of the new world economy. Is terrorism the dark side of globalization?

Globalization is the word evokes diverse ideas and reactions. According to various
arguments, globalization has created a stronger sense of connectedness among the world’s
nations and cultures and improved living standards in some poor, developing countries as
workers have access to new jobs provided by multinational corporations. Advocates and
opponents of globalization can argue each of the preceding statements and none would be
completely wrong, as the benefits and repercussions stemming from globalization continue to
cause widespread debate. It is crucial to examine the effects of economic globalization and the
claim that it exacerbates poverty. Continued widespread poverty plays a profound role in
transnational problems such as the drug trade, the spread of infectious disease, illegal
immigration, international human trafficking, terrorism and a growing number of refugees
fleeing failed states. The spread of technology to less developed countries has made these threats
even more intense as the division between the “haves” and the “have not’s” becomes starkly
more evident when displayed on television or accessed over the Internet. Without sufficient
development of social welfare programs, government regulation and policy coordination,
changes wrought by globalization have the potential to cause greater crisis and increase
transnational problems, subsequently diminishing stability and growth in all nations.

No economic idea has shaped the era of globalization more profoundly than a belief in
free, open markets. Free trade has been a fundamental tenet of capitalism for over 200 years. But
in the 1990s, the global market created a new reality that no government, no politician could
afford to ignore. Our story begins in 1992. The global economy was changing rapidly, but
America seemed adrift. A recession had left 10 million workers unemployed. Industries
struggled against intense foreign competition. Europe had formed a single trading bloc. Japan
looked invincible. Japanese companies were buying up American icons, like Rockefeller Center
and Universal Studios.

Daniel Yergin, Author, Commanding Heights: Up until September 11, there was a sense
that this movement toward globalization really was irreversible. And since then there's been this
recognition that things can go in another direction. Historians may well say that a new era began
at the beginning of the 1990s with the end of the Cold War and the Gulf crises. It was this new
era of globalization, of a world being tied together by flows of investment, of trade, of ideas, of
culture, of people travelling all the time. And it happened very fast. And as so often happens, the
change came more quickly than the ability of thinking to catch up and understand the change.
But to understand where we are today and where we're going, we have to understand this recent
past.
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Bill Clinton, U.S. President, 1993-2001: And that's basically the next big challenge, is
making this interdependent world of ours, on balance, far more positive than negative. And the
extent to which we do that will depend on whether the 21st century is marred by terrorism of all
kinds or whether it becomes the most peaceful and prosperous time the world has ever known.
In the 1990s, a worldwide capitalist revolution fueled the new era of globalization, the greatest
expansion of world trade in history.

Richard Cheney, U.S. Vice President: Millions of people a day are better off than they
would have been without globalization, and very few people have been harmed by it.

Gretchen King, Media Activist, Independent Media Center: And should the world's
wealthiest people really dictate how the world's economy is going to run? George W. Bush, U.S.
President: Out of the sorrow of September 11, I see opportunity, a chance for nations to
strengthen and rethink and reinvigorate their relationships. When nations open their markets to
the world, they find in America trading partners, an investor, and a friend. The 1990s saw the
creation of a new kind of global economy, a single market in which everyone has a stake, but no
one has control. Globalization has brought unprecedented prosperity, but it has also brought
crises and risks we are only beginning to understand. It has unleashed a worldwide debate about
wealth and poverty, about the "rules of the game" for this new era of globalization.

Summary
Singapore

China's leaders hoped to emulate the "tiger economies" of Southeast Asia, where trade
and investment had transformed once-impoverished nations. Lee Kuan Yew, Senior Minister of
Singapore: When the British came here in 1819, they found a fishing village of about 120 people.
When the empire broke up, everybody wanted to do their own trading, and we could easily have
withered on the vine. So we just had to make ourselves relevant to the world. And the countries
that make themselves relevant become better off; their people become better off. Those who opt
out, they suffer. Since the 1970s, the countries of Southeast Asia had become became world-
class exporters, shipping everything from cars to computers across the globe. Daniel Yergin:
They called it the Asian economic miracle because the world had not really seen that kind of
economic growth, that many people brought out of poverty, that rapid a creation of a middle
class so quickly anywhere in the history of the world. By the mid-90s, many Asian economies
were growing at the astonishing rate of 10 percent or more each year. I remember the CEO of
one major company in about 1995 or so saying, "If we're not investing in Asia tomorrow, we're
too late." Lee Hsien Loong, Deputy Prime Minister of Singapore: There was a tremendous
confidence and hope that this was the Asian century, and the place was being transformed, and
you just had to put money there and it would grow on trees.

The Japanese Paradox

In Tokyo, Japan there was one big exception. Japan, the world's second largest economy,
had fallen into a deep, unexpected slump that shook the confidence of its people. Kaorimaruya,
Parliamentary Secretary for Foreign Affairs, Japan: Japan was in the so-called bubble economy,
and at that time the Japanese people were not very careful about debt. After the collapse of the
bubble economy, people came back to reality and came down from their dreams. Japanese banks
hold $1 trillion in bad debts. Japan's economy once looked unstoppable, but it was slow to adapt
to the rapid changes of a fast-moving, interconnected world. Eisuke Sakakibara, Vice Minister of
Finance, Japan, 1997-1999: Japan is a very sort of parochial and very closed economy; there's no
question about it. Walk around the Japanese cities, you don't see many foreigners. Japan, the
great exporter, protected its domestic industries. At the heart of the country's economic problems
lay a contradiction. Eisuke Sakakibara: One sector of the Japanese economy is an export-oriented
sector which is highly competitive, consisting of Toyotas and Sonys. And the other is domestic
manufacturing sector which is extremely uncompetitive. We have a market-oriented capitalistic
system on the one hand; we have a very socialistic, egalitarian sector on the other. In Japan,
government bureaucrats managed a highly regulated economy.

Bangkok, Thailand

By early 1997, Southeast Asia's rapid economic boom was overheating. Sirivat
Voravetvuthikun was one of many who thought the good times would never end. Sirivat
Voravetvuthikun, Former Real Estate Developer, Thailand: Ever since I was a child, I have been
wanting to be a multimillionaire. I wanted to be rich. I wanted to do something that no one has
done -- build a luxurious condominium. I knew a lot of rich people and multimillionaires would
like to take time off to play golf, to enjoy the fresh air in the mountains, which you cannot find in
Bangkok. I looked at the golf course. It's designed by Jack Nicklaus. I put my effort into making
it one of the most beautiful condominiums in Thailand. Still today, with the mountains in the
background, with a fairway and a lake in front of the condominium, it's really beautiful. Anand
Panyarachun, Prime Minister of Thailand, 1991-1993: People were just buying apartments and
condominiums like they were gambling. And they were tempted by this easy money, tempted by
this easy profit. During the '90s, Thailand had opened up its capital markets. For the first time,
local businesses could borrow money from foreign banks which offered lower interest rates.
Anand Panyarachun: People would come and knock on your door and plead with you to borrow,
be they European or Japanese banks. The Western financial world, the banks or the financial
companies, they came and begged us to borrow from them.

Conclusion

The era of globalization looks set to continue, as does the debate over the new rules of the
global game. The belief that trade increases the odds for peace and also leads to higher standards
of living is something that has been part of the American political tradition. And looking back on
the Depression, looking back on the first or second world war, it became very deep seated, and
it's not just a question of specific trade agreements, but it's really a broad consensus about the
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importance of trade to the American economy, to what it does for economic development around
the world, and also as one of the foundations for a more peaceful world. Coupled with the above
comparison between poverty and unemployment during years of positive economic growth
during both administrations, discussion of actual policies is necessary. Menem instituted policies
of economic globalization that included privatizing state entities, reducing tariffs, increasing
taxes and eliminating subsidies. Kirchner has not widely rejected policies of economic
globalization; he has not renationalized privatized industries (although three have been
nationalized: the post office, a railroad line and Aguas Argentinas, and his administration created
a weak staterun oil company, ENARSA, that works in conjunction with private oil companies).
In his goals for 2006, Kirchner discussed reforming the tax structure to make it more
progressive; however, this has been postponed in order to concentrate on inflation (Miguez
2005). Regarding trade liberalization, Argentina remains a member of the World Trade
Organization as well as a key partner in Mercosur (Mercado Común del Sur), which facilites
regional trade between Argentina, Brazil, Uruguay, Paraguay and associate Andean members. At
the end of 2004, though, Kirchner postponed auto trade liberalization with Brazil that was to
begin in 2006, stating that it needed to be further

Critique
So what we've been discovering is that there's a real huge paper wall that stops the poor
from actually being able to develop private legal enterprise. Without property rights, ordinary
people in developing countries can't get a loan, a mortgage, or credit. They are excluded from the
capitalist system, and the global market simply passes them by. So this is a time of crisis for the
cause of capitalism worldwide, because for the moment it has only meant giving the elite of
developing countries additional opportunities, and not being able to get down deep, deep into
where the real majority interests of people in any developing country are, which is among the
poor. With all the discussion about the need to acknowledge human, social, and cultural
differences, there is no assumption that indigenous, other nonwestern, or women’s ways of
knowing and perspectives are recognized within this global future. Rather, a certain kind of
intellectual development remains paramount, and only certain so-called “rational” aspects of
knowledge are valued.