Globalization and Its Discontents

IR Theories on the EU

Liberalism– Institutions

– Domestic politics and intergovernmental bargains

– Functionalism – functional spillover

Constructivism– Norms of democratic community

Realism?

Globalization

Globalization: Global networks of interdependence (Nye 2004)

Interdependence: mutual dependence of actors across different parts of the international system (Keohane and Nye 1977)

“…globalization is about connections between different region of the world-from the cultural to the criminal, the financial to the environmental-and the ways in which they change and increase over time….”(Held et al. 1999)

Elements of Globalization

Trade– Exports: $66bn (1960) -$7,100bn (2002)

International finance– FDI: $68bn (1960) $7,100(2002)

Multinational corporations– 3,500 (1960) to 65,200 (2001)

Regional integration

Elements of Globalization

Cultural globalization Disease Environmental interdependence Population and migration Transnational trafficking networks Transnational terrorism

Trends: FDI Flows

FDI I nflows 1970-2004

0

200 000

400 000

600 000

800 000

1 000 000

1 200 000

1 400 000

1 600 000

Y197

0

Y197

5

Y198

0

Y198

5

Y199

0

Y199

5

Y200

0

Year

Mil

lion

s o

f d

oll

ars

World

Developed countriesand territoriesDeveloping countriesand territories

Trends: Trade Flows

Sources of Globalization

Technology

Triumph of liberalism– Francis Fukuyama: The End of History?

– Washington Consensus

Institutions– WTO

– International Monetary Fund (IMF)

– World Bank

Is Globalization Good or Bad?

Benefits of Globalization

Access to information

Access to goods

Access to technology

Access to capital

The Risks of Globalization

States lose control

Heightened vulnerability

Benefits distributed asymmetrically

Economic objectives trump social, cultural, environmental objectives

Case: From the Asian Miracle to the Asian Financial Crisis

The miracle:– South Korea: 7%-8%average growth 1970s-1990s;

– Thailand: 7%-8.5% growth rate 1960-1980s

1990s: rapid financial market liberalization

1997 Financial Crisis– Thailand: fear of currency devaluation->sell baht->currency devaluates-

>capital flight; financial instability;

– Korea: rumor that economy in trouble/bank will not renew loans -> banks unwilling to renew loans ->economic trouble due to high indebtedness

– Korea: GDP -7%; Thailand: GDP -11%

Case: Intellectual Property Rights(Biopiracy)

Mexican yellow bean– Larry Proctor (Colorado) patent on “Enola” bean, originally

from Sonora (Mexico)

Basmati rice– RiceTec Inc (Texas)-Texmati Rice patent

The global banana

Distribution of a dollar of retail revenue:– Producer income $0.05

– Export costs $0.04

– Transport $0.11

– Import license $0.09

– Ripening process $0.05

– Taxes $0.15

– Distribution/retail $0.34

– Profit $0.17

Source: Lipschutz,2004, p. 2

The Backlash: Seattle 1999

Solutions, Solutions….The Role of Institutions

Keynesian welfare politics?

Domestic institution?

Gradual liberalization, mitigated by government policies?

Strengthen international institutions?

Tackle poverty?