Globalization on a reverse gearFor Vs against

Introduction• Globalization is the system of interaction among the

countries of the world in order to develop the global economy. Globalization refers to the integration of economics and societies all over the world. Globalization involves technological, economic, political, and cultural exchanges made possible largely by advances in communication, transportation, and infrastructure.

• On a philosophical plane, India has been a votary of globalization since ages. It is reflected in hymns like “Aa no bhadra rutavo yantu Viswatah”▫ Let noble thoughts come from all over the universe

Early history of globalization

• History of globalization can be traced back to the ancient civilizations.

• Example ▫ Trade links between the Sumerian civilization and the

Indus Valley Civilization in third millennium B.C.▫ Trade links between various countries like India, Egypt,

Greece, and Roman Empire and so on. ▫ Business links between the Parthian Empire, Roman

Empire and Han Dynasty. ▫ Development of various trade routes like Silk Road and

so on.

Globalization in the medieval age

• Islamic period in the medieval era witnessed Jew & Muslim traders going to various parts of the world for trade which led to a blend of ideas, traditions and customs

• China introduced the first postal service and invented paper.▫ This led to better knowledge sharing

• Columbus and Vasco Da Gama sailed through in search of new countries to establish trade links or to make colonies

Globalization between the pre modern periods to modern period• Industrial revolution led to significant increase in

quantity and quality of output▫ Led to higher exports and better trade relations. ▫ Various countries across the world became the

consumers of European market.

• Pre globalization era came to an end after the First World War. ▫ It put significant adverse effect on the economic

scenario which led to the Great Depression and gold standard crisis in the later part of the 1920s and early 1930s.

Globalization in the modern era• Globalization, in the modern sense of the term, came

into existence after the Second World War when world leaders wanted to foster trade relations between nations

• Countries experienced:▫ Promotion of free commerce and trade ▫ Abolition of various double taxes, tariffs, and

capital controls▫ Reduction of transport cost and development of

infrastructure▫ Creation of global corporations▫ Blend of culture and tradition across the countries

• Creation of World Trade Organization led to the growth of trade and commercial▫ World exports improved significantly from 8.5% to

around 16.2% due to globalization.

Globalization today• Between 1990 and 2006, world output grew from US$ 22,680

billion to $45,941 billion

• Global exports grew from US$3480 billion to $12,088 billion

• As % of world output, exports grew from 15.3% to 26.3% between 1990 and 2006

• Some argue that the present model of globalization has exacerbated problems of unemployment, inequality and poverty, while others contend that globalization helps to reduce them. These problems predated globalization, but it is clear that for globalization to be politically and economically sustainable, it must contribute to their reduction

The official line from the former Prime Minster Atal Behari Vajpayee’s Economic Advisory Council

“Globalization is an unavoidable process which is taking place independent of us. It forces us to cope with it. There is no room in a globalised world for an economy delinked from world trade and foreign investment.”

Globalization

Boon Bane

“If globalization is to go forward, and I believe it should because, as I have said,  the benefits outweigh the costs, then we have to reassure our publics that the policies and initiatives are in place to ensure that both the pain and gain of globalization are shared in an equitable and sustainable way”

Globalization a boon• Increase in free trade and commerce• Increased options for customers• Increased investment due to foreign

investments accelerates growth, increases employment and reduces poverty

▫ Examples Uganda and Vietnam• Better awareness, information and technology

sharing• Reduction of cultural barriers increases the

global village effect

Globalization a boon• Spread of democratic ideals to developed nations• Reduction of likelihood of war between

developed nations• Increases in environmental protection in

developed nations• Greater interdependence of nation-states• Increase in flexibility of corporations to operate

across borders▫ Companies are making this move because not only

are they able to save millions on the lower costs, but they are getting a better quality of work

Globalization

Boon Bane

“Globalization may be good for economic prosperity but is definitely bad for social goals... Globalization may be economically benign but...it is socially malign”

Globalization a bane

•Increased flow of skilled and non-skilled jobs from developed to developing nations

• Increased unemployment in developed countries•Ill effects of coupling •Increase in inequalities between the rich and the

poor•FDI being attracted to certain sectors only•Tougher conditions being imposed on workers•Destroying jobs and local communities

Globalization a bane

•Increase in the chances of civil war within developing countries

•Decreases in environmental integrity •Threat that control of world media by a

handful of corporations will limit cultural expression

•Spread of a materialistic lifestyle and attitude that sees consumption as the path to prosperity

So…Is Globalization on a reverse gear?

Globalization on a reverse gear?- Yes!!Climate change • Rising sea levels, Global warming: 1993 Mississippi River

flood and Hurricanes Rita and Katrina • The results of such changes can be severe for all forms of

transport infrastructure • Higher temperatures and heat events raise costs and

cause delays via both infrastructure and transport operations.

• Via transportation, global warming will also undermine agriculture and manufacturing.

• Changes in temperature and precipitation are expected to decrease crop outputs.

According to the United Nations, global food production could fall by as much as one quarter by 2050. Smaller output will reduce food exports and lead to more local food production reducing demand for transportation of food.

Globalization on a reverse gear?- Yes!!Peak oil• Petroleum is the critical fuel for the movement of goods.

Freight transportation consumes 35% of all transport energy use worldwide and virtually all of this fuel is petroleum based.

• As peak oil is neared, there will be an increasing gap between production and demand. As a result, the price of crude oil is expected to both rise significantly and become much more volatile

• Price of crude oil rose from $28 per barrel in 2003, to $37 in 2004, $50 in 2005, $60 in 2006, $67 in 2007, spiking at $147.27 on July 11, 2008 and falling to $53 in November 2008 and $36 January 2009, before recovering to the low$70s in August 2009

• Air and ocean freight transport rates rises • While it cost only $3,000 to ship a normal container from

China to the US in 2000, today its costs $8,000!

• High oil prices also erode global supply chains by their impacts on production. For example, Agriculture is petroleum intensive in terms of fuels for machinery and refrigeration and feedstock for fertilizers and pesticides. Higher oil prices result in higher food production costs.

World oil production, according to the International Energy Agency, has been essentially flat for several years and will soon steadily and irreversibly decline at some time between 2010 and 2012, new oil production will not be sufficient to keep up with depletion and world oil production will begin

dropping

US POLICIES

IS GLOBALIZATION ON REVERSE GEAR? NO

Conclusion• "Globalization is not a phenomenon. It is not just some passing trend.

Today it is an overarching international system shaping the domestic politics and foreign relations of virtually every country, and we need to understand it as such.“ As thoughtful people concerned about world affairs, our job is to pick up "globalization," examine it from all sides, dissect it, figure out what makes it tick, and then nurture and promote the good parts and mitigate or slow down the bad parts. Globalization is much like fire. Fire itself is neither good nor bad. Used properly, it can cook food, sterilize equipment, form iron, and heat our homes. Used carelessly, fire can destroy lives, towns and forests in an instant. As Friedman says: "[Globalization] can be incredibly empowering and incredibly coercive. It can democratize opportunity and democratize panic. It makes the whales bigger and the minnows stronger. It leaves you behind faster and faster, and it catches up to you faster and faster. While it is homogenizing cultures, it is also enabling people to share their unique individuality farther and wider.“ Globalization has dangers and an ugly dark side. But it can also bring tremendous opportunities and benefits. Just as capitalism requires a network of governing systems to keep it from devouring societies, globalization requires vigilance and the rule of law.