Globalization at the Dawn of the Twenty-First Century

in Power and Plenty, Trade, War and the World Economy in the Second Millenium By Ronald Findlay and Kevin O’Rourke

Class presented by:Mariana Varela Chaves no.9336Constança Eça Pinheiro no. 9341Sara das Neves Franco no.9443

Index

• Introduction

Development of major Eurasian regions in the last 1000 years

Economical Challenges

Political challenges

Conclusion

Introduction-The text deals upon the future of globalization by providing an overview of the challenges the whole world is going to face in the upcoming decades;

-The author refers to the history of the last 1000 years to state his belief that the future of globalization is inconsistent with its current development, implying that the future of globalization is facing economic challenges which will slow down the growth of the world market;

Development of major Eurasian regions in the last 1000 years

-East

-China, Japan, Korea : prosperous throughout the years

•China:

-Returning to its eminence - Vast population - Rapid industrialization - Growing foreign trade

-Very entrenched Communist Party

• Japan: - After a period of stagnation, has a steady rate of growth;

- Stable democratic regime since the end of the second world

war.

• South Korea: - In the last four decades has faced a huge growth - Emerging power -Transition from military dictatorship has been made

successfully.

• North Korea:

- High values of starvation - Makes itself known only because of threats of nuclear explosions

-Central Asia (no longer a part of the Soviet Union, is very underdeveloped)

Five Islamic Republics:

• Kazakhstan• Uzbekistan- most populated (25 million)• Kyrgyzstan• Tajikistan• Turkmenistan

-These states:

- Influenced by their former membership of U.S.S.R, by Turkey and Iran in the west and China in the east.

- Russia and China compete for influence in Central Asia

- USA also is a major influence in this area

- If properly handled can be the stage of a successful industrialization and modernization.

-South Asia: Constituted by six states:

• India

- Growing very rapidly - Prestigious position in the information technology sector

• Pakistan:

- Stepping up growth rate - Governed by a military dictatorship - Conflict with India over Kashmir caused many troubles, due to the nuclear weapons that both countries now possess

• Bangladesh

• Sri Lanka

• Small mountain kingdoms of Nepal and Bhutan

The region:

-Good growth rates -It still has some problems

-Southeast Asia: facilitates the overseas trades

• Indonesian archipelago• Malaysia

• Philippines• Cambodia• Burma

•Thailand• Vietnam:

- Most successful story of development in the Southeast Asia.- Transformed itself from a communist command economy to a dynamic export one

The region:

-Manufacturing itself to a leader of globalization

-Islamic World of the Middle East

• It has fallen from its position of primacy

• Higher per capita incomes than South or Central Asia or China, due to the rents from the oil reserves that this region has.

• Low growth rates of per capita income throughout the region. The exception is Israel.

-Eastern Europe:

• Russia

- Restored centralized direction of the economy

- Plays a geopolitical role in the world’s market

- Due to its size it can supply energy at a lower cost than Middle East

- Faces the challenge to use the earnings from the exploration of the natural resources to generate higher productivity in its modern manufacturing sectors

-Western Europe (region with the most spectacular success):

• Birthplace of modern economic growth

• The EU and USA, with only 12% of world’s population have over 40% of the world’s GDP

• The EU is a Black Sea power

-Sub-Saharan Africa:

•In the beginning of the second millennium was quite isolated•One of the most poor and underdeveloped regions of the world•Africa’s poor growth attributed to -warfare, -environment propitious to diseases - low productivity agriculture - bad governance -rich-country trade policies

•Ending sub-Saharan poverty remains the greatest development challenge facing humanity.

Economical Challenges

Globalization - process with implications on:• International trade• international division of labour•Economic growth

Risk in the medium to long run: oil significantly dearer.Reasons:

•Oil production peak and then start to decline•Concerns over global warming lead to imposition of high

carbon taxes

In the end of the XIX century there were distributional shifts favouring New World landowners and workers, hurting European landowners and American workers.

The more regional liberalization of 1945-80 mostly involved OECD economies, with similar economic development, capital labour ratios and living standards. Trade between them was of intraindustry nature.

In the 1980’s and 1990’s:•trade liberalization in the Third World•increase in the South’s exportation of manufactured

products and wider volumes.

Rise in inequity:•International trade•Technological change – negative impact on unskilled

workers, who are much more protectionists than skilled workers and this is influencing politics, since the vote has split largely.

Distrust of globalization: MFA (multi-fabric agreement) 1974-2004

•USA restricted imports of Chinese textiles•EU agreement with China limiting the growth of textiles

exports USA’s adoption of a Central American Free Trade Agreement

Income distribution matters because of the political reactions it can provoke. Which implies that those wishing to maintain an open trading system also need to propose a range of complementary domestic policies, including but not limited to educational, training and welfare programs, in order to have political support.

Immigrants can have either positive or negative effects, depending on the age they have, their skills, if they are employed. This can be politically important in determining the future of immigration and on globalization in general.

Political challenges

The geopolitical context is crucial in determining the extent of international trade;

To continue the present trends relating international trade is necessary to avoid conflicts that divide the world;

Today’s problems: •Terrorism•Nuclear proliferation•Imperial overstretch.

The USA is the dominant military power and the world’s leading economy.

but, with the collapse of the Soviet Union and the entry of China in the world market, will it continue to have se same important role in the world’s economic system?

•The rapid growth of certain countries, such as China an India, shifts the power in the energy market even further to the suppliers, with benefit for Russia and to the detriment of the USA.•Different powers in the world search for different gains

from trade in the global market.

However there are some barriers to globalizations:•Border tension•Inability to settle a trade agreement•Necessity for globalization to keep growing (reflected in

the incapacity to build the pipeline).

Regarding these problems we can’t assume that the progress achieved so far will continue indefinitely.

Numerous events, such as wars, natural catastrophes or financial crises (generated more directly by the process of globalization) constitute setbacks and disruptions of the future globalization.

Therefore many challenges will come out, being the rise of India and China as influential powers in the world, the most challenging of all.

Conclusion

•Globalization is facing big upcoming challenges, predominantly economical and political, which will eventually slow down its remarkable development.•Evidence that economic and political threats can create problems for the countries which are more dependent on trade.•Globalization is not a stable process and can be interrupted by events such as rising oil prices, global warming, rising income inequity, terrorism.•Globalizations as we know it today is not likely to continue forever.