Globalisation

Definition : it is the growing economic interdependence among countries as reflected in the increasing cross-border flow of goods, services, capital and know-how.

It is like seeing the world as one single global market.

Causes of globalisation :

  • Voyages of Discovery in the 16th century, and the Industrial Revolution in the 19th.
  • The growth of capitalism
  • Improved air-travel and communication
  • Deregulation (Thatcher / Reagan)
  • Fall of Berlin Wall and collapse of the Soviet Union : victory of capitalism on communism.
  •  Internet (“everything is at the touch of the button”, “the world is at your fingertips”)
  • The development of international institutions (IMF, WTO, World Bank)

Main territories :

  • Tree centers : North America, Europe and Eastern Asia (= TRIAD). They play a major role politically, ideologically, culturally and scientifically.
  • New centers called BRICS : Brazil, Russia, India, China and South Africa

Arguments for globalisation :

  • It makes the world richer
  • The “Third world” countries will benefit from this
  • Asian countries prospered thanks to globalisation.
  • Free trade have caused the diffusion of prosperity

Arguments against globalisation :

  •  It divides the world into Rich/Poor, North/South.
  • There is more trade, but only rich countries
  • FMN make what is best for them, and not for the country or its inhabitants
  •  There is only little control : it led to economic crisis
  • Undemocratic system : the FMN and IMF are not elected as a government is.
  • Individual word-wide power and no control (ex : Rupert Murdoch)
  • Loss of cultural identity : the world is becoming the same everywhere
  • Exploitation of the poor.

Causes of the recent crisis :

  • American banks lent too much credit to people who could not pay back the loans (“sub-prime mortgages”)
  • Because American banks lent to foreign banks, the crisis spread in other countries (especially Iceland and GB)
  • People can’t buy goods, it led to a collapse in manufacturing industry

The response to the crisis :

  • USA and GB : governments spent billions to pay the debts of the banks
  • Europe : the EU tried to find a common solution, but each government wanted to protect its own country
  • There are European countries which are more touched than other : Greece, Spain, Ireland… Germany refused to pay for weak countries, because it could be touched.

Conclusion :

It is unlikely that globalisation will “stop” because of the crisis but it will need to be more regulated than before, especially in the banking and finance sectors.

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