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.
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.