Globalization and the U.S.

Globalization and the U.S.

Globalization refers to the process of international integration with regards to both culture and trade.

Learning Objectives

Interpret the general trend of globalization

Key Takeaways

Key Points

  • Globalization is the process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture. The process of globalization has increased in recent history due to advances in industrialization, rapid population growth, increased transportation, increased global travel, and the advent of technology such as mobile phones and the Internet.
  • The Bretton Woods Conference from July 1-22, 1944 led to an agreement by major governments around the world to lay down the framework for international monetary policy, commerce, and finance. 
  • International institutions, such as the General Agreement on Tariffs and Trade ( GATT ) and the World Trade Organization (WTO), were formed to remove trade restrictions and negotiate and formalize trade agreements. 
  • Many fear that cultural globalization, driven by communication technology and the worldwide marketing of Western cultural industries, is resulting in the global domination of American culture at the expense of other cultures.
  • In regards to politics, globalization may ultimately reduce the importance of nation states, as supranational institutions such as the European Union, the WTO, the G8 (“Group of Eight”), and the International Criminal Court serve to replace or extend national functions to facilitate international agreement. 

Key Terms

  • globalization: A common term for processes of international integration arising from increasing human connectivity and the interchange of worldviews, products, ideas, and other aspects of culture.
  • Supranational: Beyond the borders or scope of any one nation.
  • Bretton Woods Conference: Held July 1-22, 1944 at the Mount Washington Hotel in New Hampshire, a gathering of 730 delegates from all 44 Allied nations with the aim of regulating the international monetary and financial order after the conclusion of World War II.
  • GATT: A multilateral agreement regulating international trade; according to its preamble, its purpose is the “substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis.”
  • economies of scale: The characteristics of a production process in which an increase in the scale of the firm causes a decrease in the long-term average cost of each unit.

Overview: What is Globalization? 

Globalization is the process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture. Advances in transportation (such as the steam locomotive, steamship, jet engine, and container ships) and in telecommunications infrastructure (including the rise of the telegraph and its modern offspring, the Internet, and mobile phones) have been major factors in globalization, generating further interdependence of economic and cultural activities in nations around the world. Though scholars place the origins of globalization in modern times, others trace its history long before the cross-Atlantic travel by Europeans in the 15th century. Some even trace the origins to the third millennium BCE. Large-scale globalization began in the 19th century, and in the late 19th century and early 20th century, the connectivity of the world’s economies and cultures grew very quickly.

The word globalization is a very recent term, only establishing its current meaning in the 1970s when it was brought about by the intersections of the work of academics, librarians, journalists, and publishers/editors. In 2000, the International Monetary Fund (IMF) identified four basic aspects of globalization: trade and transactions, capital and investment movements, migration and movement of people, and the dissemination of knowledge. Further, environmental challenges such as global warming, cross-boundary water and air pollution, and over-fishing of the ocean are linked with globalization. Globalizing processes affect and are affected by business and work organization, economics, socio-cultural resources, and the natural environment. Academic literature commonly subdivides globalization into three major areas: economic globalization, cultural globalization, and political globalization.

Globalization has been driven by the global expansion of multinational corporations based in the United States and Europe, as well as the worldwide exchange of new developments in science, technology, and products. The direction of cultural flows has often been one-sided, and worldwide export of Western culture to non-Western nations has proliferated through new forms of mass media: film, radio, television, recorded music, and most recently the internet. Development and growth of international transport and telecommunication played a decisive role in modern globalization.

Economic Globalization

The Bretton Woods Conference

After the Second World War, work by politicians led to the Bretton Woods Conference from July 1-22, 1944. Formally known as the United Nations Monetary and Financial Conference, the conference was a gathering of 730 delegates from all 44 Allied nations at the Mount Washington Hotel, situated in Bretton Woods, New Hampshire, United States, to regulate the international monetary and financial order after the conclusion of World War II. Out of the conference came an agreement by major governments to lay down the framework for international monetary policy, commerce, and finance, as well as the founding of several international institutions intended to facilitate economic growth by lowering trade barriers. 

GATT and WTO

One of the earliest institutions was the General Agreement on Tariffs and Trade (GATT), which initially led to a series of agreements to remove trade restrictions. GATT’s successor was the World Trade Organization (WTO), which provided a framework for negotiating and formalizing trade agreements and a dispute resolution process. Other institutions, including the International Bank for Reconstruction and Development (the World Bank) and the International Monetary Fund (IMF), have been facilitated by advances in technology, which have reduced the costs of trade and trade negotiation rounds, originally under the auspices of the GATT. Other bilateral and multilateral trade agreements, including sections of Europe’s Maastricht Treaty and the North American Free Trade Agreement (NAFTA), have also been signed in pursuit of the goal of reducing tariffs and barriers to trade.

Particular initiatives carried out as a result of GATT and the WTO have included:

  • Promotion of free trade and the elimination of tariffs
  • Creation of free trade zones with small or no tariffs
  • Reduced transportation costs, especially resulting from development of containerization for ocean shipping
  • Reduction or elimination of capital controls
  • Reduction, elimination, or harmonization of subsidies for local businesses
  • Creation of subsidies for global corporations
  • Harmonization of intellectual property laws across the majority of nation-states, with more restrictions put in place
  • Supranational recognition of intellectual property restrictions (e.g., patents granted by China would be recognized in the United States)

Cultural Globalization

Cultural globalization refers to the transmission of ideas, meanings, and values around the world in such a way as to extend and intensify social relations. This process is marked by the common consumption of cultures that have been diffused by the Internet, popular culture media, and international travel. This has added to processes of commodity exchange and colonization, which have a longer history of carrying cultural meaning around the globe. The circulation of cultures enables individuals to partake in extended social relations that cross national and regional borders. The creation and expansion of such social relations is not merely observed on a material level: cultural globalization involves the formation of shared norms and knowledge with which people associate their individual and collective cultural identities. 

While cultural globalization has increased cross-cultural contacts, it has also been accompanied by a decrease in the uniqueness of once-isolated communities. Many argue it is a process of homogenization, and more specifically a process marked by the global domination of American culture at the expense and erasure of other cultures. Multiple anti-globalization movements have emerged out of this concern, protesting against globalization and giving new momentum to the defense of local uniqueness, individuality, and identity.

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Cultural globalization: This image shows a McDonald’s in Osaka, Japan, illustrating the “McDonaldization” of global society.

Political Globalization 

In general, globalization may ultimately reduce the importance of nation states. Supranational institutions such as the European Union, the WTO, the G8 (“Group of Eight”), and the International Criminal Court serve to replace or extend national functions to facilitate international agreement. Increasingly, non-governmental organizations (NGOs) influence public policy across national boundaries, including humanitarian aid and developmental efforts. As a response to globalization, some countries have embraced isolationist policies. For example, the North Korean government makes it very difficult for foreigners to enter the country and strictly monitors their activities when they do. Aid workers are excluded from places and regions the government does not wish them to enter, and citizens cannot freely leave the country.

Debates over Globalization

While proponents argue globalization is beneficial to economic growth, opponents argue that it contributes to global inequality.

Learning Objectives

Assess the controversy over globalization

Key Takeaways

Key Points

  • Globalization has resulted in the widespread sharing of—and access to—information and cultural exchanges around the globe. 
  • Mobile phones,  cellular networks, and the Internet allow people to communicate and connect across nations and borders. In addition, advancements in transportation have led to more opportunities for travel across borders, especially for those with more access to wealth.
  • Proponents of economic growth, expansion, and development generally view globalizing processes as desirable or necessary to the well-being of human society. 
  • Economic liberals generally argue that higher degrees of political and economic freedom in the form of free trade in the developed world are ends in themselves, producing higher levels of overall material wealth; they see globalization as the beneficial spread of liberty and capitalism.
  • Critiques of globalization generally stem from discussions surrounding the impact of such processes on individual nation-states and on the planet. Opponents view globalizing processes as detrimental to social and economic well-being on a global or local scale. 
  • Opponents claim that the increasing autonomy and strength of corporate entities shapes the political policy of countries. They instead advocate global institutions and policies that better address the needs of the working classes and the environment.
  • The anti-globalization movement’s largest and most visible mode of organizing remains mass decentralized campaigns of direct action and civil disobedience.

Key Terms

  • gini coefficient: A tool that measures the inequality among values of a frequency distribution (e.g., levels of income): a number of zero expresses perfect equality, where all values are the same (e.g., where everyone has an exactly equal income), while a number of one (100 on the percentile scale) expresses maximal inequality among values (e.g., where only one person has all the income).
  • anti-globalization: A movement critical of the internationalization of corporate capitalism; participants oppose what they see as large, multi-national corporations having unregulated political power, exercised through trade agreements and deregulated financial markets.

Introduction

Globalization is the process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture. Put in simple terms, globalization refers to processes that promote worldwide exchanges of national and cultural resources. Advances in transportation and telecommunications infrastructure, including the rise of the Internet, are major factors in globalization, generating further interdependence of economic and cultural activities. Globalizing processes affect and are affected by business and work organization, economics, socio-cultural resources, and the natural environment.

Impact of Globalization

Globalization has resulted in the widespread sharing of—and access to—information around the globe. Cultural trends are exchanged through music, art, industry, clothing style, and technology. People around the world are more connected than ever before through social media platforms such as Facebook, Twitter, Instagram, and others. Mobile phones and cellular networks, in addition to the Internet, allow people to communicate and connect across nations and borders. Advancements in transportation have led to more opportunities for travel across borders, especially for those with more access to wealth.

Some research indicates positives trends as the world has become more globalized, though it is unclear if these trends are directly linked to globalization. For example, some researchers have shown that in the developing world as a whole, life expectancy rose by four months each year after 1970 and infant mortality rate declined from 107 per thousand in 1970 to 58 in 2000 due to improvements in standards of living and health conditions. Adult literacy in developing countries rose from 53% in 1970 to 74% in 1998. Technological innovations such as the mobile phone are believed to benefit most developing countries.

At the same time, globalization has allowed corporations to outsource manufacturing and service jobs from high-cost locations to lower-cost locations, where they can pay workers lower salaries and provide fewer (or no) benefits; critics argue this disadvantages poorer countries. Increases in income disparity has occurred over the last 20 years. In the U.S. the income of the top 50% has risen to a much greater extent than the income of the bottom 50% of American citizens, which has risen only slightly over the last forty years.

The Debate Over Globalization

Reactions to processes contributing to globalization have varied widely, with a history as long as extraterritorial contact and trade. Philosophical differences regarding the costs and benefits of such processes give rise to a broad range of ideologies and social movements. Proponents of economic growth, expansion, and development generally view globalizing processes as desirable or necessary to the well-being of human society. Those opposed to globalization view one or more globalizing processes as detrimental to social well-being on a global or local scale. Many question the social or natural sustainability of long-term and continuous economic expansion, while others point out the social and structural inequality caused by these processes, as well as the colonial, imperialistic, or hegemonic ethnocentrism, cultural assimilation, and cultural appropriation that underlie such processes.

Proponents of Globalization

In general, corporate businesses, particularly in the area of finance, see globalization as a positive force in the world. Many economists cite statistics that seem to support such a positive impact. For example, per capita Gross Domestic Product (GDP) growth among post-1980 globalizing countries accelerated from 1.4% a year in the 1960s and 2.9% a year in the 1970s to 3.5% in the 1980s and 5.0% in the 1990s. Economic liberals generally argue that higher degrees of political and economic freedom in the form of free trade in the developed world are ends in themselves, producing higher levels of overall material wealth. Globalization is seen by these proponents as the beneficial spread of liberty and capitalism.

Critiques of Globalization

Critiques of globalization generally stem from discussions surrounding the impact of such processes on the planet and on individual nation-states, especially those in the “Third World.” Economic arguments by fair trade theorists claim that unrestricted free trade benefits those with more financial leverage (i.e. the rich) at the expense of the poor. They challenge directly traditional metrics, such as GDP, and look to other measures, such as the Gini coefficient or the Happy Planet Index, pointing to evidence of social disintegration, the spread of diseases, environmental damage, breakdowns in democracy, and increasing poverty in many of the world’s nations as unintended consequences of globalization. Environmental challenges such as climate change, cross-boundary water and air pollution, and over-fishing of the ocean have all been linked to globalization. Some opponents of globalization see the phenomenon as the promotion of corporate interests; they also claim that the increasing autonomy and strength of corporate entities shapes the political policy of countries. They advocate global institutions and policies that they believe better address the moral claims of poor and working classes as well as environmental concerns.

Anti-globalization, or counter-globalization, consists of a number of criticisms of globalization, but can be generally described as a criticism of the globalization of corporate capitalism. Opponents of globalization in developed countries are disproportionately middle class and college educated; this contrasts sharply with the situation in developing countries, where anti-globalization movements have been more successful in enlisting a broader group, including millions of workers and farmers. Although since the mid-2000s more emphasis has been given to the construction of grassroots alternatives to (capitalist) globalization, the movement’s largest and most visible mode of organizing remains mass decentralized campaigns of direct action and civil disobedience.

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The Occupy Movement: One of the most recent manifestations of the anti-global capitalism movement is the Occupy Movements. These images show protests in different cities across the United States where activists protests dominance of the banks, corporations, and organizations like NATO, the World Bank, and IMF.

The Internationalization of the United States

The internationalization of the United States has become apparent through the processes of free trade, outsourcing, exporting of American culture, and immigration.

Learning Objectives

Analyze the impact globalization has had on the United States

Key Takeaways

Key Points

  • Globalized society in the modern-day United States offers a complex web of forces that bring people, cultures, markets, beliefs, and practices into increasingly greater proximity to one another; in the United States, this has had a range of both positive and negative effects.
  • The relative costs, benefits, and beneficiaries of the free trade policies linked with globalization are debated by academics, governments, and interest groups. 
  • Globalization allows many American corporations to outsource manufacturing and service jobs from the United States to lower-cost locations. 
  • The financial savings from lower international labor rates can provide a major motivation for companies to outsource; some critics say this harms poorer countries, while others argue it decreases the jobs available for American citizens at home.
  • The term ” Americanization ” is used to describe the exportation of American culture across the globe, as seen in the diffusion of American fast food chains such as McDonald’s and Starbucks.
  • Due to immigration, the United States has become an increasingly ethnically diverse (and, hence, internationalized) country. American population growth is fastest among minorities as a whole, and according to the Census Bureau’s estimation for 2012, 50.4% of American children under the age of 1 belong to so-called “minority” groups.

Key Terms

  • internationalization: The act or process of making a product suitable for international markets.

Globalization within the United States 

Globalized society in the modern-day United States offers a complex web of forces and factors, bringing people, cultures, markets, beliefs, and practices into increasingly greater proximity to one another. In the United States, this has had a range of both positive and negative effects.

Free Trade

Free trade, which is a component of globalization, is a policy followed by many international markets in which countries’ governments do not restrict imports from, or exports to, other countries. The relative costs, benefits, and beneficiaries of free trade are debated by academics, governments, and interest groups. 

Economic liberals and neoliberals generally argue that higher degrees of political and economic freedom in the form of free trade in the developed world are ends in themselves, producing higher levels of overall material wealth. Globalization is seen by these proponents as the beneficial spread of liberty and capitalism. However, many in the United States oppose free trade for a variety of reasons.

Free trade is often opposed by domestic industries that would have their profits and market share reduced by lower prices for imported goods. For example, if U.S. tariffs on imported sugar were reduced, U.S. sugar producers would receive lower prices and profits, while U.S. sugar consumers would spend less for the same amount of sugar because of those same lower prices. Proponents of socialism frequently oppose free trade on the ground that it allows maximum exploitation of workers by capital: the process of free trade is seen as an end-run around workers’ rights and laws that protect individual liberty. The idea of free trade is opposed by many anti-globalization groups, based on the assertion that free trade agreements generally do not increase the economic freedom of the poor or the working class, and frequently make the poor even poorer. 

Outsourcing 

In business, outsourcing involves the contracting out of a business process to another party. The term “outsourcing” came from the words “outside resourcing,” and it can include both foreign and domestic contracting. Globalization allows many American corporations to outsource manufacturing and service jobs from the United States to lower-cost locations (such as developing or Third World countries). The financial savings from lower international labor rates can provide a major motivation for companies to outsource, and many corporations take advantage of the lower wages and lack of benefits they can provide workers in lower-income countries. Some critics of globalization say that this harms poorer countries, while others argue it decreases the jobs available for American citizens at home.

Exporting American Culture 

A 2005 report by the United Nations Educational, Scientific and Cultural Organization (UNESCO) showed that, while cultural exchange is becoming more frequent from Eastern Asia in recent years, Western countries are still the main exporters of cultural goods. The term “Americanization” is used to describe the exportation of American culture across the globe, a process related to a period of high political American clout and of significant growth of America’s shops, markets, and objects being brought into other countries. Through the process of globalization, American culture has expanded around the globe by spreading pop culture, particularly via the Internet and satellite television. The diffusion of certain cuisines such as American fast food chains is a visible aspect of cultural globalization: the two most successful global food and beverage outlets, McDonald’s and Starbucks, are American companies often cited as examples of globalization, with over 32,000 and 18,000 locations operating worldwide, respectively, as of 2008. Of the top ten global brands, seven are based in the United States; Coca-Cola, which holds the top spot, is often viewed as a symbol of Americanization.

Some critics of globalization argue that it harms the diversity of cultures. As a dominating country’s culture (such as that of the United States) is introduced into a receiving country through globalization, it can become a threat to the diversity of local culture. Some argue that globalization may ultimately lead to Westernization or Americanization of culture, where the dominating cultural concepts of economically and politically powerful Western countries spread and cause harm on local cultures. In this way, globalization can contribute to the alienation of individuals from their traditions. Cultural practices including traditional music can be lost or turned into a fusion of traditions. While scholarly opinion typically states that globalization and Americanization are different phenomena, they are inherently linked. 

After World War II, American investment in Europe soared, generating much talk of the Americanization of Europe. Public opinion began to resent American advertising and business methods, personnel policies, and the use of the English language by American companies. Criticism was also directed toward the international currency system, which was blamed for inflationary tendencies as a result of the dominant position of the U.S. dollar. By the 1970s, European investment in the United States increased even more rapidly than vice-versa. The basic reason for the U.S. investments is no longer only lower production costs, faster economic growth, or higher profits in Europe, but rather the desire to maintain a competitive position based largely on American technological superiority.

Immigration and Population Changes

One of the ways in which internationalization has become apparent in the United States is through immigration and the resulting demographic changes occurring in the U.S. population. Through the continued process of immigration, the United States is becoming an increasingly ethnically diverse (and, hence, internationalized) country. 

The American population more than tripled during the 20th century—at a growth rate of about 1.3% a year—from about 76 million in 1900 to 281 million in 2000. According to the Census Bureau’s estimation for 2012, 50.4% of American children under the age of one belonged to so-called “minority” groups. Hispanic and Latinx Americans accounted for almost half (1.4 million) of the national population growth of 2.9 million between July 1, 2005, and July 1, 2006. Immigrants and their U.S.-born descendants are expected to provide most of the U.S. population gains in the decades ahead. The top twelve emigrant countries in 2006 were Mexico (173,753), People’s Republic of China (87,345), Philippines (74,607), India (61,369), Cuba (45,614), Colombia (43,151), Dominican Republic (38,069), El Salvador (31,783), Vietnam (30,695), Jamaica (24,976), South Korea (24,386), Guatemala (24,146). Other countries comprise an additional 606,370.

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McDonaldization: A kosher McDonald’s in Ashkelon, Israel, symbolizes the internationalization of American businesses around the world.