The Global Economy

• Read File:Introduction.pdf Overview to Globalization
• Read File:Globalrecession.pdf

Do Individual Countries Matter and how difficult is it to measure Globalisation

Yes, countries do still matter but consider this in terms of the impact of Globalisation from an economic criterion and a country's ability to be isolated from the global economy, which might be describes as Economic Coupling/Decoupling.

Some examples

• 1. The Oil Shocks on the 1970's/1980's. The large run up in prices in '73 and '79 contributed to significant fall in UK GDP of between 3.5% and 4.5% as well as high inflation. The UK's and US's economic response could only mitigate the effects but not isolate them and in the next 20 years falling oil prices had a positive impact on economic growth.

http://www.bankofengland.co.uk/publications/inflationreport/ir09feb.pdf

• 2. Global Credit Crunch. If, as Gordon Brown tried to argue, Britain's recession was born out of the US subprime mortage crisis it indicates the the world's financial markets are so interdependent in terms of the free (or in this case frozen ) flows of credit that a bank's default in one country can impact the financial health of banks in another country (think Irish and Icelandic banks) regardless of the intervention of the nation's government. But "Global" credit crunch may be overstating it as Asian and Middle Eastern financial systems were not impacted as much and to a much greater extent decoupled from US than Europe. The initial global economic response was a concerted effort from the G20 countries to increase liquidity and stimulus. The longer term response, ironically, if for countries to adopt contrary economic polices e.g stimulus in the US and debt reduction in the UK.

Measurements of the increased level of Globalisation, I think, are actually very difficult to measure. Sutcliffe and Gynn (Handbook of Globalisation p61-p75) provide examples of some of the difficulties

• 1. Aggregated measures of Globalisation hide large variances between different industries and sectors. Eg Manufacturing and Service or Agriculture and Consumer Electronics

• 2. The assumption that the revenue of MNC's is a proxy measure for the level of globalized economic activity when the correct measure would be to count the added value to the product they contributed.

So from the economic perspective good measurement is difficult and perhaps less easy to measure than social (e.g internet and social media traffic, migration), etc

"The more global the world economy becomes the more unequal it becomes on country basis, ie. gdp per capita"

I was interested in a comment that said "The more global the world economy becomes the more unequal it becomes on country basis, ie. gdp per capita"

I was thinking whether that was true and came across a paper by Dowick and Delong on Globalisation and convergence supports that assertion http://www.j-bradford-delong.net/econ_articles/Dowrick/GandC.PDF. It goes on further to say that since poorer ecomonies opened up the convergence between GDP per capita between rich and poor countries seems to have increased. I am not sure I understand the reasons why but I can offer some suggestions. In some of these countries

1. They have a history of political instability and military conflict.

2. The benefits of globalisation have not been shared equally amongst its population

3. They are high fertility rates and low levels of investment in education and infrastructure.

4. They are still 'lower down the learning curve' and that their growth rates will accelarate as richer countries level off in the decades to come

It is also possible that if these countries did not open up the convergence could have been greater still.

I think it points to the conclusion that relative measurements of the effects of Globalisation being difficult to determine and interpret, but it should not stop us from trying!

Is globalization is an economic, social, political or technological phenomenon. Which ones are more important?

If we take the approach that Globalization in some form has been ever present then this was driven by mankind's desire to trade (e.g. the Silk Road) and as such Globalization was driven by economic factors. Even in recent centuries I would argue empires such as the Dutch and British were no not so much intent on colonisation for its own sake but to open up new markets for their goods. In turn that spurred technical innovations such as Tea Clippers and Railroads, etc whose purpose was to transport and open up new markets.

In the 20th and 21st century I think it is a much more complicated picture. global alliances have had both a political and economic dimension (e.g. ECC/NAFTA became EU, ASEAN, Bretton Woods, World Bank) and I think you start to see Economic factors spurring on Political and Technological Globalization which in turn spur further Economic Globalization which provide further impetus to Social, Technological and Political globalization and so on .

I am struck by the notion that technology has made globalization more of a social phenomenon in recent years. In previous centuries only countries and large companies had the resources to build railroads and ships but now global movements can spring from small groups and individuals and gain momentum for the cost of a laptop and an internet connection (e.g. Facebook, Youtube). This is no better illustrated than by Steger's example (p3) of Osama Bin Laden orchestrating a war against Western powers from a cave in Afganistan.