Dickens Global Shift Notes

8/16/2019 Dickens Global Shift Notes

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Dickens Global Shift- Chapter 1- QuestioningGlobalisation

Globalisation denition:

Stiglitz puts it as “the closer integration of the countries and peoplesof the world which has been brought about b the enor!ousreduction of costs of transportation and co!!unication and thebreaking down of articial barriers to the "ows of goods# ser$ices#capital# knowledge and %to a lesser e&tent' people across borders(p)

Con"icting perspecti$es on Globalisation

Neo-liberals (or pro-globalizers, political right):

• Globalisation is an ideological pro*ect that will bring the

greatest benet for the greatest nu!ber+ ,rgue for free!arkets

• ,rgue for free !arkets in trade and nance

• elie$e that there is too little rather than too !uchglobalisation

• Globalisation is the solution to the worlds econo!ic proble!sand ine.ualities

Hyper-globalizers (anti-globalizers, political left):

• Globalisation is the proble! not the solution

• /ree !arkets create ine.ualities0 globalisation increases thescale and e&tent of ine.ualities

• nregulated !arkets lead to a reduction in well-being for alle&cept a s!all !inorit in the world# also createsen$iron!ental proble!s

• 2arkets !ust be regulated

Geograph of globalisation

Before 1914:

• Shallow integration through ar!s length trade between

independent r!s

• 3elati$el si!ple direct in$est!ent

Today

• Deep integration

•

Geographicall e&tensi$e and co!ple& global productionnetworks


2/15


3/15

Today

• 7!ergence of china into global !arket econo!

• Collapse of pre$ailing political sste!s in the So$iet nion andits 7astern 7uropean satellites in 1)?)

3oller-coasters and interconnections

@wo particularl i!portant features ha$e characterized the globalecono! since 1)AB: the increased $olatilit of aggregate econo!icgrowth0 and the growing interconnectedness between di>erent partsof the world+

*ggregate trends in global econo+ic actiity

@he path of econo!ic growth certainl does not run s!ooth+ 9t6s aroller-coaster+ So!eti!es the ride is gentle# with *ust !inor ups anddowns0 at other ti!es# the ride is trul sto!ach-wrenching# withsteep upward surges separated b $ertiginousdescents to what see! like botto!less depths+

olden *ge (19&%-19$%)

• /igure 8+ depicts this roller-coaster pattern for the periodsince 1)B+


4/15

• @he ears i!!ediatel following the Second ;orld ;ar wereones of basic reconstruction of war-da!aged econo!ies+

• 3ates of econo!ic growth reached unprecedented le$els0 the

period between the earl 1)ABs and the earl 1)EBs beca!e

known as the 5golden age6+

• 9n fact# it was onl partl golden: it was !ore golden in so!eplaces than others# and for so!e people than others+

• ut then# in the earl 1)EBs# the sk fell in+@he long boo!suddenl went bust0 the 5golden age6 beca!e tarnished+

'ost olden *ge

• 3ates of growth again beca!e e&tre!el $ariable# rangingfro! the negati$e growth rates of 1)?8 through to two ears%1)?F and 1)??' when growth of world !erchandise tradereached the le$els of the 1)Bs once again+

• ut then# in the earl 1))Bs# recession returned+

• 9n 1))F and 1))A# strong e&port growth reappeared+

• , si!ilarl $olatile pattern characterized the nal ears of the

twentieth centur+@here was spectacular growth in world tradein 1))E# followed b far slower growth in 1))? and 1)))%partl related to the 7ast ,sian nancial crisis and to itscontagious e>ects on other parts of the world'+

• @hen# once again# there was spectacular acceleration in worldtrade in 8BBB# followed b an e.uall spectacular bursting ofthe growth bubble# a proble! certainl e&acerbated %thoughnot caused' b the )11 terrorist attacks on ewHork Cit andb the crisis in the 9@ %dotco!' sector of the so-called 5new6econo!+

• Iigh growth rates returned once again+

• @hen# in 8BB?# see!ingl without warning# the deepestrecession since the late 1)8Bs suddenl occurred+@he roller-coaster was back with a $engeance+

ro.ing interconnectedness .ithin the global econo+y


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6/15

• /igure 8+F !aps the network of world !erchandise trade+ 9t

shows the strong tendenc for countries to trade !ost withtheir neighbours+


7/15

• 7urope is the world6s !a*or trading region+ Iowe$er# al!ostthree-.uarters of that trade is intra-regional# that is between7uropean countries the!sel$es+ ,round EJ of 7urope6se&ports go to orth ,!erica and EJ to ,sia %including Kapan'+

• ,sia is the second !ost signicant trade region# with a littleunder one-half of its trade conducted internall+ Kust underone-fth of ,sia6s e&ternal trade goes to orth ,!erica and afurther 1?J to 7urope+

• orth ,!erica also conducts around ABJ of its tradeinternall# with an especiall large increase in trade in$ol$ing2e&ico+ ,sia and 7urope each account for al!ost 8BJ oforth ,!erica6s e&ternal trade and 4atin ,!erica for ?J+

/ 0 has gro.n faster than trade

• /igure 8+A shows that during the 1)EBs and into the rst half

of the 1)?Bs the trend lines of both /D9 and e&ports ran !oreor less in parallel+


8/15

• @hen fro! 1)?A the rate of growth of /D9 and of e&portsdi$erged rapidl+ ;ith so!e e&ceptions# /D9 grew faster thantrade+

• @his di$ergence in growth trends between /D9 and trade is

e&tre!el signicant+ 9t suggests that the pri!ar !echanis!of interconnectedness within the global econo! has shiftedfro! trade to /D9+ Lf course# these trends in the growth of /D9and trade are not independent of one another+

• @he co!!on ele!ent is the transnational corporation%@C'+@he nu!ber of @Cs has grown e&ponentiall o$er thepast three decades+

• 9n 8BB)# according to C@,D# there were around ?8#BBB

parent co!pan @Cs controlling around ?1B#BBB foreignaMliates+

• @Cs account for around two-thirds of world e&ports of goodsand ser$ices# of which a signicant share is intra-r! trade+ 9nother words# it is trade within the boundaries of the r! Nalthough across national boundaries N as transactionsbetween di>erent parts of the sa!e r!+

• @he relati$e i!portance of /D9 to national econo!ies hasincreased $irtuall across the board# a clear indication ofincreased interconnectedness within the global econo!

2/ 3tr#ct#ral i+balances in the .orld econo+y @he "e&ing and "u&ing global econo!ic !ap is the outco!e of the!a*or global shifts that ha$e occurred o$er the past four decades orso+ 9t is !ade up of co!ple& interconnections# !ost notabl thoseconstituted through networks of trade and /D9+ ut such "ows ha$ecreated huge structural i!balances within the global econo!+/igures 8+ to 8+? show the pattern of trade balances in

!anufacturing# ser$ices and agriculture+@he accu!ulated result ofthese three sets of trade balances creates a huge dile!!a for theglobal econo!: the potential instabilit created b the fact thatso!e countries ha$e huge trade and current account surpluseswhilst others ha$e enor!ous decits+

• Countries with trade surpluses accu!ulated capital beondtheir capacit to absorb it+

• 2an ran large current account surpluses and accu!ulated

record reser$es+


9/15

• Countries with trade decits nanced their current account bincreased borrowing abroad +++ China6s current account surplusrose fro! 8 per cent of GD= in 8BBB to an a$erage of 1B percent during 8BBANBE +++

• @he largest decits were in high-inco!e countries# with the Saccounting for !ore than half the world6s current accountdecits+ @he S current account decit increased fro! F+ percent of GD= in 8BBB to an a$erage of per cent in 8BBANBE +++

• ,s the global i!balances between sa$ings and in$est!entgrew# countries with large decits borrowed fro! countrieswith surpluses# while fast-growing e&porters depended one&panding !arkets in decit countries+

• China and other surplus econo!ies accu!ulated recordreser$es +++ and sent capital o$erseas+

• @he S and other decit countries consu!ed !ore andnanced their decits b issuing !ore debt and e.uit+


10/15

@he changing contours of the global econo!ic !ap: globalshifts in production# trade and /D9


11/15

• ,lthough the established de$eloped econo!ies continue todo!inate# their position has undoubtedl changed+

• ,t the broadest le$el# for e&a!ple# the de$eloping countries6

share of GD=# e&ports and inward /D9 has increased

signicantl+

• @able 8+ shows a s!all nu!ber of de$eloping countries#pri!aril in 7ast ,sia# together with the 3ussian /ederationand so!e of the 7astern 7uropean econo!ies# ha$e e!ergedthrough rapid growth

• e$ertheless# the geographies of production# trade and /D9re!ain highl une$en and strongl concentrated+

• ,round three-.uarters of global !anufacturing and ser$ices

production# and al!ost four-fths of world agriculturalproduction# are concentrated in *ust 1A countries+

• ,round one-fth of world trade in goods# ser$ices andagriculture is accounted for b the leading two countries ineach sector

• @he picture is si!ilar in the case of /D9+ 2ore than ?B per cent

of outward /D9 stock originates fro! 1A countries0 the leading

two source countries N the S and the O N account for al!ostB per cent of the world total+

• Ialf of all the inward /D9 in de$eloping countries isconcentrated in *ust $e host countries0 al!ost B per cent isconcentrated in China and Iong Oong alone+

The 3 still do+inates the global econo+y 5 tho#gh less so

• ,lthough still the world6s leading econo!ic power# itsdo!inance has been !uch reduced as other co!petitors ha$ee!erged+


12/15

• etween 1)?BN1))B and 1))BN8BB# S GD= grew at anannual a$erage rate of + and + per cent respecti$el#slightl abo$e the world growth rate of + and 8+? per cent+

• etween 8BBB and 8BBE# its a$erage annual rate of growth

was 8+E per cent# below the world a$erage of +8 per cent+@he8BB? recession hit the S especiall hard:5the worst downturnin post-war histor6+

• S share of world !erchandise e&ports has fallen fro! 1E percent in 1) to less than 1B per cent+

• ,lthough S !erchandise e&ports ha$e grown at around A per

cent a ear# i!ports ha$e grown at between ? and ) per centa ear+

• ,s a result# as we ha$e seen# the S has an enor!ous tradedecit+ 9n e>ect# it has beco!e the 5i!porter of last resort6 forthe global econo!+

• China has beco!e# in e>ect# ,!erica6s banker through its

huge holdings of S @reasur bonds+

• 9n 1)B# the S generated al!ost AB per cent of all theworld6s /D9# co!pared with less than 8B per cent toda+ @he

biggest change# howe$er# has been in the countr6s positionas a host for /D9+ ,lthough the S has attracted /D9 for !andecades# such inward in$est!ent was alwas a tin fraction of the countr6s outward /D9+

• Iowe$er# the S has beco!e signicantl !ore i!portant as

an /D9 destination+ 9nward and outward /D9 are now !uch!ore e.ual than in the past+

6#rope is still a +a7or player 5 b#t its perfor+ance is #neen

• 7urope# as a region# is the world6s biggest trading area and

the pri!ar focus of global /D9+ Iowe$er# despite being the!ost politicall integrated region in the world# the 7uropeanecono! is actuall $er di$erse# e&periencing une$en ratesof econo!ic growth o$er the past two decades# as well asune$en rates of decline in the 8BB? recession+

• Ger!an is b far the biggest 7uropean econo! in globalter!s: it is the fourth largest !anufacturing producer %afterthe S# China and Kapan'# the largest !anufacturing e&porter % *ust# but to be o$ertaken b China'# the third largest

co!!ercial ser$ices e&porter# and the third !ost i!portantsource of /D9+


13/15

• ut its growth in GD= has been below the world a$erage for along period %onl 1+1 per cent between 8BBB and 8BBE'# and itstill faces diMcult proble!s in integrating the for!er 7astGer!an into the econo! as a whole+

• 7urope6s second biggest econo!# the O# has e&perienced

the greatest long- ter! relati$e decline in so far as it oncedo!inated the world+ Iowe$er# it is still the world6s secondbiggest source of /D9 and second biggest e&porter ofco!!ercial ser$ices+

• etween 8BBB and 8BBE# the O econo! grew b 8+ percent per ear+ Iowe$er# the O was hit harder b the 8BB?recession largel because# like the S# its propert bubble

burst# and it is also !ore highl e&posed to the collapse in thenancial sector than !ost other 7uropean countries+

• @here are considerable di>erences in trade perfor!ancebetween indi$idual 7uropean countries+ ;hereas /rance# theO# Spain and 9tal ha$e !erchandise trade decits# Ger!an#the etherlands and Sweden ha$e surpluses+

• 9n contrast# in co!!ercial ser$ices the O has a big tradesurplus# /rance and Spain !odest surpluses# while Ger!anhas a substantial decit+

• 7urope re!ains a !a*or !agnet for inward in$est!ent as wellas the leading source of outward /D9+

• /or all the !a*or 7uropean countries %e&cluding the O'# !orethan half of their /D9 out"ows are to other 7uropean countries+9n !ost cases# this regional orientation has actuall increased+

8e-e+ergence of china

• China is ha$ing a dra!atic e>ect on the world econo!because of two factors: not onl does it ha$e a huge# cheapworkforce# but its econo! is also unusuall open to trade+

• China6s de$elop!ent is not *ust a powerful dri$er of globalgrowth0 its i!pact on other econo!ies is also far !oreper$asi$e +++ China6s growing in"uence stretches !uch deeperthan its e&ports of cheap goods: it is re$olutionising therelati$e prices of labour# capital# goods and assets in a wa

that has ne$er happened so .uickl before+


14/15

• etween 1)?B and 8BB# China6s growth rate %of GD= as awhole and of !anufacturing' was the highest in the world:annual a$erage rates were around 1B per cent+@hisre!arkabl high rate continued through to 8BBE+

• @he 8BB? global crisis ine$itabl had an e>ect and growthslackened but it was still of the order of ? per cent and# b8BB)# it was e$en higher+

• 9ts a$erage annual rate of growth of !erchandise e&ports was1 per cent in the 1)?Bs and 1F per cent between 1))B and8BB+ 7&ports as a share of China6s GD= increased fro! ? percent in 8BB8 to E per cent in 8BBE+

• ,s a result# China is now the world6s second largest !an-

ufacturing producer# the largest agricultural producer# thesecond largest e&porter of !erchandise %about to be the rst'and the world6s third largest i!porter+

L$erall# then# China6s i!pact on the global econo! is !anifested

in the following was:

• Resource-intensive growth. 5 8BB# China alread consu!ed

8 per cent of the world6s steel# 8A per cent of the world6s

alu!iniu!# 8 per cent of the world6s copper# B per cent of

the world6s zinc and 1? per cent of the world6s nickel +++ China

accounted for 1 per cent of the global incre!ental de!and

for oil between 8BBB and 8BB+6

• Prices of manufactures and commodities. @he initial i!pact of

China6s entr into the global econo! was to reduce the price

of !anufactured goods# especiall labour-intensi$e goods

which China could produce so cheapl and in such large

.uantities+ Ln the other hand# its $oracious appetite forresources has helped to increase world prices of co!!odities+

• Exports of capital. ot onl is China now a !assi$e e&porter of

goods# it is also an increasingl signicant e&porter of

capital+5China6s current account surplus has e&ploded upwards

in recent ears# fro! +++ + per cent of GD= as recentl as

8BBF# to a recent forecast of +++ 11+) per cent of GD=+ @his ear

P8BBE its current account surplus will be !uch the biggest in


15/15

the world and as big as the surpluses of Ger!an and Kapan

together+,s a share of GD=#China6s surplus is !ore than

double the largest surplus Kapan has e$er generated +++ China6s

Pfor- eign currenc reser$es are now !ore than RABBbn

bigger than those of Kapan+6

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Dickens Global Shift Notes

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