GLOBALIZATION OF ECONOMICS AND DEVELOPMENT

Prof. Anna Nedyalkova DSc

Eleonora Tankova PhD

Module 1

FROM ECONOMICS

TO

GLOBALIZATION OF ECONOMIS

AND

DEVELOPMENT

WHY ?

• Economics - The social science that deals with the production, distribution, and consumption of goods and services and with the theory and management of economies or economic systems.

• Macroeconomics - The study of the overall aspects and workings of a national economy, such as income, output, and the interrelationship among diverse economic sectors.

• Megaeconomics – It studies the interaction of national economies through comparative analysis of the economic systems.

• International Economics - A branch of economics that studies economic interactions among different countries, including foreign trade (exports and imports), foreign exchange (trading currency), balance of payments, and balance of trade. The study of interational economics focusses on two related areas - international trade and international finance

• Globalization – Interdisciplinary subject which relates to all branches and fields of knowledge

• Main objectives of the study of Globalization of economics and development:THINK GLOBALLY AND ACT LOCALLY!

So knowledge about globalization is important part of your academic

knowledge !

Changed economic activity of the society

• In our days no one sphere of life, including economic In our days no one sphere of life, including economic sphere can actsphere can act independent and isolated. All processes independent and isolated. All processes and events should be examined and understood in the and events should be examined and understood in the broad sense of economic, political, social, ecological and broad sense of economic, political, social, ecological and demographic context, taking into account their demographic context, taking into account their interdependence. interdependence.

• The area of economic science is already too narrow to The area of economic science is already too narrow to explain all the aspects of the complex and explain all the aspects of the complex and interdependence worldinterdependence world..

Actuality and Significance of the Subject

Realities: Theories:

1. Huge complexity of the contemporary society;

2. A lot of conflicts and heterogeneity ;

3. New polarization of humanity after the end of the Cold War;

4. Global dissemination and importance of local events and processes.

1. Statements for a going process of global cohesion;

2. Available concepts for common standards and principles of development;

3. A lot of researches and publications concerning the problem ;

Globalization of Economics and Development – Two Sites of One Process

WHY?

• The main spheres of life are inseparable;• Economics is one of these spheres of life;• The technological development fosters the development

of all other spheres;• Simultaneousness development of communication

technologies, culture, education and etc.;• Trends for universality of development;• Economic activity of the society has changed;• The universal and national development are tightly

bounded

Our choice is to examine globalization of economics in the broad context of development !

The Nature of Globalization

• Till 19th century “global” meant “spherical”;• At the end of 19th century “global” meant “the whole

world”;• 20th century “global” meant “definition of capacity and

dissemination of events and processes”

Main key words

About the process:• Universality• Internationalization• Integration• Generality• Worldwide

About the main key players/agents:

• Global companies• International

economic organizations

• Global markets• The state• Communication

technologies

Some special features of globalization in present days

• Growing interdependence of all processes

• Establishing of a global financial-economic area

• Information technologies - WWW

• Change in the state’s functions – vanishing of the national boarders

• Universality of the world – dissemination of the democratic system and socio – cultural values

Some conclusions

• “Global” – a new scientific category, which treats the processes and events on a global scale

• “Globalization” – an approach which expands and deepens the economic theory as well as other scientific fields

• Subject of globalizations are:

- global companies;

- regional structures;

- the state;

- international economic organizations

Evidences • Civilizations – they have originated

independently from one another and have had common standards and rules of life;

• Religions – they have monotheistic character, universality of values and trends towards expansion of ideas;

• Colonizational processes – they have similarity of reasons, forms and consequences: creation of one-sided economic relations;

• From the great migration of peoples till now – there is a tendency for decreasing the uncertainty

Theoretical discussion about Globalization

• Second half of 20th century – the global idea emerged in philosophy and political science. Then it was transferred to communications theory and finally conquered economic thinking;

• The 90-ties – active discussion on the nature and essence of globality and globalization as a new stage of economics and world development.

• The Roman Club – the report “Limits of growth” provoked the first serious discussion about globalization and raised the necessity to coordinate activities of all countries.

Influence of Globalization on different spheres of life

• Economic – the trade roads were built; global companies started their functions; global economy and finance system have been created.

• Political – tribes transformed to peoples, nations and states formed, after that regional unions and finally international authorities of governance.

• Geographical – the great migration of peoples started, new lands were founded, empires created.

• Ideological – unified social ideas spread on huge territories

• Informational – the speech and writing were created, after that literature, finally massmedia and Internet

Common Characteristics of the Globalization Process

• The dynamic development of the globalization process follows the development of the society.

• As a phenomenon it has two levels – general civilization and formative ones

• Contradictory process which has its positive and negative sides

• It is pursued by anti-social phenomena

Examples from reality• Attendance of new country to NATO:

- it could be considered as a local event, but the reality is…

Change of the Change of the Economic structure of Economic structure of the labor market and of the labor market and of

the budgetthe budget

Change of the Change of the infrastructure and infrastructure and

other related other related productionsproductions

Weapon tradingWeapon trading

MilitaryMilitary productionproduction

Definitions of globalization• Globalization is a very high level of

development of the globality of economics and life in the conditions and content of life activity expanding with a tendency for planetarism.

• Globalization is a compression of time and space.

Module 2The role of the state

Different statements:I. Against the State

• Some scholars predict the “end” of national state power.

• Some argue that the state may only adjust to globalization, without having an active role in it.

• Some believe that the state will disappear. Michael Sandel;Charles Maynes;Zygmunt Bauman

The role of the state

Which structures will replace the State?

The answer of the scholars, who share these statements is:

• The global companies or

• The International organizations, such as UN, which has instruments for realizing global governance.

The role of the stateII. In defense of the State

The facts of practice show that the role of the state is increasing in all aspects of

social life, including economics. Economic globalization does not remove the

necessity for functioning of the state.

The role of the stateSome arguments in defense of the state• The state has guaranteed internal and external

security;• The state has underpinned the law;• The state has funded national welfare systems;• The state has provided the structures for popular

representation• The state has built the framework for economic

and social activities.So the state plays fundamental role in creating of

institutional forms and strategies of globalization processes and supporting the process of capital concentration.

Two realities co-exist:

1. The so called borderless virtual world where geography does not count, and communication and business transactions can occur in a matter of seconds.

2. The other world is that of the everyday life of people in which borders still count, local realities are still complex and very different among themselves, and most fundamentally where social and economic problems still need to be addressed.

Why have not all countries benefited to the same extent from globalization?

• Countries that do not have strong institutional framework, as well as solid social policies and networks to cope with negative externalities most suffer the negative effects of globalization.

• External factors, such as the global trading environment, are crucial in creating greater opportunities or in posing constraints on a country’s economic growth.

Module 3REGIONALISM

Regionalism originated along with globalization and approximately at the same time.

Factors leading to the formation of regional structures during ages:

• Political;• Geographical;• Religious;• Military and defense;• Economical.

REGIONALISM• 40-ties and 50-ties of XX century – new wave of regional

structures in Europe:1948 – Organization for European economic Cooperation;1950 – European Coal and steel Community;1957 – European Economic Community;1959 – European Free Trade Association1949 – 1991 – Council for Mutual Economic Assistance (socialist countries)

New factor for regional integration appears:according to the social system- the world was divided into

two social systems.

40-ties and 50-ties - Economic stabilization was the leading idea

REGIONALISM• 80-ties – economic regional structures with

mutual political, social or military and strategic goals:

- EU;

- ASEAN

- NAFTA• 90-ties – the regional structures became even

more closed with very clear mutual economic, social, cultural, educational etc. relations.

They form the new structure of the world

REGIONALISMEconomical aspects:

• Similar economic development;• Common priorities;• Forming common economic model;• Regional competitiveness and comparative advantages in a global arena;• Common reaction to the risks of the environment

REGIONALISM

Some conclusions:

Objective, real, social and historical movement in which economic reasons dominate. They reflect and influence on political, cultural and educational activities. New international relations appear. Regionalism does not question the state and its future role.

REGIONALISMSome conclusions:

• The new major integration processes of the epoch – globalization and regionalism – established themselves in the 90-ties.

• Regionalism is an instrument of the state for attaining the further goals of globalization.

• In present days globalization is realizing through regional structures.

Module 4Civilization basis of Globalization

The analysis of the globalization should be made at two levels:

• General civilization level

• Formative level (social system)

There is a clear dependence of globalization from the civilization model and from the dominated social system.

Civilization

• Civilization is a complex society or culture group developed upon common or similar principles, with common or similar characteristics and marks.

• Civilization is a system of nations and states which have had their own specific historic destiny in a long period of time.

• Culture is a subsystem of civilization. In one civilization can develop and exist a lot of similar cultures with their national specifics.

The engines of the civilization progress are:

• The permanent fight between man and nature for surviving and satisfying man’s needs.

• Factors of progress – science, technologies, labor etc.

• Factors of social conflicts – properties, capitals, territories.

Three mechanisms for society’s integration

ReligionReligionSystem ofSystem of

valuesvalues,, practices practices and normsand norms, ,

related to the idea related to the idea of Godof God. .

A composition of A composition of attitudes attitudes between between

God and man.God and man.

CultureCulture

An integratedAn integrated pattern ofpattern of humanhuman knowledge, beliefknowledge, belief and behavior that and behavior that depends upon thedepends upon the

capacity for capacity for symbolic thought symbolic thought

and social and social learninglearning

IdeologyIdeologySystem of ideasSystem of ideas, , which serve the which serve the

politics,politics, recommend recommend public and political public and political

structure of thestructure of the society and the society and the type of relations type of relations

between mad and between mad and authoritiesauthorities

In each society the three mechanisms exist, but one of them In each society the three mechanisms exist, but one of them dominates!dominates!

These three mechanisms have four main functions in different societies:

1. Unite the individuals;

2. Create social capital, which makes easier the achievement of common aims;

3. Establish the authority’s functions and inequality;

4. Create life aims and ambitions.

When some of the three mechanisms does not work effectively, the society is in a condition of DESINTEGRATION!

• Lack of trust;

• Growing criminal activities;

• A lot of anomalies;

• The social processes are not managed;

• The private interests dominate over the common values

Formative basis of GlobalizationMain features of the capitalistic system:

• Intensified and strong competition between corporations and leading countries;

• Technological contest – new form of competition;

• The corporate secret and informational isolation;• The market economy and the state set different

conditions for going off the globalization process;

• Models of development – for each country they determine the aim and the character of the economic growth

Conclusions

• Globalization manifests in different way at civilization and formative level.

• At civilization level it should develop and enrich the humanity without breaking its diversity.

• According to the social system of the country, different social and economic consequences are shown.

Module 5

Globalization- contradictions, tendencies and prospects

factors

tendenciescontradictions

GLOBALIZATION EFFECT

globalization

Global shaping of economics

regionalism

Conclusions for Europe

• Globalization is one of the forces of development putting the other factors of development and growth on a new basis and in new relations.

• Globalization effect – the systematic result of the influence of the globalization on the other factors and forces of development

Systematic result of the influence of

the globalization on the other factors

and forces of development

Globalization Effect

Research approach

To consider the effect of other

development factors

To consider the accumulated result

Factorseconomic

non economic

Manifest ontwo levels

General historical

Formative level(social system)

• On the general historical level globalization is effected by several main factors:

- technical and technological progress;

- quality and content of interaction between man and nature;

- culture, media and communication;

- organization of public production.

• Within the frames of the social system, in our case the capitalist system, globalization takes place under the influence of the following factors:

- market environment, market mechanisms

- competition;

- state;

- international financial system;

- surrounding natural environment

Globalization

Democracy andpolitics

Media and communication

Technologies

Culture

Economics

The role of technological factor

• Technologies are a product of science.• Technologies are materialized reality of science.• Technologies are socially neutral and all the

conflicts that occur in society does not relate to technologies.

The effect of and role of technologies in life depend on the way of application and the goals pursued.

Technologies – the main source for development

• 17th century – scientific revolution – scientific knowledge was applied and machines were invented.

• 18th century – the beginning of the industrial revolution.

• 19th century - intensive application of science in the material production.

• 20th century – inventing the computer and its using, replacing some functions of the machines

Technologies – the main source for development

• 21th century – expansion and development of the functions of technology. Technology acquires also some social characteristics - new technologies can reproduce biological and mental functions.

The effects of technologies are:• A possibility and necessity for public production

to go out of the national-state frames;• A possibility and necessity for the management

of the society to be performed by means of information technologies and communication networks;

• Acceleration of the synthesis between the results of R/D and the transfer of technologies;

• Formation of a new type of consumer demand which can not be shut off within the frames of national markets

IndustrialIndustrial revolutionrevolution created the global marketcreated the global market

TechnologicalTechnological revolution revolution createdcreated the global societythe global society and the global economyand the global economy

Negative tendencies

• Technological competition;

• Technological dictate;

• Technological determinism;

• Technological imperialism;

• There is no free movement of technology

Global media and communication• Modern communications and their basic form –

media are a product of the new technologies and major circumstances which have given rise to globalization.

• They ate total global structure with universal effects.

• They have organizational transformation on a company level:– At first a process of uniting in communication and

media complexes began;– Then their merger into huge industrial and financial

corporations.

• The main economic force of media and communications is global capital, which through them turns into a universal force of society

• Media have become a sub-system of global corporations and a means of realizing their global strategies

• Media in itself have turned into a global and universal factor of development.

Culture

• In the past years culture and economics were treated as separated and independent spheres.

• The importance of culture in the overall development of society is evidently increasing, showing itself in economics too.

Economics - Culture• The common feature between them is that both

follow the overall development of the society;• The development of culture is not always

following the development cycle of economics;• The cultural specifics of a nation, state or region

is much more clear then their economic or political specifics;

• Cultural processes are determined by the national and state differences.

Culture - Globalization• The cultural processes gain the importance of

major conditions of life and effect each human activity;

• Culture is turning into one of the basic factors of economic growth, while cultural product is among the new strategic resources of society;

• Culture became a specific sphere of entrepreneurship;

• Culture, education and science form “new economy” - knowledge economy

Is their Global Culture?• The early 70-ties the French Ministry of

Culture introduced in the scientific space the concept “cultural imperialism”;

• 80-ties and 90-ties the theses of “war of cultures”, “conflict of civilizations” were very popular;

• Later appear the concept of “Americanization of world culture”

Some conclusions

• The very globalization of economics, science and technologies requires a very high degree of development of cultures.

• The concept of “glocalization”, introduced in Japan in 1996 a combination of “global” and “local”, expressing the need for globalization to be carried out in compliance with the specifics of the individual countries.

• The main contradictions of culture in the global world is between its economic form of realization and its esthetic and artistic nature.

Democracy and politics• Democracy means that peoples and their

parliaments should be sovereign judges in their own countries. They should choose the national model of development and solve the main problems of organization and functioning of the national economics.

• In practice – the decisions are taken at the head offices of the global corporations and are implemented in the individual countries. This is how the issues of the structure of production, of investment and technological policy, of strategic marketing are solved.

• After 11th September 2001 the world is not the same:

• Unstable political relations and political systems;• New “paradoxes of democracy” appear:

– New wave of religion expansion;– Terrorism;– Using weapons to solve problems and conflicts

“Economics of war” opposes the humanism and subordinates the world order to corporative interests.

• Globalization comes in contradiction with human rights and with the very principle of individualism, which along with competition, is the fundament of capitalist system.

Globalization in contemporary conditions is an asymmetry

• Deepening gap between the economies of the developed and developing countries;

• Intensified struggle for additional access to resources and markets;

• Ecological asymmetry;

• Poverty and polarization of men;

• Uneven location of people;

• Continuing international debt crisis

THANK YOU !!!