Globalization & Development: “A New World Order or Déjà Vu All Over Again?”

 

Research Assignment #13:  Globalization & Development: “A New World Order or Déjà Vu All Over Again?”

Through qualitative research please assess the essence of Globalization.  Globalization has many definition; perhaps one can say that with the emergence of MNCs in the 90s and many International Organizations, and INGOs in the 80s a new era of a rapid increase in the flow of economic activity, technology, and communications around the globe has developed.  Three key questions have arisen about globalization: (1) Does it represent a brave new world in which the fundamental relationship between the state and the market has changed forever, or is it simply the latest phase in that relationship—something new and interesting but not fundamentally different? (2) What caused it in the first place? (3) What can and should be done about it, if anything? see Mission: Case study: US vs Germany or US vs Japan ‘Globalization and Reform’.

Key Terminology: 

Social Market Economy: In Germany, a postwar economic system that combines a highly productive market economy with an extensive and generous welfare state, as well as unusually active involvement of both business and labor in economic policy

Liberal Market Economy (LME):  e.g. Free Liberal Market US- In liberal market economies: (LMEs) In the varieties of capitalism approach, countries that rely heavily on market relationships to govern economic activity; the United States and United Kingdom are key examples

Coordinated Market Economies (CME):  In the varieties of capitalism approach, capitalist economies in which firms, financiers, unions, and government consciously coordinate their actions via interlocking ownership and participation; Germany and Japan are key examples.

Developmental State: Japan,  A state that seeks to create national strength by taking an active and conscious role in the development of specific sectors of the economy

Globalization: A rapid increase in the flow of economic activity, technology, and communications around the globe, and the increased sharing of cultural symbols, political ideas, and movements across countries. 

Globalization and the European Union:
The creation of the EU  and especially of its common currency, the euro, raised fundamental questions about globalization and state sovereignty over economic policy. On the one hand, the existence of the EU arguably limits globalization because it creates a regional market as an alternative. On the other hand, EU member states have given up far more economic sovereignty to a transnational organization than have any other modern states, and EU membership requires that they follow many of the policies that Iversen and Soskice (2019) saw as facilitating the new, knowledge-based economy. n 2010 private international creditors began to doubt the weaker states’ ability to repay their debts and, therefore, started refusing to buy their government bonds. The worst hit were Greece and Ireland, followed by Portugal, Italy, Spain, and Cyprus. Usually, countries in this situation would allow the value of their currencies to drop to encourage exports and restart growth. This was not an option, however, because the countries use the euro and its value is tied to the strength of the entire EU. The value of the euro was not dropping fast enough to spur exports because of the continuing economic strength of the larger countries—especially Germany, which, as the strongest exporter in the region, had long been advantaged by the euro. Bailout packages funded by the ECB and IMF were put in place in 2010 for Greece and Ireland, with Greece requiring two more in 2012 and 2016. The bailouts gave those countries new funds to pay their debt but only very slightly forgave any debt (Frieden and Walter 2017). Alternatives, such as raising taxes on banks and the wealthy across Europe to help fund the weaker governments, were proposed but never seriously considered by the ECB or International Monetary Fund (IMF) (Cafruny and Talani 2013). Widespread protests turned violent in Greece and toppled the governments in Ireland and Italy. By 2018, modest economic growth had returned to Greece, but unemployment remained at 22 percent; in Italy, voters put a government led by openly anti-EU parties in power.

Causes of Globalization:
What factors facilitated this weakening of the state vis-à-vis capital? The causes of globalization are undoubtedly multiple, but two major answers to this question have competed for attention. The first one is that technology is the driving force of globalization. The costs of communication and transportation have dropped dramatically.

Political Responses to Globalization: The expanded global market and capital mobility also raise questions about the level at which political responses to economic problems can and should occur. As we noted above, individual states are still important, as they navigate global markets the best they can via their economic policies

The WTO, the IMF, and the World Bank to enact global measures to address global problems. Domestically, the Great Recession has led growing numbers of citizens to blame trade and immigration (aspects of the reduced border controls of globalization) 

Two schools of thought have debated how wealthy governments should or must respond to globalization. According to the convergence thesis, the distinctions among different models of capitalism that we discussed above will tend to disappear as all governments are forced to conform to the logic of attracting global capital. In effect, they must pursue even more neoliberal policies. They must keep inflation low so prices are stable, which requires restraining government spending and the money supply. 

Comparativists using the varieties of capitalism approach, on the other hand, suggest that while globalization applies pressure toward convergence, long-established political and economic institutions heavily influence how each country can and will respond. They argued that the various institutionalized relationships in each kind of economy are complementary, which they term comparative institutional advantage. The institutions work together to provide greater benefits than any single institution could alone. Comparative institutional advantage: Idea in the varieties of capitalism school of thought that different kinds of capitalist systems have different institutional advantages that they usually will try to maintain, resulting in different responses to external economic pressure.

Globalization and Inequality:
A growing concern in the era of globalization is increasing economic inequality. Capitalism inherently produces inequality, as some people benefit from the market and private property more than others, but the level of inequality varies over time and across countries, even among  successful advanced capitalist economies.

Mission:  Please evaluate and define the type of economic principles of two nations US vs Germany or US vs Japan in relation to ‘Globalization and Reform’.   Consider the Great Recession the Free Markets model and the Developmental State of the nations’.  Also, research on the state institutions that reflect the political globalization process.  Through your own critical and comprehensive analysis you can make a projection if Globalization and Reform is possible.  Consider how three key questions have arisen about globalization: (1) Does it represent a brave new world in which the fundamental relationship between the state and the market has changed forever, or is it simply the latest phase in that relationship—something new and interesting but not fundamentally different? (2) What caused it in the first place? (3) What can and should be done about it, if anything?

Guidelines to Consider for your Research: 

  • The United States has shifted economic policy between neoliberalism and Keynesianism several times. Overall, which seems to be the most effective policy option, and why?While the United States has long championed the “free-market model,” the government has in fact intervened in the market in various ways. What are the main impetuses behind those interventions? Are they primarily essential, beneficial, or politically generated interventions?How does the United States demonstrate the classic elements of an LME; how does it differ from the LME model, and why?
  • Like Germany, Japan had a very successful economic model that fell on hard times in the 1990s. What changed to make the model less successful? How does this compare with the decline of Germany’s social market economy model? What do both teach us about the future of CMEs in the face of globalization?What lessons does Japan’s long struggle with stagnation have for other countries facing economic problems in the last few years, since the Great Recession?

Research Guidelines: 

  • Please view the Supplemental Links for further research and inspiration.
  • Use the Online Library of your College, Library of Congress or Think Tanks e.g. Woodrow Wilson Center ‘Think Tank”Links to an external site.
  • Use the proper APA/Chicago Style Format (paraphrase correctly with in text citation) refer to ‘pages’ tab or ‘announcement tab’ for more info.  Thorough qualitative research 3-4 resources and not wikipedia use the ‘Pages’ tab for extra research references.Include a Bibliography and don’t get off Topic!!!

****no Wikipedia… etc. please check module links or ‘pages’ tab. 

 

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