Globalization on a reverse gear

For Vs against
Introduction
• Globalization is the system of interaction among the countries of
the world in order to develop the global economy. Globalization
refers to the integration of economics and societies all over the
world. Globalization involves technological, economic, political, and
cultural exchanges made possible largely by advances in
communication, transportation, and infrastructure.

• On a philosophical plane, India has been a votary of

globalization since ages. It is reflected in hymns like “Aa
no bhadra rutavo yantu Viswatah”
▫ Let noble thoughts come from all over the universe
Early history of globalization

• History of globalization can be traced back to the ancient

civilizations.
• Example
▫ Trade links between the Sumerian civilization and the Indus
Valley Civilization in third millennium B.C.
▫ Trade links between various countries like India, Egypt, Greece,
and Roman Empire and so on.
▫ Business links between the Parthian Empire, Roman Empire and
Han Dynasty.
▫ Development of various trade routes like Silk Road and so on.
Globalization in the medieval age

• Islamic period in the medieval era witnessed Jew &

Muslim traders going to various parts of the world for
trade which led to a blend of ideas, traditions and
customs

• China introduced the first postal service and invented

paper.
▫ This led to better knowledge sharing

• Columbus and Vasco Da Gama sailed through in search

of new countries to establish trade links or to make
colonies
Globalization between the pre
modern periods to modern period
• Industrial revolution led to significant increase in
quantity and quality of output
▫ Led to higher exports and better trade relations.
▫ Various countries across the world became the consumers
of European market.

• Pre globalization era came to an end after the First

World War.
▫ It put significant adverse effect on the economic scenario
which led to the Great Depression and gold standard crisis
in the later part of the 1920s and early 1930s.
Globalization in the modern era
• Globalization, in the modern sense of the term, came into
existence after the Second World War when world leaders
wanted to foster trade relations between nations

• Countries experienced:
▫ Promotion of free commerce and trade
▫ Abolition of various double taxes, tariffs, and capital
controls
▫ Reduction of transport cost and development of infrastructure
▫ Creation of global corporations
▫ Blend of culture and tradition across the countries

• Creation of World Trade Organization led to the growth of

trade and commercial
▫ World exports improved significantly from 8.5% to around 16.2%
due to globalization.
Globalization today
• Between 1990 and 2006, world output grew from US$ 22,680 billion to
$45,941 billion

• Global exports grew from US$3480 billion to $12,088 billion

• As % of world output, exports grew from 15.3% to 26.3% between 1990

and 2006

• Some argue that the present model of globalization has exacerbated

problems of unemployment, inequality and poverty, while others
contend that globalization helps to reduce them. These problems
predated globalization, but it is clear that for globalization to be
politically and economically sustainable, it must contribute to their
reduction
The official line from the former Prime Minster
Atal Behari Vajpayee’s Economic Advisory Council

“Globalization is an unavoidable process

which is taking place independent of us. It
forces us to cope with it. There is no room
in a globalised world for an economy
delinked from world trade and foreign
investment.”
 Globalization

Boon Bane
“If globalization is to go forward, and I believe it should
because, as I have said,  the benefits outweigh the costs,
then we have to reassure our publics that the policies and
initiatives are in place to ensure that both the pain and
gain of globalization are shared in an equitable and
sustainable way”
Globalization a boon
• Increase in free trade and commerce
• Increased options for customers
• Increased investment due to foreign investments
accelerates growth, increases employment and reduces
poverty
▫ Examples Uganda and Vietnam
• Better awareness, information and technology sharing
• Reduction of cultural barriers increases the global
village effect
Globalization a boon
• Spread of democratic ideals to developed nations
• Reduction of likelihood of war between developed
nations
• Increases in environmental protection in developed
nations
• Greater interdependence of nation-states
• Increase in flexibility of corporations to operate across
borders
▫ Companies are making this move because not only are they
able to save millions on the lower costs, but they are getting
a better quality of work
 Globalization

Boon Bane
“Globalization may be good for economic prosperity but
is definitely bad for social goals... Globalization may be
economically benign but...it is socially malign”
Globalization a bane
• Increased flow of skilled and non-skilled jobs
from developed to developing nations
• Increased unemployment in developed countries
• Ill effects of coupling
• Increase in inequalities between the rich and the
poor
• FDI being attracted to certain sectors only
• Tougher conditions being imposed on workers
• Destroying jobs and local communities
Globalization a bane
• Increase in the chances of civil war within
developing countries
• Decreases in environmental integrity
• Threat that control of world media by a handful
of corporations will limit cultural expression
• Spread of a materialistic lifestyle and attitude
that sees consumption as the path to prosperity
 So…
Is Globalization on a reverse gear?
Globalization on a reverse gear?- Yes!!
Climate change
• Rising sea levels, Global warming: 1993 Mississippi River flood and
Hurricanes Rita and Katrina
• The results of such changes can be severe for all forms of transport
infrastructure
• Higher temperatures and heat events raise costs and cause delays
via both infrastructure and transport operations.
• Via transportation, global warming will also undermine agriculture
and manufacturing.
• Changes in temperature and precipitation are expected to decrease
crop outputs.
According to the United Nations, global food production
could fall by as much as one quarter by 2050. Smaller
output will reduce food exports and lead to more local
food production reducing demand for transportation of
food.
Globalization on a reverse gear?- Yes!!
Peak oil
• Petroleum is the critical fuel for the movement of goods. Freight
transportation consumes 35% of all transport energy use worldwide
and virtually all of this fuel is petroleum based.
• As peak oil is neared, there will be an increasing gap between
production and demand. As a result, the price of crude oil is
expected to both rise significantly and become much more volatile
• Price of crude oil rose from $28 per barrel in 2003, to $37 in 2004,
$50 in 2005, $60 in 2006, $67 in 2007, spiking at $147.27 on July
11, 2008 and falling to $53 in November 2008 and $36 January
2009, before recovering to the low$70s in August 2009
• Air and ocean freight transport rates rises
• While it cost only $3,000 to ship a normal container from China to
the US in 2000, today its costs $8,000!
• High oil prices also erode global supply chains by their impacts on
production. For example, Agriculture is petroleum intensive in
terms of fuels for machinery and refrigeration and feedstock for
fertilizers and pesticides. Higher oil prices result in higher food
production costs.
World oil production, according to the International
Energy Agency, has been essentially flat for several years
and will soon steadily and irreversibly decline at some
time between 2010 and 2012, new oil production will not
be sufficient to keep up with depletion and world oil
production will begin dropping
US POLICIES
IS GLOBALIZATION ON REVERSE GEAR?
NO
 Conclusion
• "Globalization is not a phenomenon. It is not just some passing trend.
Today it is an overarching international system shaping the domestic
politics and foreign relations of virtually every country, and we need to
understand it as such.“ As thoughtful people concerned about world affairs,
our job is to pick up "globalization," examine it from all sides, dissect it,
figure out what makes it tick, and then nurture and promote the good parts
and mitigate or slow down the bad parts. Globalization is much like fire.
Fire itself is neither good nor bad. Used properly, it can cook food, sterilize
equipment, form iron, and heat our homes. Used carelessly, fire can destroy
lives, towns and forests in an instant. As Friedman says: "[Globalization]
can be incredibly empowering and incredibly coercive. It can democratize
opportunity and democratize panic. It makes the whales bigger and the
minnows stronger. It leaves you behind faster and faster, and it catches up
to you faster and faster. While it is homogenizing cultures, it is also enabling
people to share their unique individuality farther and wider.“ Globalization
has dangers and an ugly dark side. But it can also bring tremendous
opportunities and benefits. Just as capitalism requires a network of
governing systems to keep it from devouring societies, globalization
requires vigilance and the rule of law.