Globalization and Its Discontents

IR Theories on the EU  Liberalism –Institutions –Domestic politics and intergovernmental bargains –Functionalism – functional spillover  Constructivism –Norms of democratic community  Realism?

Globalization  Globalization: Global networks of interdependence (Nye 2004)  Interdependence: mutual dependence of actors across different parts of the international system (Keohane and Nye 1977)  “…globalization is about connections between different region of the world-from the cultural to the criminal, the financial to the environmental- and the ways in which they change and increase over time….”(Held et al. 1999)

Elements of Globalization  Trade –Exports: $66bn (1960) -$7,100bn (2002)  International finance –FDI: $68bn (1960) $7,100(2002)  Multinational corporations –3,500 (1960) to 65,200 (2001)  Regional integration

Elements of Globalization  Cultural globalization  Disease  Environmental interdependence  Population and migration  Transnational trafficking networks  Transnational terrorism

Trends: FDI Flows

Trends: Trade Flows

Sources of Globalization  Technology  Triumph of liberalism –Francis Fukuyama: The End of History? –Washington Consensus  Institutions –WTO –International Monetary Fund (IMF) –World Bank

Is Globalization Good or Bad?

Benefits of Globalization  Access to information  Access to goods  Access to technology  Access to capital

The Risks of Globalization  States lose control  Heightened vulnerability  Benefits distributed asymmetrically  Economic objectives trump social, cultural, environmental objectives

Case: From the Asian Miracle to the Asian Financial Crisis  The miracle: –South Korea: 7%-8%average growth 1970s-1990s; –Thailand: 7%-8.5% growth rate s  1990s: rapid financial market liberalization  1997 Financial Crisis –Thailand: fear of currency devaluation->sell baht->currency devaluates- >capital flight; financial instability; –Korea: rumor that economy in trouble/bank will not renew loans -> banks unwilling to renew loans ->economic trouble due to high indebtedness –Korea: GDP -7%; Thailand: GDP -11%

Case: Intellectual Property Rights (Biopiracy)  Mexican yellow bean –Larry Proctor (Colorado) patent on “Enola” bean, originally from Sonora (Mexico)  Basmati rice –RiceTec Inc (Texas)-Texmati Rice patent

The global banana  Distribution of a dollar of retail revenue: –Producer income $0.05 –Export costs$0.04 –Transport$0.11 –Import license$0.09 –Ripening process$0.05 –Taxes$0.15 –Distribution/retail$0.34 –Profit$0.17 Source: Lipschutz,2004, p. 2

The Backlash: Seattle 1999

Solutions, Solutions…. The Role of Institutions  Keynesian welfare politics?  Domestic institution?  Gradual liberalization, mitigated by government policies?  Strengthen international institutions?  Tackle poverty?