An Overview of Key Terms and Definitions of Globalization

Globalization is a form of cultural integration that is usually defined in terms of economics, but also encompasses cultural, biological, and political homogenization on a global scale. The term is often used to describe the process by which dominant cultures exert social, political, and economic influence on other nations and cultures. The globalization debate has its origins in the first contact between ancient societies. Economic globalization began when cultures with their own economic systems began to exchange resources or attempt military conquest of other cultures. Many social scientists adopt a neutral stance on globalization, while attempting to elucidate both the benefits and detriments of current and historical trends. Within the larger public debate, there are those who believe that globalizationwill eventually lead to a utopian world society, while others believe that globalization will cause the obliteration of less-dominant cultures in favor of more economically developed cultures. Throughout history, governments have been viewed as the principal agents of globalization; in recent years, multinational corporations have become a more important force in economic and environmental globalization. Many of these companies have reached to global markets as sources of new revenue.

Capitalism: An economic system in which the means of production are privately or publicly owned. Goods, services and capital are exchanged in a free market. Developing Countries: Those countries classified by the World Bank as "intermediate" and "low" income nations. The distinction is made on the basis of the country's Gross National Income (GNI). E-Commerce: Electronic commerce usually refers to economic transactions that take place electronically, including Internet-based transactions and direct electronic connections between businesses.

Homogenization: To make something uniform or similar by blending elements. International Monetary Fund (IMF): An international organization of 183 countries, established in 1947 with the goal of promoting cooperation and exchange between nations, and to aid the growth of international trade. Mercantilism: An economic theory that holds that a nation's prosperity is based on the nation's supply of capital.Mercantilism is generally associated with nations whose major mode of accumulating wealth is through merchant trading with other nations. Multilateral: A system involving the participation of more than two countries. Multinational Corporation: A corporation that conducts business in more than one nation. Offshoring: Transferring organizational functions to another country. Outsourcing: Transferring non-central functions to another entity to complete. This could be done in the same country such as when a company outsources its shipping function to a major shipper. It can also be done offshore for cost benefits. Protectionism: Measures set up by a governing organization to protect domestic industry and economy from foreign competition. Protectionism includes import and export regulations and government support for domestic production. World Bank: A union of international organizations established in 1945 to provide aid to countries seeking to participate in international exchange, and to reduce poverty around the world. Its member organizations are the International Development Association, International Center for the Settlement of Investment Disputes, International Finance Corporation, International Bank for Reconstruction and Development, and the Multilateral Investment Guarantee Agency.

-------------------------------------------------------------------------------------------------------------------------------Cultural Globalization refers to the transmission of ideas, meanings and values across national borders. This process is marked by the spread of commodities and ideologies, which become standardized around the world. Mass consumption serves as a facilitator between different people and cultures around the globe as a result of the exponential growth of the human population. Through technological advancement, culture has been moving beyond borders and boundaries, transforming through locations the shared meanings of culture. Through the process of sharing the ideas and values of one culture to another ultimately leads to an interconnectedness between various populations from diverse cultures.[1] [edit]Perspectives

on Globalization

Jan Nederveen Pieterse ( 2004) beliefs are that globalization should be viewed as a long term historical process.[2] He conceived globalization as a human integration and hybridization, arguing that it is possible to detect cultural mixing across continents and regions back many centuries. These ideas refer to the movement of religious practices, language and culture brought by Spanish colonization of the Americas. This however contrast with many economist and sociologist, who trace the origins of globalization to capitalism as well as modernity, which have been facilitated through technological advances.

One of the dominant perspectives of globalization, asserts that this is a process of the transfiguration of worldwide diversity into a pandemic westernized consumer culture.[3] Many critics argue that through the dominance of American culture influencing the entire world, this will ultimately result in the end of cultural diversity. This has been associated with the destruction of cultural identities, dominated by a homogenized and westernized, consumer culture. The global influence of American products, businesses and culture upon other countries around the world has been referred to as Americanization. This influence is represented through that of American-based Television programs which are rebroadcast throughout the world. Major American companies such asMcDonalds and Coca-Cola have played a major role in the spread of American culture across the globe. Terms such as Cocacolonization have been coined to refer to the dominance of American products in foreign countries, which some critics of globalization view as a threat to the cultural identity of such foreign nations. Another perspective, regards globalization as a process of hybridization on which cultural mixture and adaptation continuously transform and renew cultural forms.[4] As anthropologist Roy Wagner.[5] has argued; cultures are continually changing and being recreated as part of an ongoing process. In particular cultures are being informed through various internal pressures and influences. However culture is also shaped by external forces, thus indicating that this is not a homogenous discrete and bounded entities; rather cultures overlap as well as draw from other traditions. The Indian experience particularly reveals the plurality of the impact of cultural globalization [6] -------------------------------------------------------------------------------------------------------------------------------------------

Big Question: How is globalization changing culture?

Globalization has propagated economic opportunity, elevated human rights and improved access to information, technology and goods for people all over the world. Critics argue that these benefits have come at a steep price: the sacrificing of regional cultural identity for Western ideals. Curiosity contributor Bambi Turner looked at globalization and found disagreement about its benefits and drawbacks. Globalization can affect culture in a few basic ways. One interpretation suggests that globalization disperses any and every culture throughout the world, making the planet more heterogeneous, forging deeper connections between different groups. For example, teens in the United States gain an understanding of Japanese culture through animation, comic books and video games, while teens throughout Asia learn about the American way of life by watching U.S. TV shows and movies. Others argue that globalization makes culture more homogenous, leading to a unified world culture that consists of watered-down versions of regional cultural trends. Japanese sushi can be consumed in virtually any country in the world, and favorites from French pastries to "American" fried chicken can be found from Florida to Hong Kong. Proponents argue that this only affects things like consumer goods and the media, while critics worry that it weakens traditional culture. The impact of globalization on culture may also be seen as a blend of the heterogeneous and homogenous, or a "glocalization" of sorts. Glocalization can be understood as the development of hybrid cultures at the local level, as foreign cultures reach local soil, such as in the creation of fusion cuisine or music. In the 21st century, this impact has been felt in American movies, where foreign films like The Departed are remade for the U.S. market.

One of the most common arguments against globalization is that it forces American culture onto the world, Westernizing other nations. Will everyone one day wear blue jeans and eat at McDonald's? We don't know. Globalization can work both ways: Even American blue jeans were forged from different cultures. They were developed by a German immigrant; their denim comes from the name of the French town where it originated (de Nimes); and "jeans" comes from "Genes," a name used to describe a style of pants inspired by the pants worn by Genoan sailors [source:Legraine].

cultural globalization, a phenomenon by which the experience of everyday life, as influenced by the diffusion of commodities and ideas, reflects a standardization of cultural expressions around the world. Propelled by the efficiency or appeal of wireless communications, electronic commerce, popular culture, and international travel, globalization has been seen as a trend toward homogeneity that will eventually make human experience everywhere essentially the same. This appears, however, to be an overstatement of the phenomenon. Although homogenizing influences do indeed exist, they are far from creating anything akin to a single world culture.
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Emergence of global subcultures

Some observers argue that a rudimentary version of world culture is taking shape among certain individuals who share similar values, aspirations, or lifestyles. The result is a collection of elite groups whose unifying ideals transcend geographical limitations.

Davos culture
One such cadre, according to political scientist Samuel Huntington in The Clash of Civilizations(1998), comprises an elite group of highly educated people who operate in the rarefied domains of international finance, media, and diplomacy. Named after the Swiss town that began hosting annual meetings of the World Economic Forum in 1971, these Davos insiders share common beliefs about individualism, democracy, and market economics. They are said to follow a recognizable lifestyle, are instantly identifiable anywhere in the world, and feel more comfortable in each others presence than they do among their less-sophisticated compatriots.

The international faculty club

The globalization of cultural subgroups is not limited to the upper classes. Expanding on the concept of Davos culture, sociologist Peter L. Berger observed that the globalization of EuroAmerican academic agendas and lifestyles has created a worldwide faculty cluban international network of people who share similar values, attitudes, and research goals. While not as wealthy or privileged as their Davos counterparts, members of this international faculty club wield tremendous influence through their association with educational institutions worldwide and have been instrumental in promoting feminism, environmentalism, and human rights as global issues. Berger cited the antismoking movement as a case in point: the movement began as a singular North American preoccupation in the 1970s and subsequently spread to other parts of the world, traveling along the contours of academes global network.

Nongovernmental organizations
Another global subgroup comprises cosmopolitans who nurture an intellectual appreciation for local cultures. As pointed out by Swedish anthropologist Ulf Hannerz, this group advocates a view of global culture based not on the replication of uniformity but on the organization of diversity. Often promoting this view are nongovernmental organizations (NGOs) that lead efforts to preserve cultural traditions in the developing world. By the beginning of the 21st century, institutions such as Cultural Survival were operating on a world scale, drawing attention to indigenous groups who are encouraged to perceive themselves as first peoplesa new global designation emphasizing common experiences of exploitation among indigenous inhabitants of all lands. By sharpening such identities, these NGOs have globalized the movement to preserve indigenous world cultures.

Transnational workers
Another group stems from the rise of a transnational workforce. Indian-born anthropologist Arjun Appadurai has studied English-speaking professionals who trace their origins to South Asia but who live and work elsewhere. They circulate in a social world that has multiple home bases, and they have gained access to a unique network of individuals and opportunities. For example, many software engineers and Internet entrepreneurs who live and work in Silicon Valley, California, maintain homes inand strong social ties toIndian states such as Maharashtra and Punjab.

The persistence of local culture

Underlying these various visions of globalization is a reluctance to define exactly what is meant by the term culture. During most of the 20th century, anthropologists defined culture as a shared set of beliefs, customs, and ideas that held people together in recognizable, self-identified groups. Scholars in many disciplines challenged this notion of cultural coherence, especially as it became evident that members of close-knit groups held radically different visions of their social worlds. Culture is no longer perceived as a knowledge system inherited from ancestors. As a result, many social scientists now treat culture as a set of ideas, attributes, and expectations that change as people react to changing circumstances. Indeed, by the turn of the 21st century, the collapse of barriers enforced by Soviet communism and the rise of electronic commerce have increased the perceived speed of social change everywhere. The term local culture is commonly used to characterize the experience of everyday life in specific, identifiable localities. It reflects ordinary peoples feelings of appropriateness, comfort, and correctnessattributes that define personal preferences and changing tastes. Given the strength of local cultures, it is difficult to argue that an overarching global culture actually exists. Jet-setting sophisticates may feel comfortable operating in a global network disengaged from specific localities, but these people constitute a very small minority; their numbers are insufficient to sustain a coherent cultural system. It is more important to ask where these global operators maintain their families, what kind of kinship networks they rely upon, if any, and whether theirs is a transitory lifestyle or a permanent condition. For most people, place and locality still matter. Even the transnational workers discussed by Appadurai are rooted in local communities bound by common perceptions of what represents an appropriate and fulfilling lifestyle.

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Experiencing globalization
Research on globalization has shown that it is not an omnipotent, unidirectional force leveling everything in its path. Because a global culture does not exist, any search for it would be futile. It is more fruitful to instead focus on particular aspects of life that are indeed affected by the globalizing process.

Cultural globalization is the rapid movement of ideas, attitudes, and values across national borders. The term "globalization" came to be widely used in the 1980s, but as early as the 1960s, the Canadian literary critic Marshall McLuhan popularized the term "global village" to describe the effect that the ability to connect and exchange ideas instantaneously would bring to the world. This sharing of ideas generally leads to greater interconnectedness and interaction between peoples of diverse cultures and ways of life, which can have both positive and negative results. Consequently, as technology has accelerated the process, it has sparked considerable controversy. Historical Perspective Though often thought of as a modern concept, the processes of cultural globalization can be traced back through most of history. Even during times when most societies tended to exist in relative isolation, international trade and exploration often led to transformative exchanges of ideas. For example, the expeditions of early European explorers resulted in interaction with Asia, Africa, and the Americas. Among many other results of this was the introduction of the potato into Europe from South America, which had profound effects on the European diet. Likewise, the British Empires colonization of India produced many cultural impacts on that nation which can still be seen today.

Cultural Impact of Globalization

The Spread of the American Political and Economic Model In addition to cataloging the influences of globalization on culture, students of this phenomenon should ask to what extent the effects on culture are negative or positive, and why they are happening. The mechanisms of cultural globalization are numerous and come from different sources. Thinking about globalization in the broadest possible terms, there are three principal ways that globalization can be seen to have an impact on global culture. These occur through: 1. the development of a new culture of the globally connected professionals and especially business elites; 2. the proliferation of pop culture

Globalization: Culture and Society

Will the world become homogenous? Or perhaps

by SATO Akira

Village on the outskirts of Guiglo City

The word "globalization" has been widely promulgated to refer to aspects of development mostly from an economic perspective; to describe the increasing flow across borders of labor, capital, goods and services, and the formation of international production networks as represented in multinational enterprises, for example. Since the 1990s, however, the term has been picked up by scholars from a wide variety of disciplines, such as sociology, political science, anthropology and cultural studies. Its use is no longer limited to economics and the term has spurred debate in various areas of study. This point of debate can actually be wide-ranging in reach. By way of example, if we look at the table of contents in Global Sociology (Cohen and Kennedy 2000), which is regarded a textbook on globalization, the following chapter headings appear: Modernity; The Changing World of Work; Nation States; Global Inequalities: Gender, Race and Class; TNCs, Uneven Development; Failures of Global Control; Asia Pacific; Population Pressures and Migration; Tourism; Consuming Culture; Media and Communication; Urban Life; Social Movements; Challenges to a Gendered World; The Green Movement; and Identities and Belonging. These chapters might surprise those whose specialties are not in sociology. Here, we find that the word globalization is not used in a limited sense to refer to a particular matter (e.g. the globalization of finance). Common views among those who take a sociological stance are: All the dimensions of globalization - economic, technological, political, social and cultural - appear to be coming together at the same time, each reinforcing and magnifying the impact of the others (Cohen and Kennedy); and globalization is best thought of as a multidimensional set of social processes that resists being confined to any single thematic framework (Steger 2005).

Modern
In the 19th century, steamships reduced the cost of international transport significantly and railroads made inland transport cheaper. The transport revolution occurred some time between 1820 and 1850.[11] More nations embraced international trade.[11] Globalization in this period was decisively shaped by nineteenth-century imperialism such as in Africa and Asia.

Globalization took a big step backwards during the First World War, the Great Depression, and the Second World War. Integration of rich countries didn't recover to previous levels before the 1980s.[citation
needed]

After the Second World War, work by politicians led to the Bretton Woods conference, an agreement by major governments to lay down the framework for international monetary policy, commerce and finance, and the founding of several international institutions intended to facilitate economic growth multiple rounds of trade opening simplified and lowered trade barriers. Initially, the General Agreement on Tariffs and Trade (GATT), led to a series of agreements to remove trade restrictions. GATT's successor was the World Trade Organization (WTO), which created an institution to manage the trading system. Exports nearly doubled from 8.5% of total gross world product in 1970 to 16.2% in 2001.[37] The approach of using global agreements to advance trade stumbled with the failure of the Doha round of trade-negotiation. Many countries then shifted to bilateral or smaller multilateral agreements, such as the 2011 South KoreaUnited States Free Trade Agreement. Since the 1970s, aviation has become increasingly affordable to middle classes in developed countries. Open skies policies and low-cost carriers have helped to bring competition to the market. In the 1990s, the growth of low cost communication networks cut the cost of communicating between different countries. More work can be performed using a computer without regard to location. This included accounting, software development, and engineering design. In late 2000s, much of the industrialized world entered into the Great Recession,[38] which may have slowed the process, at least temporarily.[39][40][41] [edit]Aspects

Global Competitiveness Index (2008-2009): competitiveness is an important determinant for the well-being of nationstates in an international environment

[edit]Global

business organization

Main article: International business With improvements in transportation and communication, international business grew rapidly after the beginning of the 20th century. International business includes all commercial transactions (private sales, investments, logistics,and transportation) that take place between two or more regions,countries and nations beyond their political boundary. Usually, private companies undertake such transactions for profit.[42] Such business transactions involve economic resources such as capital, natural and human resources used for international production of physical goods and services such asfinance, banking, insurance, construction and other productive activities.[43] International business arrangements have led to the formation of multinational enterprises (MNE), companies that have a worldwide approach to markets and production or one with operations in more

than one country. An MNE is often called multinational corporation (MNC) or transnational company (TNC). Well known MNCs include fast food companies such as McDonald's and Yum Brands, vehicle manufacturers such as General Motors, Ford Motor Company and Toyota, consumer electronics companies like Samsung, LG and Sony, and energy companies such as ExxonMobil, Shell and BP. Most of the largest corporations operate in multiple national markets. Businesses argue that survival in the new global marketplace requires companies to source goods, services, labor and materials overseas to continuously upgrade their products and technology in order to survive increased competition. [edit]International trade Main article: International trade

Singapore, the top country in the Enabling Trade Index, embraced globalization and became a highly developed country

An absolute trade advantage exists when countries can produce a commodity with less costs per unit produced than could its trading partner. By the same reasoning, it should import commodities in which it has an absolute disadvantage.[44] While there are possible gains from trade with absolute advantage, comparative advantagethat is, the ability to offer goods and services at a lower marginal and opportunity costextends the range of possible mutually beneficial exchanges. In a globalized business environment, companies argue that the comparative advantages offered by international trade have become essential to remaining competitive.

[edit]Trade agreements, economic blocks and special trade zones

A Special Economic Zone (SEZ) is a geographical region that has economic and other laws that are more free-market-oriented than a country's typical or national laws. "Nationwide" laws may be suspended inside these special zones. The category 'SEZ' covers many areas, including Free Trade Zones(FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial parks or Industrial Estates (IE), Free Ports, Urban Enterprise Zones and others. Usually the goal of a structure is to increase foreign direct investment by foreign investors, typically an international business or a multinational corporation (MNC). These are designated areas in which companies are taxed very lightly or not at all in order to encourage economic activity. Free ports have historically been endowed with favorable customs regulations, e.g., the free port of Trieste. Very often free ports constitute a part of free economic zones. A FTZ is an area within which goods may be landed, handled, manufactured or reconfigured, and reexported without the intervention of the customs authorities. Only when the goods are moved to consumers within the country in which the zone is located do they become subject to the prevailing customs duties. Free trade zones are organized around major seaports, international airports,

and national frontiersareas with many geographic advantages for trade.[45] It is a region where a group of countries has agreed to reduce or eliminate trade barriers.[46] A free trade area is a trade bloc whose member countries have signed a free-trade agreement, which eliminates tariffs, import quotas, and preferences on most (if not all) goods and services traded between them. If people are also free to move between the countries, in addition to free-trade area, it would also be considered an open border. The European Union, for example, a confederation of 27 member states, provides both a free trade area and an open border.

A Billboard in Jakarta welcoming ASEAN Summit 2011 delegates.

Qualifying Industrial Zones (QIZ) are industrial parks that house manufacturing operations in Jordan and Egypt. They are a special free trade zones established in collaboration with neighboring Israel to take advantage of the free trade agreements between the United States and Israel. Under the trade agreements with Jordan as laid down by the United States, goods produced in QIZ-notified areas can directly access US markets without tariff or quota restrictions, subject to certain conditions. To qualify, goods produced in these zones must contain a small portion of Israeli input. In addition, a minimum 35% value to the goods must be added to the finished product. The brainchild of Jordanian businessman Omar Salah, the first QIZ was authorized by the United States Congress in 1997. The Asia-Pacific has been described as "the most integrated trading region on the planet" because its intra-regional trade accounts probably for as much as 50-60% of the region's total imports and exports. [47] It has also extra-regional trade: consumer goods exports such as televisions, radios, bicycles, and textiles into the United States, Europe, and Japan fueled the economic expansion.[48] The ASEAN Free Trade Area[49] is a trade bloc agreement by the Association of Southeast Asian Nations supporting local manufacturing in all ASEAN countries. The AFTA agreement was signed on 28 January 1992 in Singapore. When the AFTA agreement was originally signed, ASEAN had six members, namely, Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand. Vietnam joined in 1995, Laos and Myanmar in 1997 and Cambodia in 1999.

[edit]Drug trade
In 2010 the United Nations Office on Drugs and Crime (UNODC) reported that the global drug trade generated more than $320 billion a year in revenues.[50]Worldwide, the UN estimates there are more than

50 million regular users of heroin, cocaine and synthetic drugs.[51] The international trade of endangered species was second only to drug trafficking among smuggling "industries".[52] Traditional Chinese medicine often incorporates ingredients from all parts of plants, the leaf, stem, flower, root, and also ingredients from animals and minerals. The use of parts of endangered species (such as seahorses, rhinoceros horns, saiga antelope horns, and tiger bones and claws) resulted in a black market of poachers who hunt restricted animals.[53][54] [edit]Tax havens

The ratio of German assets in tax havens in relation to the total German GDP. [55] The "Big 7" shown are Hong Kong, Ireland, Lebanon, Liberia, Panama, Singapore, and Switzerland.

Main article: Tax haven A tax haven is a state, country or territory where certain taxes are levied at a low rate or not at all, which are used by businesses for tax avoidance and tax evasion.[56] Individuals and/or corporate entities can find it attractive to establish shell subsidiaries or move themselves to areas with reduced or nil taxation levels. This creates a situation of tax competition among governments. Different jurisdictions tend to be havens for different types of taxes, and for different categories of people and/or companies.[57] States that are sovereign or self-governing under international law have theoretically unlimited powers to enact tax laws affecting their territories, unless limited by previous international treaties. The central feature of a tax haven is that its laws and other measures can be used to evade or avoid the tax laws or regulations of other jurisdictions.[58] In its December 2008 report on the use of tax havens by American corporations, [59] the U.S. Government Accountability Office was unable to find a satisfactory definition of a tax haven but regarded the following characteristics as indicative of it: nil or nominal taxes; lack of effective exchange of tax information with foreign tax authorities; lack of transparency in the operation of legislative, legal or administrative provisions; no requirement for a substantive local presence; and self-promotion as an offshore financial center. A 2012 report from the Tax Justice Network estimated that between USD $21 trillion and $32 trillion is sheltered from taxes in unreported tax havens worldwide. If such wealth earns 3% annually and such capital gains were taxed at 30%, it would generate between $190 billion and $280 billion in tax revenues, more than any other tax shelters.[60] If such hidden offshore assets are considered, many countries with governments nominally in debt are shown to be net creditor nations.[61] However, the tax policy director of the Chartered Institute of Taxation expressed skepticism over the accuracy of the figures.[62] Daniel J. Mitchell of the Cato Institute says that the report also assumes, when considering notional lost tax revenue, that 100% money deposited offshore is evading payment of tax.[63]

[edit]Information systems Main article: Global information system Multinational corporations face the challenge of developing global information systems for global data processing and decision-making. The Internet provides a broad area of services to business and individual users. Because the World Wide Web (WWW) can reach any Internet-connected computer in the world, the Internet is closely related to global information systems. A global information system is a data communication network that crosses national boundaries to access and process data in order to achieve corporate goals and strategic objectives.[64] Across companies and continents, information standards ensure desirable characteristics of products and services such as quality, environmental friendliness, safety, reliability, efficiency and interchangeability at an economical cost. For businesses, widespread adoption of international standards means that suppliers can develop and offer products and services meeting specifications that have wide international acceptance in their sectors. According to the ISO, businesses using their International Standards are competitive in more markets around the world. The ISO develops standards by organizing technical committees of experts from the industrial, technical and business sectors who have asked for the standards and which subsequently put them to use. These experts may be joined by representatives of government agencies, testing laboratories, consumer associations, non-governmental organizations and academic circles.[65] [edit]International tourism

Modern aviation has made it possible to travel long distances quickly.

Main article: Tourism Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".[66] There are many forms of tourism such as agritourism, birth tourism, culinary tourism, cultural tourism, eco-tourism,extreme tourism, geotourism, heritage tourism, LGBT tourism,medical tourism, nautical tourism, pop-culture tourism, religious tourism, slum tourism, war tourism, and wildlife tourism Globalization has made tourism a popular global leisure activity. The World Health Organization (WHO) estimates that up to 500,000 people are in flight at any one time.[67] In 2010, international tourism reached $919B, growing 6.5% over 2009.[68] In 2010, there were over 940 million international tourist arrivals worldwide, representing a growth of 6.6% when compared to 2009.[69] International tourism receipts grew to US$919 billion (693 billion) in 2010, corresponding to an increase in real terms of 4.7%.[69]

As a result of the late-2000s recession, international travel demand suffered a strong slowdown from the second half of 2008 through the end of 2009. After a 5% increase in the first half of 2008, growth in international tourist arrivals moved into negative territory in the second half of 2008, and ended up only 2% for the year, compared to a 7% increase in 2007.[70] This negative trend intensified during 2009, exacerbated in some countries due to the outbreak of the H1N1 influenza virus, resulting in a worldwide decline of 4.2% in 2009 to 880 million international tourists arrivals, and a 5.7% decline in international tourism receipts.[71]

How Globalization Affects Developed Countries

April 22 2012| Filed Under Economics, Economies of Scale, Economy, Financial Theory, Foreign Investment, GDP, International Markets, International Trade, Macroeconomics, Microeconomics The phenomenon of globalization began in a primitive form when humans first settled into different areas of the world; however, it has shown a rather steady and rapid progress in recent times and has become an international dynamic which, due to technological advancements, has increased in speed and scale, so that countries in all five continents have been affected and engaged. What Is Globalization? Globalization is defined as a process that, based on international strategies, aims to expand business operations on a worldwide level, and was precipitated by the facilitation of global communications due to technological advancements, and socioeconomic, political and environmental developments. The goal of globalization is to provide organizations a superior competitive position with lower operating costs, to gain greater numbers of products, services and consumers. This approach to competition is gained via diversification of resources, the creation and development of new investment opportunities by opening up additional markets, and accessing new raw materials and resources. Diversification of resources is a business strategy that increases the variety of business products and services within various organizations. Diversification strengthens institutions by lowering organizational risk factors, spreading interests in different areas, taking advantage of market opportunities, and acquiring companies both horizontal and vertical in nature. Industrialized or developed nations are specific countries with a high level of economic development and meet certain socioeconomic criteria based on economic theory, such as gross domestic product (GDP), industrialization and human development index (HDI) as defined by the International Monetary Fund (IMF), the United Nations (UN) and the World Trade Organization (WTO).

Using these definitions, some industrialized countries in 2012 are: Austria, United Kingdom, Belgium, Denmark, Finland, France, Germany, Japan, Luxembourg, Norway, Sweden, Switzerland and the United States. SEE: What Is The World Trade Organization? Components of Globalization The components of globalization include GDP, industrialization and the Human Development Index (HDI). The GDP is the market value of all finished goods and services produced within a country's borders in a year, and serves as a measure of a country's overall economic output. Industrialization is a process which, driven by technological innovation, effectuates social change and economic development by transforming a country into a modernized industrial, or developed nation. The Human Development Index comprises three components: a country's population's life expectancy, knowledge and education measured by the adult literacy, and income. The degree to which an organization is globalized and diversified has bearing on the strategies that it uses to pursue greater development and investment opportunities. The Economic Impact on Developed Nations Globalization compels businesses to adapt to different strategies based on new ideological trends that try to balance rights and interests of both the individual and the community as a whole. This change enables businesses to compete worldwide and also signifies a dramatic change for business leaders, labor and management by legitimately accepting the participation of workers and government in developing and implementing company policies and strategies. Risk reduction via diversification can be accomplished through company involvement with international financial institutions and partnering with both local and multinational businesses. SEE: Evaluating Country Risk For International Investing Globalization brings reorganization at the international, national and sub-national levels. Specifically, it brings the reorganization of production, international trade and the integration of financial markets. This affects capitalist economic and social relations, via multilateralism and microeconomic phenomena, such as business competitiveness, at the global level. The transformation of production systems affects the class structure, the labor

process, the application of technology and the structure and organization of capital. Globalization is now seen as marginalizing the less educated and low-skilled workers. Business expansion will no longer automatically imply increased employment. Additionally, it can cause high remuneration of capital, due to its higher mobility compared to labor.
Penny Stock of the Day

The phenomenon seems to be driven by three major forces: globalization of all product and financial markets, technology and deregulation. Globalization of product and financial markets refers to an increased economic integration in specialization and economies of scale, which will result in greater trade in financial services through both capital flows and cross-border entry activity. The technology factor, specifically telecommunication and information availability, has facilitated remote delivery and provided new access and distribution channels, while revamping industrial structures for financial services by allowing entry of non-bank entities, such as telecoms and utilities. Deregulation pertains to the liberalization of capital account and financial services in products, markets and geographic locations. It integrates banks by offering a broad array of services, allows entry of new providers, and increases multinational presence in many markets and more cross-border activities. In a global economy, power is the ability of a company to command both tangible and intangible assets that create customer loyalty, regardless of location. Independent of size or geographic location, a company can meet global standards and tap into global networks, thrive and act as a world class thinker, maker and trader, by using its greatest assets: its concepts, competence and connections. Beneficial Effects Some economists have a positive outlook regarding the net effects of globalization on economic growth. These effects have been analyzed over the years by several studies attempting to measure the impact of globalization on various nations' economies using variables such as trade, capital flows and their openness, GDP per capita, foreign direct investment (FDI) and more. These studies examined the effects of several components of globalization on growth using time series cross sectional data on trade, FDI and portfolio investment. Although they provide an analysis of individual components of globalization on economic growth, some of the results are inconclusive or even contradictory. However,

overall, the findings of those studies seem to be supportive of the economists' positive position, instead of the one held by the public and non-economist view. Trade among nations via the use of comparative advantage promotes growth, which is attributed to a strong correlation between the openness to trade flows and the affect on economic growth and economic performance. Additionally there is a strong positive relation between capital flows and their impact on economic growth. Foreign Direct Investment's impact on economic growth has had a positive growth effect in wealthy countries and an increase in trade and FDI, resulting in higher growth rates. Empirical research examining the effects of several components of globalization on growth, using time series and cross sectional data on trade, FDI and portfolio investment, found that a country tends to have a lower degree of globalization if it generates higher revenues from trade taxes. Further evidence indicates that there is a positive growth-effect in countries that are sufficiently rich, as are most of the developed nations. The World Bank reports that integration with global capital markets can lead to disastrous effects, without sound domestic financial systems in place. Furthermore, globalized countries have lower increases in government outlays and taxes, and lower levels of corruption in their governments. One of the potential benefits of globalization is to provide opportunities for reducing macroeconomic volatility on output and consumption via diversification of risk. Harmful Effects Non-economists and the wide public expect the costs associated with globalization to outweigh the benefits, especially in the short-run. Less wealthy countries from those among the industrialized nations may not have the same highly-accentuated beneficial effect from globalization as more wealthy countries, measured by GDP per capita etc. Although free trade increases opportunities for international trade, it also increases the risk of failure for smaller companies that cannot compete globally. Additionally, free trade may drive up production and labor costs, including higher wages for more skilled workforce. Domestic industries in some countries may be endangered due to comparative or absolute advantage of other countries in specific industries. Another possible danger and harmful effect is the overuse and abuse of natural resources to meet new higher demands in the

production of goods. SEE: The Globalization Debate The Bottom Line One of the major potential benefits of globalization is to provide opportunities for reducing macroeconomic volatility on output and consumption via diversification of risk. The overall evidence of the globalization effect on macroeconomic volatility of output indicates that although direct effects are ambiguous in theoretical models, financial integration helps in a nation's production base diversification, and leads to an increase in specialization of production. However, the specialization of production, based on the concept of comparative advantage, can also lead to higher volatility in specific industries within an economy and society of a nation. As time passes, successful companies, independent of size, will be the ones that are part of the global economy.

Globalization and Culture

By Girish Mishra

"The chasm between Indias educated elite and its impoverished multitudes is widening. The near infatuation with information technology and the rush to integrate India with the global economy is leaving the poor and the poorer states further behind."

The ongoing globalization, based on the Washington Consensus, is aimed at bringing in cultural uniformity throughout the world without leaving any scope for diversities. It wants to impose American culture and way of life everywhere. The champions of America-led globalization have declared this in most candid terms. Let us give just two examples. First,

Dr. Henry Kissinger, a former Secretary of State, in the course of a lecture at the Trinity College in Dublin on 12 October 1999, said: The basic challenge is that what is called globalization is really another name for the dominant role of the United States. During the past decade, the United States has created unprecedented wealth, broadened and deepened the availability of capital; funded the creation, development and broad distribution of a wide variety of new technologies, created markets for an endless array of goods and services in economic terms it can get no better: full employment, rising real wages, increasing productivity, low inflation, increasing wealth and nonstop growth. For America, these are the good old days Success of this magnitude inevitably inspires imitation. [1] Then he went on to add that, just as the previous phase of globalization was under the British hegemony, the current phase had to be under US domination. The world had no alternative but to accept American ideas, values and way of life. Second, Thomas L. Friedman, a foreign affairs columnist of The New York Times declares, without any fudging or hedging, We Americans are apostles of the Fast World, the prophets of the free market and high priests of high tech. We want enlargement of both our values and Pizza Huts. We want the world to follow our lead and become democratic and capitalistic, with a Web site in every pot, a Pepsi on every lip, Microsoft Windows in every computer and with everyone, everywhere, pumping their own gas. [2] Elsewhere, he says: globalization has its own dominant culture, which is why it tends to be homogenizing. Culturally speaking, globalization is largely, though not entirely, the spread of Americanization from Big Macs to Mickey Mouse on a global scale. [3] American coffeehouse chain Starbucks has begun selling its espresso and food items to ever-increasing number of countries and this way spreading American food habits. It is the first time in human history that virtually every individual at every level of society consciously or unconsciously feels the impact of globalization. He finds it in the media,

tastes it in his food and senses it in the goods that he buys. At the same time, it generates resentment and fear that his traditional culture and identity are in danger. Before we proceed further, we must keep in mind that Culture is not static; it grows out of a systematically encouraged reverence for selected customs and habits. Indeed, Websters Third New International Dictionary defines culture as the total pattern of human behavior and its products embodied in speech, action, and artifacts and dependent upon mans capacity for learning and transmitting knowledge to succeeding generations. Language, religion, political and legal systems, and social customs are the legacies of victors and marketers and reflect the judgment of the marketplace of ideas throughout popular history. They might also rightly be seen as living artifacts, bits and pieces carried forward through the years on currents of indoctrination, popular acceptance, and unthinking adherence to old ways. Culture is used by the organizers of society politicians, theologians, academics, and families to impose and ensure order, the rudiments of which change over time as need dictates. [4] Cultural differences are often utilized either to justify imperialist aims or resist foreign forces and influence. Francis Fukuyama, when asked whether globalization was really a euphemism for Americanization, said: I think that it is, and thats why some people do not like it. I think it has to be Americanization because, in some respects, America is the most advanced capitalist society in the world today, and so its institutions represent the logical development of market forces. Therefore, if market forces are what drive globalization, it is inevitable that Americanization will accompany globalization. [5] Fukuyama rejects the view that globalization is leading to cultural homogeneity. There may be homogenization of certain aspects of the economy and the society, but, at the same time, there will be an affirmation of distinctive cultural identities. If the process of cultural homogenization takes place, it will be too slow to discern. Many people

think that because we have advanced communications technology, and are able to project global television culture worldwide, this will lead to homogenization on a deeper cultural level. I think that, in a way, its done just the opposite. For example, there is probably less mutual liking, more distrust and greater emphasis on the difference between the cultures of the United States and Asia today than there was 40 years ago. In the 1950s and 60s, Asia looked up to the United States as a model of modernization. Now, Asians look at American urban decay and the decline of the family and they feel that America is not a very attractive model. Communications technology has allowed both Asians and Americans to see each other more clearly, and it turns out they have very different value systems. [6] Malcolm Waters thinks that, if people view the concept of present-day globalization as homogenization, they are not wrong. This is because like modernization, a predecessor and related concept, it appears to justify the spread of Western culture and capitalist society by suggesting that there are forces operating beyond human control that are transforming the world. Globalization is the direct consequence of European culture across the planet. [7] Cultural imperialism, for quite some time, has been a topic of discussion. Weckert and Adeney have defined it as the use of political and economic power to exalt and spread the values and habits of a foreign culture at the expense of native culture [8] Herbert I. Schiller thinks cultural imperialism arises in the world economic system, with the terms and nature of production settled at one location and nurtured elsewhere. Goods bought in the world market bring with them certain ideology and values of the world capitalist system. [9] Cultural imperialism is used to (1) increase demand for foreign goods; (2) depress growth within local industry; and, (3) foster a consumerist mentality where the need to save is overcome by the desire to emulate the foreign rich. Once such a desire is instilled in this market, corporations (4) widen and consolidate their market by investing in merchandising facilities and sales promotion. Their goal of establishing of preference for their goods

in the local economy means that they are involved in the international transmission of values. [10] The new global culture signifies deterritorialisation and the emergence of a borderless world. Globalization has greatly increased the means through which nationals of one country actively take part in another countrys cultural, economic and political life. [11] Some hold that this leads to consumer culture, which does not mean plain and simple consumption. Throughout human history people of one society have been influenced by consumption habits of other societies. With increasing mobility these influences have become more and more powerful. When one speaks of a consumer culture, the bundle of goods and services consumed, and its composition are not determined mainly on the basis of real needs and the capacity of individual consumer to pay. In fact, the bundle consists of such goods and services that justify in the eyes of his peers his social status. At times, what one calls bandwagon and snob effects determine them. The former stands for the effort of an individual to ape the consumption pattern of his or her superiors while the latter underlines the determination of the superiors to give up the present pattern of consumption and move on to a higher one. Under capitalism, the aim is to sell as much as possible to maximize profit. In order to do this, advertisement becomes necessary not in order to disseminate knowledge about the produce but to create a demand by underlying the fact that its consumption will enhance the status of the consumer in the eyes of the society. An attempt is made to create product differentiation, in many cases, imaginary. Fashion shows, selection of beauty queens, employment of well-known models, sportsmen, actors and actresses etc. are the ways to attract potential consumers. With the increasing reach of newspapers, films, radios and cable television, the power of advertisement to lure the potential consumers has increased manifold. The easy availability of loans, attractive hire-purchase schemes, and credit card facilities enable people to translate their desires into demand. Under consumer culture, consumption is regarded as the principal form of self-expression and the major source of demonstrating ones identity. It implies that both material and non-material items, including kinship, affection, art, and intellect become commodified, that is their value is assessed by the context of their exchange, rather than the context of their production or use. An advanced or post-modernized consumer culture

experiences hyper commodification in which minute differences between products or minute improvements in them can determine variations in demand, and in which consumption is differentiated on the basis of the signifiers known as brand names. This is captured in such terms as taste, fashion and lifestyle that become key sources of social differentiation, displacing class and political affiliation. Its original form was probably a deliberate creation but under post modernized conditions it is hyper simulated, having a life of its own that is beyond the control of any particular group. Since it is symbolically mediated, consumer culture liberates values and preferences from particular social and geographical locations and indeed invalidates the social and political structures of modernity including states. It does so by undermining the cultural classifications of modernity, technically by declassifying or dedifferentiating culture. [12] There are, broadly speaking, two views about the way consumer culture goes global and is able to influence and dominate an individual. First, individual identity is linked to culture. Capitalism transforms people into consumers by altering their self-images, their structure of wants so that they serve capitalist accumulation. [13] Second, the phenomenon, known as McDonaldization, constitutes the other view. This is the process by which the principles of fast food restaurant chain McDonalds are fast bringing the entire world into their fold. They include efficiency (expressed in the declining gap between placing the order and its execution); calculability (indicated by the calculation by a consumer of costs in terms of money, time and effort rather than quality of the product); predictability (standardizing the products so that the trust of the consumer is won); and control of human beings through the application of material technology. [14] This underlines the growing tendency to the unification of lifestyles, cultural symbols and the modes of behaviour. There is no unanimity on the emergence of a homogeneous global culture; only of the fusion of global and local cultures as the main outcome of globalization. [15] The application of material technology not only leads to maximum deskilling of workers but also directing consumers by means of queue control barriers, fixed menu displays, limited options, uncomfortable seats, inaccessible toilets, drive-through processing. [16] Consequently, much talked about sovereign consumers are made docile conformists. Thus McDonaldization leads to a reordering of consumption and production and rationalization of previously informal and domestic

practices, in order to bring about greater conformity. [17] In the sphere of consumption, two developments stand out. They are, namely, the mobilization of fashion in mass (as opposed to elite) markets, which helps accelerate the pace of consumption not only in dress, adornment, and decoration but also across a wide spectrum of life-styles and recreational activities (leisure and sporting habits, pop music styles, video and childrens games, and the like). And secondly, in the consumption basket of an individual the importance of services vis--vis goods continuously increases. These services have a wide variety, ranging from personal, business, educational, and health services to entertainment. The life span of goods and services is shortened so that the volume of demand does not fall much below that of production. [18] A number of consequences have followed from the increasing predominance of services. First, they have heightened the ephemeral nature of fashions, products, production techniques, labour process, etc. [19] Second, In the realm of commodity production, the primary effect has been to emphasize the values and virtues of instantaneity (instant and fast foods, meals, and other satisfactions) and of disposability (cups, plates, cutlery, packaging, napkins, clothing, etc.). The dynamics of a throwaway society have become quite obvious. It means more than just throwing away produced goods (creating a monumental waste-disposal problem), but also being able to throw away values, life-styles, stable relationships, and attachments to things, buildings, places, people, and received ways of doing and being individuals were forced to cope with disposability, novelty and the prospects for instant obsolescence. [20] It follows that a producer of goods or services needs to master the art and science of manipulating the tastes, fashions and attitudes of the potential consumers of his wares. [21] R. Cronk, writing in 1996, termed globalization as new capitalism and analyzed its impact vis--vis consumerism. According to him, the traditional values of Western society were getting corrupted by commercialization of culture and the impact of mass media. [22] The consumer is no longer the mythical sovereign to be obeyed and pleased, but a target.

Controlling interests commodify culture and sell it to a public weaned on media advertising. Selection is reduced, not to what the public wants, but to what it will accept at a greater profit for the stockholder. This includes the availability and variety of commodities as well as their quality. [23] Corporations restrict consumers choices and freedoms. As people become acclimatized to television, they are gripped by media-produced images and symbols and they start hankering after brand names. Consumerism establishes a hold over them and they do not bother to verify the properties of goods demanded. They do not care to see whether the goods they are going to buy really satisfy a genuine need. People tend to believe that their being is shaped by what they consume. [24] An important feature of present-day globalization is the advent of consumer credit society. Till the arrival of credit cards, the cash at his disposal or his ability to raise loans limited a persons consumption. Credit cards have played a very vital role in tremendously extending this limit. A person can now buy goods and services even if he does not have cash at his disposal or the prospect of immediately securing a loan. Credit cards have given a tremendous boost to consumerism and pushed households into debt. [25] Globalization is supposed to have ended the period of modernity and ushered the world into the age of post-modernity. Thus modes of social life or organization which emerged in Europe from about the seventeenth century onwards which subsequently became more or less worldwide in their influence, [26] popularly referred to as modernity, have come to an end. A new era has begun, which is taking the world beyond modernity. This new era is variously referred to as information society, consumer society, post-modernity, post-modernism, post-industrial society, postcapitalism, and so on. Each of these terms is supposed to convey the idea of the transition from a society based on the predominance of manufacturing to that on services. One may ask whether globalization has brought in a global culture. If by a global culture is meant something like the culture of the nation-state, extended to cover the entire world, the answer is in the negative. This is for the simple reason that while the culture of a nation-state is homogeneous and integrated, there is no such culture visible on the global level for there is no world-state. In the near future too there is no

prospect of a world-state coming into existence, hence there is no possibility of world culture. Thus in Marshall McLuhans global village there is global culture growing. [27] Five dimensions of global cultural flows have been discerned. They are ethnoscapes (brought in by flows of people), tecnoscapes (the flows of machinery and industry), finanscapes (the flows of money in the currency and stock markets), mediascapes (images and information disseminated by print and electronic media), and ideoscapes (flows of the elements of ideologies). During the present era of globalization, the concept of the work place is undergoing a sea change. In developed countries, people work from their homes or while travelling. The old concept of fixed working hours is giving way to working according to convenience and transferring the work through Internet. Employees remain in constant touch with their superiors, thanks to advances in information technology. This development is bound to have enormous impact on the character of cities. They will be transformed from concentrations of office employment to centers of entertainment and culture; that is, cities will become places where people go to stay in hotels, visit museums and galleries, dine in restaurants, participate in civic events, and attend live performances of all kinds. In contrast, some poor countries will stem the flight from the countryside to cities by using low-cost communications to provide rural dwellers with better medical services, jobs, education, and entertainment. [28] The importance of English as global language has been rapidly increasing, as it has become the most important medium of telecommunication. All over the world people will have to learn English to use computer software. It is not British but American English that is in the ascendancy. Many computers have only American English software and it is the main transnational language used in various fields of scientific, cultural, economic and business activities. With the help of improved information technology, people can communicate their ideas and views and bypass mass media censorship. Thus, theoretically, they can influence public opinion and build democratic movements, even globally. Peoples ability to communicate more freely and easily could foster greater mutual understanding and appreciation of

one anothers problems and points of view. [29] New ideas and information will get disseminated, jumping physical and political barriers, in the shortest possible time. There is, however, no universal agreement on the shape of the world to come. There are people who assert that the process of globalization strengthening commercial and technological interdependence among nations will lead to a virtual paradise made possible by spreading markets and global technology, [30] while, on the other hand, a finger is pointed out towards what has happened in recent years in different parts of the world. It is surmised that all of the horrors of the ancient slaughter [are being] reenacted. [31] Benjamin R. Barber discerns two scenarios. One scenario holds out the grim prospect of a retribalization of large swaths of humankind by war and bloodshed: a threatened balkanization of nation-states in which culture is pitted against culture, people against people, tribe against tribe, a Jihad in the name of a hundred narrowly conceived faiths against every kind of interdependence, every kind of artificial social cooperation and mutuality: against technology, against pop culture, and against integrated markets; against modernity itself as well as the future in which modernity issues. The other scenario paints that future in shimmering pastels, a busy portrait of onrushing economic, technological, and ecological forces that demand integration and uniformity that mesmerize peoples everywhere with fast music, fast computers, and fast food MTV, Macintosh, and McDonalds pressing nations into one homogeneous global theme park, one McWorld tied together by communications, information, entertainment, and commerce. Caught between Babel and Disneyland, the planet is falling precipitously apart and coming reluctantly together at the very same moment. [32] Thus, the present era of globalization has given rise to two mutually contradictory tendencies, namely, Jihad and McWorld. They are discernible simultaneously in many countries. Barber underlines that squeezed between their opposing forces, the world has been sent out of

control. Even though they are opposed to each other, they reinforce each other. Jihad not only revolts but abets McWorld, while McWorld not only imperils but re-creates and reinforces Jihad. They produce their contraries and need one another. [33] McWorld, brought in by the present era of globalization, makes countries so interdependent that their sovereignty becomes extremely limited. Economic and commercial forces unleashed by globalization work towards converting the entire world into one unified market and its inhabitants into global consumers. Its aim is to do away with all the barriers and hindrances in the way of unifying the hitherto existing national markets, make trade free, interests private and currencies fully convertible on both current and capital accounts, provide unhindered access to banking and strictly enforce contracts. Laws and needs of production and consumption are given priority over the laws of legislatures and courts. Consequently, in the world of McWorld, the alternative to dogmatic traditionalism may turn out to be materialist consumerism or relativistic secularism or merely a profitable corruption. Democracys ties to McWorld are at best contingent. Shopping, it is true, has little tolerance for blue laws, whether dictated by pubclosing British paternalism, Sabbath-observing Jewish Orthodoxy, or no-Sunday-liquor-sales condition for constitutional faith or a respect for due process. [34] While an integrated global market fails to lead to common interests or common laws, it does work towards bringing in a common currency, a common language and common behaviour. Commercial pilots, computer programmers, film directors, international bankers, media specialists, oil riggers, entertainment celebrities, ecology experts, movie producers, demographers, accountants, professors, lawyers, athletes these compose a new breed of men and women for whom religion, culture, and ethnic nationality are marginal elements in a working identity. Although sociologists of everyday life will continue to distinguish a Japanese from an American mode, shopping has a common signature throughout the world. [35] McWorld is a phenomenon of both the post-nation-state and postindustrial era. Maximization of profit rather than social or national welfare

is the motto of globalism and its central players transnational corporations. To achieve business efficiency, a policy of downsizing is pursued. It means capital-intensive production that amounts to labourminimizing policies. In their place appear machines, robots, and multiplying (so-called) temporary jobs, which are actually long-term jobs without long-term contracts, long-term security, or long-term benefits. [36] The protagonists of McWorld do not relish government intervention, however justified it may be. Market-driven profit-making activities do not go well with calls to protect the environment, increase employment opportunities and bring social justice. [37] Globalization has rendered redundant the age-old aspiration of nations to strive for economic selfsufficiency. India during and after the freedom struggle always emphasized the goal of self-reliant development based on domestic resources, domestic market and domestic manpower. Economic selfreliance was supposed to make the country pursue an independent foreign policy. Economic dependence was said to lead to servitude. Selfreliance did not, however, mean autarky. Look up any elementary economics textbook and you will come across the term consumer sovereignty. Hymns are sung in praise of the consumer and his supremacy. Producers are supposed to be directed by consumers through their behaviour in the market place to decide what to produce. In other words, capitalist folk-lore has it that producers are always at the beck and call of sovereign consumers and their sole aim is to satisfy their needs and in that process to earn profits. Sovereign consumers are supposed to have complete knowledge of various aspects of the market so that they cannot be fooled or cheated. In reality, whatever semblance of this grand idea earlier existed has now completely vanished, gradually yielding to a postmodern capitalist economy in which needs are manufactured to meet the supply of producers who make their unmediated products marketable through promotion, spin, packaging, and advertising. [38] The main constituents of American culture, namely, music, film, fashion, food, and life styles have been establishing their sway all over the globe. They have been promoted with the help of high voltage advertisements. Now goods are not produced to cater to needs. In fact, needs are created to sell goods. Even water can be sold for profit by impressing on the peoples mind that what they are drinking from municipal taps may not be pure and safe. [39]

Technology and goods and services, promoted by the present era of globalization, have deep cultural implications. Beverages like Coke or Pepsi become a substitute for tea or coffee. Also, their consumption is seldom a social activity. The same is the case with fast food, which is grabbed and eaten in a hurry. Furthermore, listening and enjoying music ceases to be a group activity through personal stereos and MP3 players. The same thing may be said of computer technology. One may watch a movie or listen to a song without going to a concert hall or cinema where its enjoyment becomes a social activity. According to Benjamin R. Barber, Films are central to market ideology. Watching them reveals a sameness pervading McWorld that seems as suffocating as the invisible ether that was once thought to have suffused the entire cosmos and to have given it the invisible infrastructure that made Newtonian physics plausible. [40] Films are McWorlds preferred software, but television rather than the cinema is its preferred medium; for with television, McWorld goes one on one, the solitary individual and cyberspace confronting one another in exquisite immediacy with the screen as the perfect nonmediated (im-mediate) medium. Where cinema is limited in time and place, television is a permanent ticket to ceaseless film watching anytime, anywhere. It is a private window on McWorld. [41] Even the Christian Church in the West and the vendors of spiritualism in India have conceded its power and sweep by seeking new followers and keeping the old ones together through television channels. A number of channels, most prominent among them Cartoon Network, are devoted to attracting children and grooming them as devoted consumers of the products regularly advertised every fifteen minutes or so during short commercial breaks. Habits formed early in life are difficult to shed later on. The proliferation of television and the Internet have adversely affected the reading habits of people. Literacy levels are decreasing. Tele-marketing or tele-shopping is being vigorously promoted. Buyers can place orders for desired goods, after looking at the relevant details, via telephone or Internet and have them delivered. This underlines one of McWorlds simplest and profoundest truths television is consumption and commercials constitute its most popular programming. Let consumers

buy what they watch, and you have united television and mall-dom McWorlds two most powerful domains. [42] McWorld tries to make consumption the way of life and transform buying and selling of goods and services into rituals. People are made to seek spiritual satisfaction in consumption. It must be remembered that even though productivity may increase enormously, high consumption cannot lead either to full employment or the mass eradication of poverty. Prof. Immanuel Wallerstein does not seem to be perturbed at this kind of cultural globalization. He does not see anything new in this. For several hundred years now we have been talking the language of cultural globalization. Obviously one of the phenomena of the modern world has been the improvement of communication-systems, which means that people can learn faster than they previously learned about things that happened in far points in the world. And its particularly fast now with the internet, but you know, 100 years ago we thought it was very fast with radio and 50 years before that we were amazed how fast it was with the telegraphy-system and 100 years before that we were thinking that newspapers were this incredible phenomenon. So I dont think its new. Its true its faster. Im not persuaded that we are in any sense more culturally homogenized today than we were several hundred years ago for the simple reason that we are not economically homogenized and we are not politically homogenized. We are polarized and the polarization is greater than it has ever been. In fact one could make the paradoxical argument that before the modern world for lets say take any arbitrary moment in time, in the 12th century different parts of the world were culturally more similar to each other than they are today. It is perfectly true that they spoke different languages, had different religions, etc., they even had different foods, kept their households in different ways, but if you analyze the structure as comparative social scientist like to do, or anthropologists, etc. we see certain kind of patterns which get repeated in almost all these societies. And today precisely because we are in a single system, which is however an extraordinarily polarized system, one of the modes of resistance is to constantly create new rebellious cultural forms. [43]

It is quite often asserted that globalization, by strengthening the dominance of world capitalism, has led to the erosion of local cultures and traditions through a global culture. This global culture, in turn, means the Westernization of the world. It is said that globalization is bringing about the destruction of local traditions and their replacement by a homogenized global culture, leaning heavily towards the West. Globalization is viewed as a process of standardization in which a globalized media and consumer culture circulates the globe creating sameness and homogeneity everywhere, thus bringing to light the bland and boring universality, and massification in the modern project. Global culture entails the promotion of a specific kind of life-style, consumption pattern, products, and identities. High-voltage advertisement campaigns are deployed by TNCs to penetrate local markets in the nonWestern world to create an ever-expanding market for their products by crushing local resistance. The growing reach of private cable and satellite television networks has strengthened the grip of commercial culture. Traditionally, culture has been a vital factor in imparting and strengthening identity of groups and peoples. It has protected their traditions and modes of life. It distinguishes one group or people from the other. It provides forms of identities, practices, and modes of everyday life that could serve as a bulwark against the invasion of ideas, identities, and forms of life extraneous to the specific local regions. Old wants, traditionally satisfied by indigenous goods and services, are being replaced by new wants, requiring goods and services from other lands for their satisfaction. This destroys local self-sufficiency and local jobs and brings in the global dependence of nations. One may look around to see how plastic goods have been pushing out many a traditional product out of fashion. Local potters, rope-makers and blacksmiths have been losing their traditional vocations. The advent of safety razors has rendered local barbers jobless. Western films, audio and videocassettes, and satellite television channels have adversely affected folk singers and performers. Moreover, some kind of hybridization has also been taking place. To give a concrete example, Maori artist Hinewehi Mohi and British post-punk composer Jaz Coleman of Killing Joke have collaborated to produce an album called Oceania. It embodies tribal techno, which combines traditional chants with contemporary techno-beat. Similarly, Sheila Chandra has produced Weaving My Ancestors Voices, which blends styles from the classical Indian and Celtic traditions, creating a sound that reflects her sense of existing between and between different national identities. To give one

more example, Apache Indian has been expressing trans-racial solidarity through a mix of Reggae, Hip Hop and Bhangra. [44] Cultures have never remained static or isolated, even in ancient times, war, trade and migration had their impact on them. At present rapid transportation and global communication and commerce accelerate change. The eradication of cultural diversities and forcing uniformity and homogeneity is supposed to be at the behest of and beneficial to advanced capitalist economies and their multinational corporations. If they succeed in their mission, developing countries natural resources and cheap labour will be used to their advantage. [45] The ownership and control of global media is concentrated in the hands of a small number of corporations, mostly American. Their main aim is to expand and consolidate the market for their products. In the realization of this mission the continuance of cultural diversity is a great obstacle. Unless the tastes and fashions become conducive to the consumption of these products, the expansion of the market for them will be, at best, a slow process. Since the 1980s, their efforts have been yielding impressive results. For example, there has been a big expansion of the pop music industry, including the development of pop videos and the MTV 24-hour music channels in America, Europe and Asia. Communication satellites have succeeded in bringing the entire globe within their orbit and they beam pop music and other products throughout the world. National boundaries seem to have become irrelevant and governments powerless in checking their transmission. It needs to be noted that 70 per cent of all pop music is produced and distributed by a handful of multinational corporations. They see to it that its production, transmission and promotion are so integrated that voices and faces of Michael Jackson and Madonna are available in most places of the world on CDs, in magazines and newspapers, on radio and cassettes and stamped on baseball caps and T-shirts. [46] U. Beck has underlined the differences among globality, globalism and globalization. According to him, globality refers to the fact that we are increasingly living in a world society in the sense that the notion of closed spaces has become illusory from now on nothing which happens on our planet is only a limited local event. [47] Meanwhile, globalism is the view that the world market is now powerful enough to supplant (local

and national) political action; and globalization is the blanket term to describe the processes through which sovereign national states are crisscrossed and undermined by transnational actors and varying prospects of power, orientation, identities and networks. [48] Consumerism is an important feature of ongoing globalization. Lifestyle choices lie at the heart of consumerism as dreams are marketed over genuine needs. Thompson [K. Thompson, Social pluralism and postmodernity, in S. Hall and B. Gieben (eds.), Modernity and its Futures, Cambridge, 1992] points out, among those who could afford it, shopping has long been far more than just purchasing goods; rather shoppers feel that through the act of shopping they are buying into (however modestly) a more exciting, sensual world. The opening up of new markets is driven by the mass media (in particular, advertising and television) as the major conveyor of fashion and lifestyle imaginings. Global consumerism thrives on the promotion of brand names. Transnational, transcultural aspirational clusters, based on what people would like to be rather than what they are, come into existence as a result of commercial life styling and are more real to people today than the surviving vestiges of class solidarity. Indeed, the two great traditional markets of collective identity, nation and class, are seen to be disintegrating under the onslaught of global media, which now has the power, to move people not just to buy the products of the cultural industries, but to buy into networks that offer forms of community and alliance which can transcend the (old) confines of class, gender, regional and national culture. [49] There are three viewpoints on the impact of globalization of Western culture: (a) it is having a homogenizing effect, (b) it is leading to the development of new hybrid cultural forms, and (c) it results in both homogeneity and hybridization. The supporters of the cultural homogenization thesis maintain that the spread of globalization through global media, information systems and multinational dispensations has led to the erosion of local cultures and traditions. According to Beck, In the villages of Lower Bavaria, just as in Calcutta, Singapore or the favelas of Rio de Janeiro, people watch Dallas on TV, wear blue jeans and smoke Marlboro as a sign of free, untouched nature. [50] He then goes on to talk of a single commodity world where local identities will give way to symbols from the publicity and image departments of multinational corporations satellites make it possible to overcome all national and class boundaries and to plant the

carefully devised glitter of white America in the hearts of people all around the world. [51] Since the images of American popular culture are everywhere, it may not be wrong to claim that ultimately all cultural differences will vanish and some sort of cultural sameness, promoted by immensely powerful, transnational media establishments, will get superimposed. The impact of globalization of media on local culture has been brought out by Francis de Sales with reference to Indonesia. The Indonesian youth prefers the clothes bearing the brand names of Nike, Adidas, Reeboks, and Filas. It tries to copy the mannerism and lifestyle of its role models like the famous baseball players Michael Jordan or O Neal. Young Indonesians prefer to put on shorts or torn jeans to imitate their American counterparts whom they quite often watch on television or in movies. [52] The potency of Reebok or Nike, Camel or Marlboro, McDonalds or Kentucky Fried Chicken, Coca Cola or Sprite, Levi-Strauss Or Wranglers advertising imagery has made it easy to sell these products everywhere on the planet. These products use the global media that play a central economic role. The global media provide part of the global infrastructure for non-media firms. The global media provide the main vehicle for advertising, and at the same time facilitate corporate expansion into new nations, regions, and markets. As a result, we see how the products of everyday needs and the global media are working together to occupy or to colonize new consumers. During the on-going globalization two processes are seen at work. They are migration and cosmopolitanism. There is a big rush of both skilled and unskilled people from less developed countries to more developed ones in search of employment opportunism. On the other hand, the cosmopolitans trot the globe in search of more profitable conditions and opportunities for locating their production facilities and marketing their wares. Both are homeless. The migrant cannot go home, whereas the cosmopolitan has no home to go. [53] If migration is the popular form of multiculturalism, cosmopolitanism is its elitist version. Both are products of the same global economic system, But since transnational capitalism also breeds isolationism and anxiety, uprooting men and women from their traditional attachments and pitching their identity into chronic crisis, it fosters, by way of reaction, cultures of defensive solidarity at the very time that it is busy proliferating this brave

new cosmopolitanism. The more avant-garde the world waxes, the more archaic it grows. As hybridity spreads, so do the cries of heresy. For every waft of Parisian perfume in Tokyo, one can find a young Nazi thing or a middle-aged communitarian philosopher. Once the mould of the nation-state is cracked, types of cultural politics which never quite fitted that framework, not cosmopolitanism locks horns with communalism, the one with too little identity and the other with too much, the temporary resolutions of nationalism and aesthetics begin to fall apart into a bad universalism on the one hand and a bad particularism on the other. At the same time, culture and politics begin to change relation. [54] It is claimed that on-going globalization with its attendant revolution in information technology is bound to enrich people culturally by bringing them all the knowledge of which they have been hitherto deprived. A person may read and enjoy the classics and enjoy music and movies without incurring much expenditure of money and time. There are, however, dissenting, nay, alarming voices on this score. One such voice is that of Cass Sunstein in his bookRepublic.com (Princeton University Press, 2001). According to him, new ideas and new knowledge definitely broaden the mental ken. This, however, is not true when people are allowed to access only selective and filtered ideas and knowledge. His basic premise is that new information technologies in general and the Internet in particular dish out filtered and selective ideas and knowledge. It is needless to add that democracy will be jeopardised. It is true that the power of governments to censor news and other pieces of information has been considerably reduced, but the people and organizations that vend them have their power to decide what to disseminate remains intact. Even now the corporations that control media decide what to dish out to readers, viewers and listeners. In the era of ongoing globalization, the faithful covering and the quality of news and views do not count much in determining the standing of a newspaper or television channel. It is the extent of circulation and the television ratings that count. The result is a sea-change in priorities and a skewed presentation of what is happening in the country. [55] To illustrate this, a simple circular issued by Delhi police commissioner that the police will no longer harass young couples in public parks caught the imagination of most editors in the print as well as electronic

media and edged out many an important political and economic development. And how can it be otherwise, when editors of not just the Times of India and the Hindustan Times, but even financial papers are reminded by their masters every day, And dont forget, you belong to the entertainment industry? No wonder, then, that the preoccupation of the so-called Generation Xthe famous three Fsfood, fashion and fornicationare being exploited by the media to boost circulation. This is the age of feel-good news. Bad news has no place, until it has the dramatic potential of a caste war or communal carnage. Four hundred journalists covered Lakme Indias Fashion week recently. Few were sent to cover starvation deaths in Kalahandi in Orissa or farmers committing suicide in Indias most prosperous state, Maharashtra. [56] Leading Indian newspapers have more interest in news items from the world of glamour and luxury that interest only the rich. To cite an instance, not long ago, the Times of India ran a front-page story on the launch a luxury car from an international corporation. Sonys CEO Nobuyuki Idei is on record as saying: We dont place our trust in market surveys. Our goal is to create new markets by discovering hidden, perhaps even unrecognized, needs and wishes. We do not initiate: this is the proudest and the most challenging value in our culture. [57] Sultan Shahin comments: Is it any wonder that now marketing executives sit in editors chairs? A whole new generation of readers has been created . Youngsters who would not look at a newspaper that was meant for their parents, particularly fathers, now avidly go to the color supplements of the same papers that their parents may not relish much. News reports and even editorials appear to be advertising some product or the other, particularly those meant for the youth." [58] Obviously, the worlds of news and advertisements have become intermingled. Youth has become the prime target of the advertisers of consumer

goods and services. The philosophy behind this is: If you get them while they are young, they will be yours for life. The turnover of global TV advertising is to the tune of $36 billion and its major orientation is towards the males of age group 18 to 34 years. Once a Chevy guy, always a Chevy guy, the reasoning goes. Apparently, so prevalent is this paradigm that most network executives find they can rarely afford to worry about nobler motives, such as public service or producing critically acclaimed shows. [59] Mario Vargas Llosa, the novelist, opposes the view that globalization poses any serious problem for cultures of developing countries. According to him, cries of Western cultural hegemony are as common as they are misguided. In reality, globalization does not suffocate local cultures but rather liberates them from the ideological conformity of nationalism. But does admit that the disappearance of national borders and the establishment of a world interconnected by markets will deal a deathblow to regional and national cultures and to the traditions, customs, myths, and mores that determine each country or regions cultural identity. Thus, a number of things follow from what Mario Vargas Llosa has stated. First, globalization does not strangle local cultures; it liberates them. Yet he admits that it does take a toll on traditional life, The festivals, attire, customs, ceremonies, rites, and beliefs that in the past gave humanity its folkloric and ethnological variety are progressively disappearing or confining themselves to minority sectors. Second, When given the option to choose freely, peoples, sometimes counter to what their leaders or intellectual traditionalists would like, opt for modernization without slightest ambiguity. Third, the allegations against globalization and in favor of cultural identity reveal a static conception of culture that has no historical basis. In other words, cultures always change, the only thing to see as to how they do so. Last, he terms dangerous the very notion of cultural identity because It threatens humanitys most precious achievement: freedom. Peoples identity, however, is not determined only by cultural factors. The concept of identity, when not employed on an exclusively individual scale, is inherently reductionist and dehumanizing, a collectivist and ideological abstraction. [60] Even though there is profound truth in what Vargas Llosa says, he fails to recognize the extreme distortions and imbalances resulting from the forces of globalization. This, in fact, results from an either-or mindset. In the words of Steve Talbott,

Its obvious enough that globalization wont buy you much if the societies and places you globalize are by that very process denatured, devalued, deprived of their local savor. You end up with global relations that are relations of same to same, in which case there isnt much reason to relate. When all the emphasis is on universal connectivity and none is on deepening the distinctive contributions of the people and institutions you are connecting, then everything loses its individual character which is much the same as losing its existence. You perfect a global syntax for interaction, but theres no one left youd care to interact with, no one who offers anything different from the homogenized culture that already surrounds you. [61] This means that one should not ignore localization; in fact it should be encourageed. Localization does not amount to being closed. By its very nature it is unbounded and outwardly open without any rigid boundaries. Each local settlement or society has relationships with neighbouring settlements. Thus localization implies openness to the rest of the world. People want to preserve their roots while at the same time becoming global citizens. They aim at holding both globalization and local roots together in harmony. The person who becomes most truly universal will also be the person who becomes most truly individual, centered and grounded in himself. And what is true of the individual is also true of communities. No community can become meaningfully universal or global except by cultivating its own distinctiveness, its own values. Then, the necessities of its ever-richer life will impel it toward an appropriate global awareness [] So its not that we should tell traditional cultures, Stay as you are. Rather, its that these cultures should be allowed to evolve according to the intrinsic logic of their own traditions, their own wisdom which of course will lead them beyond themselves, and which of course will be a path influenced by contacts with the rest of the world. [62] The on-going process of globalization lays great stress on technology, which implies two things, namely, machinery and the mental habits conducive to a dead thinking. Examples of such thinking are everywhere. We build mechanical connections between people and we call that the infrastructure of community. We convert the natural world into massive data sets, and we call that ecological understanding. We

send trillion-dollar capital flows streaming daily through the world, seeking nothing more than their own mathematical increase, and we call that social development. This is machine thinking. [63] John Tomlinson has approached the relationship between globalization and culture from a different angle. To him, the relationship between the two is not unilinear. Both of them influence each other. According to him, Globalization lies at the heart of modern culture; culture practices lie at the heart of globalization. This is the reciprocal relationship. [64] We must remember that globalization alone does not determine the shape and character of culture nor is culture the only influence on globalization. Globalization brings about a rapidly developing and ever increasing density of the network of interconnections and interdependencies that characterize present-day social life. Territorial boundaries are becoming less and less barriers to the flows of goods, capital, people, knowledge, images, crimes, pollutants, narcotics, fashions and all sorts of rational and irrational beliefs. Distances have been shrinking owing to a sharp reduction in the time taken by transmission of information and images or physical travel. It follows that globalization brings about a functional proximity among the people. There is, however, a different world beyond the air terminals and the five-star international hotels. This is the world beyond the reach of connectivity. It is where, in developing countries, most of the population works and has its home. Here local affairs rather than global happenings dominate. Few business travellers stray into this world. The visitors to this world consist mainly of small businessmen, low-budget tourists, migrant workers, etc. Both air travel and the Internet are beyond the reach of most of the lower middle and working people. In countries like India, the poor infrastructural facilities prevent people from having an Internet connection. Thus forces of globalization have increased the cultural divide. For example, take the case of the Indian State of Andhra Pradesh, which has registered impressive progress in the field of information technology. The following report on its capital, Hyderabad, is very revealing: Cyber Tower rises from the campus of a software technology park here, a sleek Internet-connected symbol of the new India that is feverishly courting foreign investment, selling its wares in the global marketplace and creating wealth at an astonishing rate. But less than 50 miles away, in the poverty-stricken village

of Sheri Ram Reddy Guda, the old India is alive and unwell. Illiteracy, sickness and hunger are the villagers constant companions. Women and children work in the fields for less than 50 cents a day. The sole telephone an antique contraption of batteries and antennae almost never works. It brings out the contrast between the two: The software technology park of Hitec City and the village of Sheri Ram Reddy Guda are separated by only a short distance, yet seem to come from different centuries, and to stand at opposite poles, emblems of the new and the old India [65] It notes that the chasm between Indias educated elite and its impoverished multitudes is widening. The near infatuation with information technology and the rush to integrate India with the global economy is leaving the poor and the poorer states further behind. This is still a country where half the women and a quarter of the men cannot read or write, where more than half the children 4 and under are stunted by malnutrition, where one-third of the population, or more than 300 million people, live in absolute poverty, unable to afford enough to eat, where more than 30 million children 6 to 10 are not in school. [66] Globalization is perceived as more dangerous because its impact cannot be kept out as it overcomes both natural and national barriers with the help of the latest information technologies. Free trade in cultural goods has given rise to television without borders and through them American fashions, tastes and values enter without any hindrance. With the march of the process of globalization, there is a change in the character of various languages; especially those of less developed countries. To bring home this point, one may look at Hindi or the kind of English spoken or written in India; there is a perceptible change. New words have entered the vocabulary of daily usage. The introduction of SMS on mobile phones, which has become a rage among the youth, has brought in a new mode of conversation. There is a great deal of hybridization and undigested alien linguistic influences are clearly visible. The use of English in general and its American variety in particular has received a great boost as a result of globalization and new information

technologies. It is now everywhere. It is the language of globalization, of international business, politics and diplomacy. It is the language of computers and the Internet. Around 380 million people speak English as their first language and about 254 million as their second language. As many as a billion people are engaged in learning it. Almost one third of the population of the world is in some way or the other exposed to it. It is estimated that by the mid-21st century half the world will be more or less proficient in it. While English has been prospering, other languages such as French, German, Russian, Spanish and Arabic have been pushed down in the international arena. According to the new edition of the Atlas of the Worlds Languages in Danger of Disappearing, published by the UNESCO, half the worlds 6,000 languages are under the threat of extinction. Globalization is an important factor responsible for this. It has led to outside groups interested in extracting minerals, timber and oil and natural gas coming to areas and communities barely exposed to external influences. Wherever they have established a position of dominance, they have seen to it that their own languages are used in schools, administration and the media at the expense of local languages. The Atlas has also underlined that the parents encourage their children to acquire the knowledge of the dominant language in order to further their job prospects. One may recall that almost the same phenomenon was witnessed during the colonial era in India. Parents prompted their children to go in for English language and culture to rise in life. [67] There is a great deal of apprehension in many developing countries about the increasing invasion by American culture. A symposium organized by the Juma Al Majid Centre for Cultural Heritage brought this out. The topic was Arab culture in a Globalization Era. Dr Jassim Mohammed Jirjees, Asstt. Secretary-General of the Centre noted: Globalization is a recent and sensitive issue that touches and affects Arabs and Muslims. I wonder whether globalisation is a bridge of brotherhood among superpowers and other small countries, or is it a trap set for nations who dont understand what globalisation is, or is it a lack of belief in nationalisation, or does it dedicate everything for the good of the U. S. Dr Jassim Asfour, General Secretary of the Cultural Council, Egypt said: Globalisation is another term for capitalism and imperialism and all Arab Muslims need to consider it an imminent danger that is endangering

our political, social, cultural and economic stability. The stability has become greatly affected by all multinational and transnational companies that have spread all over the world markets. These companies are penetrating any countrys stability without even taking into consideration the political independence, national integration or national identity. He went on to emphasise, Globalisation contains a lot of aspects that are related to the phenomenon of Americanisation. So in order to fight this phenomenon and protect our national identity and revive our Arabic and Islamic culture, we need to protect our culture by understanding what globalisation is and know how to fight it. [68] While protagonists of globalization claim that its great contribution is cultural homogenization through Westernization or Americanization, the champions of multiculturalism maintain that all cultures are authentic in their own terms and that neither the West at large nor the United States in particular has the right to impose its beliefs and values onto orhers. [69] Globalization could have many possibilities for works of music and literature in the future. They, as the available trend indicates, are going to be accessible to a large number of people. However, in the era of present globalization, human culture is being commodified, and takes place very much on the terms of the most powerful.
Panel 1: Economic Development, Economic Growth and International Trade Carnegie Endowment for International Peace Globalization and the Developing Countries: The Inequality Risk Remarks at Overseas Development Council Conference, Making Globalization Work, International Trade Center, Washington, D.C., March 18, 1999 Nancy Birdsall nbirdsall@ceip.org My task is to talk about globalization and inequality in developing countries, with emphasis on Latin America. I have a simple point to make: globalization puts developing countries at risk of increasing income inequality. The increase in inequality in the United States over the last 25 years (during which the income of the poorest 20

percent of households has fallen in real terms by about 15 percent) has been blamed, rightly or wrongly, on changes in trade, technology and migration patterns associated with increasing economic integration with other countries. For developing countries, any risk of increasing inequality associated with active participation in the global economy is even greater, if only because of the greater inherent institutional weaknesses associated with being poor. Latin America has a special disadvantage: its historical legacy of already high inequality. Inequality that is already high complicates the task of effective conflict management, which Dani Rodrik has just reminded us is a critical input to managing open economies. In the past, for example, high inequality combined with the politics of redistribution led to periodic bouts of populism in Latin America ineffective and counterproductive efforts to manage the conflicts provoked by the dangerous combination of high inequality and hard times. Let me start with two prefatory remarks. First, globalization that is the trend of increasing integration of economies in terms not only of goods and services, but of ideas, information and technology has tremendous potential benefits for developing countries. Nothing I say should suggest otherwise. The challenge is to realize the potential benefits without undertaking huge offsetting costs. Second, not all inequality is a bad thing Some inequality represents the healthy outcome of differences across individuals in ambition, motivation and willingness to work. Thisconstructive inequality provides incentives for mobility and rewards high productivity. Some would say constructive inequality is the hallmark of the equal opportunity society the U.S. symbolizes. Increases in this constructive inequality may simply reflect faster growth in income for the rich than the poor but with all sharing in some growth. But of course it can also be true that inequality is destructive, when for example it reflects deep and persistent differences across individuals or groups in access to the assets that generate income including not only land (which is extremely unequally distributed in Latin America) but, most important in todays global information age, the asset of education. Obviously this destructive inequality undermines economic growth and efficiency, by reducing the incentives for individuals to work, to save, to innovate and to invest. And it often results in the perception if not the reality of injustice and unfairness with the political risk in the short term of a backlash against the market reforms and market institutions that in the long term are the critical ingredients of shared and sustainable growth. I have three parts to my remarks: first, on inequality and market reforms; second, on inequality and the recent financial crisis; third, on what to do, or more grandly on policy implications. On Inequality and Market Reform Consider some examples of how the market reforms associated with globalization can affect inequality in developing countries. First, trade liberalization. On the one hand, trade liberalization makes economies more competitive and thus is likely to reduce disequalizing rents to insiders. The end of import substitution programs and associated rationing of access to foreign exchange has probably been the greatest single factor in reducing the corrosive effects of corruption and rent-seeking in Latin America. Trade liberalization can also generate new labor-intensive jobs in agriculture and manufacturing raising the incomes for example of the rural poor. And trade liberalization implies cheaper imports, reducing the real costs of consumption for the urban poor who after all unlike the rich use most of their income for consumption. On the other hand, recent evidence shows that trade liberalization leads to growing wage gaps between the educated and uneducated, not only in the OECD countries but in the developing countries. Between 1991 and 1995 wage gaps increased for six of seven countries of Latin America for which we have good wage data. The exception is Costa Rica, where education levels are relatively high. Apparently the combination of technology change with the globalization of markets is raising the demand for and the wage premium to skilled labor faster than the educational system is supplying skilled and trainable workers. In Latin America education levels have been increasing, but painfully slowly with for example only 1.5 years of additional education added to the average education of the labor force in three decades (in contrast to twice that increase in Southeast Asia). And the distribution of education, though improving slowly, is still highly unequal, meaning that many of todays

workers have even less than the current average of about 4.8 years of completed schooling. In short, the effect of trade liberalization on inequality depends including on the extent to which a countrys comparative advantage lies in job-using agriculture or manufactured exports, and on the extent to which education has been increasing and is already broadly shared. In Costa Rica, with good education and a high proportion of the relatively poor engaged in smallholder coffee production, trade liberalization has had equalizing effects. But in Mexico, where the rural poor are concentrated in food production and education levels are still low and unequally shared, income declined between 1986 and 1996 for every decile of the income distribution except the richest, where it increased by 15 percent. Unfortunately Mexico is probably more typical than Costa Rica. For the region as a whole, though trade liberalization is likely to increase average incomes, it is also likely to increase inequality, at least in the near future, because education efforts have lagged and because the regions comparative advantage (other than in Costa Rica and Uruguay) is in capital-intensive rather than job-creating natural resource-based production. A second example is privatization. Privatization of utilities (power, water, telecommunications) has been good news for the lower deciles of the income distribution all over the developing world. Why? Because it has dramatically increased access to services. Prior to privatization, publicly managed utilities were chronically insolvent financially and thus their services were highly rationed. The rich had access to water to fill their swimming pools (and often at artificially low prices meant to protect to the poor!) while the poor paid 20 times the unit cost to purchase water from private trucks. On the other hand, it is increasingly obvious that privatization poses grave risks of concentrating wealth unless done well and with the full complement of regulation. In small economies with limited competition and high concentrations of political and economic power, even privatization of firms that in larger settings with more armslength and transparent market rules would face the discipline of competition, can end up locking in rather than eliminating private privileges. In a recent poll in Latin America, respondents agreed by three to one to the general statement that a market is best. But in Argentina, Peru, Colombia, Uruguay and Panama, fewer than half supported the idea that privatization had been beneficial apparently because of the widespread perception that the high costs of newly privatized services reflect lack of real competition. Russia is of course the most extreme example of the danger that corruption will infect the privatization process. Those of you familiar with the saga of the privatization of banks in Mexico in the early 1990s, and the subsequent political fallout in 1998 (when a sound proposal from the technical point of view was nearly derailed by the political effects of the 1995 rescue of many insider bank owners and borrowers) will recognize the political risks associated with a privatization process that ends up reinforcing rather than diffusing initial inequality of wealth and privileges. The risks of privatization arise because developing and transitional economies, almost by definition, are handicapped by relatively weak institutions, less well-established rules of transparency, and often, not only high concentrations of economic and political power but a high correlation between those two areas of power. These conditions combine to make it difficult indeed to manage the privatization process in a manner that is not disequalizing. Third: financial liberalization. On the one hand, there is little doubt that low- and middle-income consumers and small and medium businesses were the biggest losers in the 1980s with the repressed banking systems of Latin America. Controls on interest rates reduced their access to any credit at all, and government-run credit allocation favored small enterprises only on paper. Similar arrangements almost surely penalized the middle class and the poor in Africa. In the medium term, elimination of financial repression and the increased competition of a modern and liberalized financial sector will increase access to credit for small enterprises and raise the return to the banking deposits which are the principal vehicle for small savers. The advantages for small business in turn is likely to generate more good jobs and raise wages for the working poor. However in the short run at least, financial liberalization tends to help those most who already have assets, increasing the concentration of wealth which undergirds in the medium term a high concentration of income. For one thing, liberalization increases the potential returns to new and more risky instruments for those who can afford

a diversified portfolio and therefore more risk, and who have access to information and the relatively lower transacting costs that education and well-informed colleagues provide. In Latin America, with repeated bouts of inflation and currency devaluations in the last several decades, the ability of those with more financial assets to move them abroad (often while accumulating corporate and bank debt that has been socialized and thus eventually repaid by taxpayers) has been particularly disequalizing. In Mexico between 1986 and 1996 small savers who kept their assets in bank savings accounts lost about 50 percent, while those able to invest in equity instruments realized modest gains. Those who moved their assets into dollars or dollar-indexed instruments before the 1994-95 devaluation did best of all in terms of local purchasing power. On Inequality and the Financial Crisis The recent financial crisis has highlighted how volatility associated with global capital markets can compound the problem of destructive inequality in developing countries. For example, high inflows of capital generate inflationary pressure and hurt labor-intensive agriculture and manufactured exports, especially but not only under fixed exchange rate regimes. In Asia and Latin America, Gini coefficients of inequality increased during the boom years of high capital inflows in the mid-1990s, as portfolio inflows and high bank lending fueled demand for short-term inelastic assets such as land and stocks, favoring the rich. In both regions the poor gained less during the boom, and then lost more with the bust. During the bust, with capital fleeing, the high interest rates countries are forced to impose to protect their currencies (again, whether the exchange rate is fixed or floating), hurt small capitalstarved enterprises and their low-wage employees most, and of course reduce employment in general. In Latin America, a high-interest environment also tends to benefit net savers and hurt small debtors, with a regressive impact; this has certainly been the effect in Mexico and Brazil. Helmut Reisen has recently pointed out the additional regressive impact of the fiscal cost of bank bailouts in developing countries, simply because the redistributive impact of public debt tends to be negative. He recalls Keynes Tract on Monetary Reform, where Keynes reminds us that public debt implies a transfer from taxpayers to rentiers. Worst of all in Latin Americas historically inflation-plagued economies (though this is notably much less the case the today), the poor hold cash, the non-interest bearing part of the debt which has been subject to considerable inflation tax. The problem emerging markets face is a broader one. Because global market players doubt their commitment to fiscal rectitude at the time of any shock, they are forced into tight fiscal and monetary policy, to re-establish market confidence, at precisely the moment when in the face of recession they would ideally implement countercyclical fiscal and monetary measures in order to stimulate their economies. The austerity policies that the global capital market demands of emerging markets are precisely the opposite of what the OECD economies can afford to implement such relatively automatic Keynesian stabilizers as unemployment insurance, increased availability of food stamps, and public works employment programs, the ingredients of a modern and effective social safety net. Furthermore we know now that the effects of unemployment and bankruptcy on the poorer half of the population can be permanent; in Mexico increases in child labor force participation and reduced enrollment in school during the 1995 downturn have not been reversed. Similarly a collapse in employment opportunities for labor force entrants can have lifetime effects on job possibility and income-earning potential for the affected cohorts. On What to Do: Are There Policy Implications? There are implications for domestic policy, and for international economic policy as well. On the domestic policy side, one obvious implication of the vulnerability of emerging market economies to volatility in global capital availability is to reduce reliance on foreign capital. Dani Rodrik emphasizes the centrality of a locally financed investment push to the success of small open developing economies, implying the need to increase private and/or public savings. The recent crisis highlights, for a different reason, the importance of public savings. If public spending in developing countries is to play a socially and economically efficient countercyclical role during a downturn, public savings in the form of a prior and precautionary fiscal surplus has to have already created the necessary fiscal space to finance safety net programs. Today Brazil has virtually no such fiscal flexibility, and is paying a price in increasing inequality. Chile does have space, and any increase in inequality will

be lower. Of course, maintaining and insulating politically a fiscal surplus is no easy task as the current politicsof- the-surplus debate in the U.S. shows. In addition, the developing countries face the same problem as the OECD countries: raising revenue to finance a social safety net requires taxing the public. In a global economy, there is some evidence that it is increasingly difficult to tax footloose capital (and even to tax the income of highly educated and internationally mobile labor). David Hale noted this morning that Singapore and South Africa have recently reduced corporate taxes. So countries ironically need to tax most in good times those who are most vulnerable in bad times and to the extent these are the innocent bystanders to the excesses of the boom and bust cycles, the impression if not the reality of unfair burden sharing is heightened. Assured revenue for an effective safety net minimizes the welfare and human capital losses the poor otherwise suffer with economic or other shocks. But in the medium run, the best vaccine against inequality is widespread access to good education. In todays global information age, education is the peoples asset; the more there is of it, the lower the inequality of real total wealth in the long run. It is still unfortunately the case that in many countries of Latin America, education is a vehicle for reinforcing rather than compensating for initial differences across households in income and wealth. I have written and spoken elsewhere about the need for aggressively targeted public programs to bring good education to the poor. Unfortunately in a vicious circle, education for the poor is a political and technical task made all the more difficult where high current income inequality, as in Latin America, constrains effective demand of poor households and generates resistance of rich households to use of the public fisc to finance effective basic schooling. A third key ingredient of domestic policy to counter inequality is what might be called an aggressive EOF bias, i.e. constant and vigorous Equal-Opportunity Fine-tuning of economic policies. For example, if macroeconomic equilibrium requires high interest rates, temporary measures to ensure equal access to credit for small and micro enterprises may be warranted. If a major restructuring of the financial sector is required, distributional considerations demand that bank shareholders assume their share of losses; not all the costs should be passed to depositors and taxpayers. Privatization schemes can make special provisions under which small investors can buy small lots of shares, and can borrow at reasonable rates to purchase available shares as has been tried in Peru; or can be arranged to generate widely distributed benefits for all citizens in the form of future pension assets, as in Bolivia. What about international economic programs and policies? First, the international financial institutions could pay much more attention to the political reality of inequality of assets and income in developing countries. Conditionality associated with international lending and grants could be much more explicitly focussed on slashing subsidies that benefit the rich, on encouraging and financing market-consistent land reform, and most important, on ensuring that there is effective public education, on which the poor so heavily depend if they are to join in the benefits of a market economy. Second, the OECD countries could revisit their trade stance as it affects the poor in developing countries. Protection of agriculture and of textiles discriminates against the poor within countries. The head of the World Trade Organization has proposed elimination of tariffs on all imports of the worlds 50 poorest countries. This would reduce income inequality not only across but within poor countries. Third, the poor and vulnerable in developing countries might well benefit from some international financing of countercyclical safety net programs in emerging market economies that are hit by global liquidity crises. Max Corden has set out the conditions that would make such financing appropriate, which include a solid record of sound fiscal policy in recipient countries; the political capacity to mount such programs without corruption and to unwind them when the crisis recedes; and the long-run fiscal capacity to service any resultant external debt. These are stringent conditions, but the fact is that Mexico in 1995 and Korea in 1998 could have qualified, and could thus have reduced the tremendous and terrible costs to human welfare and the permanent losses of human capital associated with the impact of financial crises on those Joe Stiglitz has called the innocent bystanders. International financing is now used during liquidity crises to build reserves (and thus market confidence) and to

finance imports. Why do we know so little about the potential costs (e.g., effects on inflation) and benefits of external financing earmarked for temporary increases in spending on social insurance and safety net programs? * * * * * * *

In conclusion, the developing countries face special risks that globalization and the market reforms that reflect and reinforce their integration into the global economy, will exacerbate inequality, at least in the short run, and raise the political costs of inequality and the social tensions associated with it. The risks are likely to be greatest in the next decade or so, as they undergo the difficult transition to more competitive, transparent and rule-based economic systems with more widespread access to the assets, especially education, which ensure equal access to market opportunities. During that transition, more emphasis on minimizing and managing inequality, on making the market game as nearly as possible a fair one, even in the short run, would minimize the real risks of a protectionist and populist backlash. A backlash would be a shame, as in a perverse twist, it would undermine the benefits that more open and more globally integrated economies and polities can deliver to all the people of the developing world.

Culturally Greater international cultural exchange, Spreading of multiculturalism, and better individual access to cultural diversity, for example through the export of Hollywood and Bollywood movies. However, the imported culture can easily supplant the local culture, causing reduction in diversity through hybridization or even assimilation. The most prominent form of this is Westernization, but Sinicization of cultures also takes place. Greater international travel and tourism Greater immigration, including illegal immigration Spread of local foods such as pizza and Indian food to other countries (often adapted to local taste) Development of a global telecommunications infrastructure and greater transborder data flow, using such technologies as the Internet, communication satellites and telephones Increase in the number of standards applied globally; e.g. copyright laws and patents Formation or development of a set of universal values The push by many advocates for an international criminal court and international justice movements (see the International Criminal Court and International Court of Justice respectively).

It is often argued that even terrorism has undergone globalization, with attacks in foreign countries that have no direct relation with the own country. Barriers to international trade have been considerably lowered since World War II through international agreements such as the General Agreement on Tariffs and Trade (GATT). Particular initiatives carried out as a result of GATT and the WTO, for which GATT is the foundation, have included: Promotion of free trade of goods: Reduction or elimination of tariffs; construction of free trade zones with small or no tariffs Reduced transportation costs, especially from development of containerization for ocean shipping. Of capital: Reduction or elimination of capital controls Reduction, elimination, or harmonization of subsidies for local businesses Intellectual Property Restrictions Harmonization of intellectual property laws across nations (generally speaking, with more restrictions) Supranational recognition of intellectual property restrictions (e.g. patents granted by China would be recognized in the US)

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Global Issues >> Globalization

Globalization
Globalization of Culture A majority of Americans has a favorable view Report Contents of American popular culture, though a large Globalization in General minority of the public is pessimistic about the Globalization of Values quality of US movies and television. Americans o Abiding By US Labor Laws are divided about the spread of American When Operating Outside US culture, but only a small minority considers o Abiding By US the dominance of US culture a threat to other Environmental Laws cultures. When it comes to globalization When Operating Outside US o Trading With Poor bringing greater cultural influences into the Countries US, Americans express a positive attitude. One of the most controversial aspects of globalization is the worldwide spread and dominance of American culture. Just as US goods flooded world markets in the post-Word War II era, US culture is now penetrating every continent through the dramatic growth of mass communications such as music, television, films

International Cooperation on Global Problems o International Intervention in the Internal Affairs of States o International Environmental Agreements The Spread of American Popular Culture

and the Internet, as well as through the penetration of American corporations into foreign countries. From China to France to the Middle East, foreign leaders and activists have expressed fear that global culture may become too Americanized, destroying their own cultural, economic, and religious traditions. Where does the majority public stand? Evaluation of American Culture Polls show that a majority of Americans have a positive view of US culture. In the January 2004 PIPA poll, 55% said they had a favorable view of "American popular culture, such as music, television, and films". Forty-three percent found it to be unfavorable. This is a bit less favorable than when the question was asked in October 1999 and 60% had a favorable view and 39% said unfavorable. Those who expressed a "very favorable" view declined from 21% to 11% between 1999 and 2004. [1] With regard to the content of films and television, though, a substantial minority has serious misgivings about the direction of US culture. In a February 1999 Los Angeles Times Poll, respondents were nearly divided on the question of the quality of American movies, with 47% saying they were satisfied and 42% saying they were dissatisfied. Five percent volunteered that they were neutral. A plurality (45%) expected the content of future American films to be about the same as it is now, but twice as many thought it would get worse rather than better (29% to 16%). [2] Thus, some may sympathize with other countries that might not want to readily accept US cultural dominance in certain areas. Spreading American Culture However Americans are divided about the value of spreading Americans culture around the world. In August 2002 an Investor'sBusiness Daily/Christian Science Monitor poll found that only 47% felt that

what latin america thinks about globalization

From the Archives Posted on January 16, 2007 Previously filed under: South America, General Globalization Latin Americans are wary of Globalization. Comments from regional political, social and academic leaders help explain why. Globalization continues to be a passionately debated topic in Latin America. In recent years, leftist and socialist movements have swept through many countries. Since the election of Hugo Chvez as Venezuela's president in 1998, a wave of politicians in the region have won elections based on leftist platforms, including Luiz Incio Lula da Silva in Brazil in 2002, Nstor Kirchner in Argentina in 2003, Tabar Vsquez in Uruguay in 2004; 2006 saw victories at the ballot box for Evo Morales in Bolivia, Michelle Bachelet in Chile, Daniel Ortega in Nicaragua, Rafael Correa in Ecuador, and the re-elections of Chvez in Venezuela and Lula in Brazil. The political trend in the region represents a broad turn away from the pro-globalization economic reforms that were dominant in political agendas during the 1990s. Over that decade, policies designed to open markets Globalization is a passionate topic in Latin America today. and increase trade liberalization did not deliver on reducing income inequality. Instead, several economic crises stalled economic growth, thereby deepening poverty levels. The result has been the rise of populist movements that blame global capitalism for the financial setbacks and the greater volatility in economic life. In Venezuela, Hugo Chvez is calling for "alter-globalization" through pan-Latin American cooperation in trade negotiations with the rest of the world, and particularly with the United States. His main supporters have been Fidel Castro in Cuba and Morales in Bolivia. Shortly after Morales came to power in January 2006, he renegotiated contracts with foreign energy companies to enhance government revenues in the lucrative oil and gas industry.

The political trend in the region represents a broad turn away from the pro-globalization economic reforms that were dominant in political agendas during the 1990s.

Nevertheless, there is some question as to how far any populist movement can sway from globalization. Peru and Colombia have recently signed free trade agreements (FTAs) with the US that are awaiting ratification by the U.S. Congress. Lula in Brazil and Bachelet in Chile remain committed to open market economics despite being swept into power by populist sentiment.

Other leftist leaders in Latin America achieved political power on populist platforms, but their attitudes toward market liberalization are varied. The process of globalization for Latin America seems inevitable and the policy debate focuses instead on how it will be shaped in coming years. Here, we present assorted views from political, academic, and social leaders in What Latin America Thinks About Globalization. We also include results from a public opinion survey on globalization conducted in 13 Latin American countries. Ernesto Zedillo, Director of the Yale Center for the Study of Globalization and former President of Mexico: "Globalization is providing the world with not only greater economic opportunities but also a remarkable resilience to events that in the past would have proven highly disruptive. If you consider recent regional wars, terrorism, the skyrocketing prices of oil and other commodities, and the laxity in the fiscal and monetary policies of some of the major economies, you may conclude that it's only through the globalization of the market economy that we've been able to sail through such stormy waters." Jorge Castaeda, former Foreign Minister of Mexico: "I don't think globalism is reversible, but I certainly think it allows great leeway in terms of what happens in the broad parameters of globalization, that not everything is predetermined. You can have China as part of globalization and New Zealand as part of globalization. The two nations are equally inserted into the global economy and, by the way, equally successful. They are as different as you can imagine in terms of the way their economies are organized, their societies are organized, their size and everything else; [yet] they're both part of globalization. The specific policies that are followed by the WTO or the World Bank or the IMF can be of one type or of another type. The World Bank comes and goes constantly, not only between its different policies but different interpretations by different groups within the Bank. So there is much greater leeway within globalization than is generally thought to be the case." Hernando de Soto, President of Institute for Liberty and Democracy (ILD) in Peru: "What we've just got to make sure of is that globalization also includes the underclasses. They have a lot to gain from Hernando de Soto, President of Institute for Liberty and Democracy (ILD) in Peru: "Everybody wants to globalize."

it as well. But if I go with you through the obstacles that somebody that's poor has to go through to get an export license, or an import license, or be able to put together the kind of paper that'll allow you to globalize, you'll find out that it's a pretty exclusive club, those who can globalize. It's a club made of those people and places like where I come from, Lima, that know how to deal with the law firms, that know how to lobby for legislation that helps some, but doesn't help somebody else. In other words, a system of capitalism for only a few, because there's a legal apartheid that blocks the majority from coming in. Everybody wants to globalize." Domingo Cavallo, former Economy Minister of Argentina: "I believe that Argentina and the Latin American nations should not manically swing from globalization love' to globalization hate' and cut themselves off from the rest of the world. I am convinced that to avoid further frustration, Latin America needs to find, through the multilateral system or through hemispheric integration, the same sort of institutional anchoring that emerging European countries have in entering the European Union. The phenomenon of convergence that is taking place in Europe is mainly explained by the existence of a monetary and financial system that permits stable crossborder capital movements in favor of less developed countries for long periods of time." "But I think that once a particular government, like this new government in Argentina, starts to work to find solutions for the problems, it immediately realizes that closing up the economy only aggravates the problems, particularly if it closes investment opportunities, because most of the investment opportunities nowadays are related to the global markets more than to the very small, local market, particularly the investment opportunities in those sectors of the economy that generate productivity increases, which are very important for making growth sustainable in an economy. So even though the speeches, the political discourses may be in the direction of closing the economies as a consequence of the crises which are associated with globalization and the previous process of opening up, in a few years I think governments, even those that are more to the left, will come to the conclusion that they have to preserve [an open] economy and try to increase foreign trade, and particularly to create a good environment for investment--domestic and foreign investment--into the country." Moiss Naim, editor of Foreign Policy magazine and former Minister of Trade and Industry for Venezuela: "It's very important to de-link globalization from trade. Trade is one aspect of globalization but 9/11 was, as I mentioned, globalization; we have cultural and social globalization. The world is being connected not just by trade; ideas, and information and crime and terrorism are also connecting the world." "One of the problems of globalization is that it's creating

Domingo Cavallo, former Economy Minister of Argentina: "Latin America needs to find, through the multilateral system or through hemispheric integration, the same sort of institutional anchoring that emerging European countries have in entering the European Union."

demands at a faster pace than the capacity of any institution, any human institution, and in fact the capacity of any human being, to digest, to understand, and react effectively. So if even individually we have a hard time coping and reacting to the demands of globalization, at a more global level, [asking] different governments to get together and come up with an institution charged with dealing with these very complex new problems, unprecedented problems, is going to be very, very hard. That is one of the underbellies of globalization. It is requiring [new] institutions at a faster pace than we are capable of creating effective institutions. " Rafael Correa, President-Elect of Ecuador: "I think dollarization was the biggest economic error this country has ever committed." "If country risk goes up because of speculators worrying over our ability to pay the debt, I don't care. The country risk I care about is children suffering." "We are going to begin to review the contracts with oil companies. We cannot permit that they take four of each five barrels and leave us one." Sara Larran, Coordinator of the Chilean Ecological Action Network (RENACE): "Chilean economic competition is based on low wages, the export of natural resources and the unequal distribution of wealth. Chile has the greatest gap between the rich and the poor after Brazil. The advocates of globalization as we know it emphasize economic growth. But growth itself is no guarantee that people also benefit from that growth." "It is often thought that there are only two power blocks in the world: international politics, and international business. But there is also the people's power, and it's increasing every day. The only problem now is that that power is led by the fact that we are against the ongoing globalization process. But ultimately, it is not enough just to say 'no.' The challenge is to develop a clear alternative vision. It is not about being against somebody else's vision, but about being for our own vision." Carlos Fuentes, Mexican writer: "The global economy is a lot like Mt Everestimpossible to move and therefore here to stay. The question is how to climb it." Carlos Fuentes, "We have to realize that the First and the Third are really one Mexican writer: "We world, united by global economic integration." have to realize that the First and the Third are "Capital is moved around the world in a day, but this freedom really one world, united by global economic is not accompanied by a comparable free movement of workers," the author stated. "Things are free to move; people integration." are not."

"If international organizations aren't perfect, our duty is to make them better, not throw them into the trash can." Mario Vargas Llosa, Peruvian-Spanish writer: "Without the globalization of legality and liberty, economic globalization presents a serious danger for the future of civilization -- and, above all, for the planetary ecology. The great powers have a moral obligation to promote democratic processes in the developing world. They also have a practical obligation. With the evaporation of borders, the greatest guarantee that economic forces will benefit all people is to ensure that throughout the world, economic life flows within the limits of liberty and competition, and is guided by the incentives, rights, and restraints imposed by democratic society." "Even though I don't think that this cultural argument against globalization is valid, we must accept that at the bottom of it there is an unquestionable truth. The world during the next century will be less colorful and picturesque than the one we have left behind. Local ftes, dress, customs, ceremonies, rites and beliefs that in the past have contributed to the rich panoply of human folkloric and ethnological variety, are fading away or becoming the preserve of minority and isolated groups, whilst, the bulk of society abandons them, adopting more practical habits better suited to our times. This is a process that to a greater or a lesser degree is experienced by all countries of the globe, not due to globalization but to the modernization that eventually causes globalization. This phenomenon can be regretted and we can feel nostalgia for the eclipse of tradition and past ways of life that appear, in our eyes from the comfort of our present situation, attractive, original and colorful. This erosion is, nevertheless, in my view, unavoidable. Latin American public opinion, Barmetro Iberoamericano 2006 - percentage of people surveyed who said globalization had had a positive impact on their country: Chile - 80% Dominican Republic - 78% Brazil - 72% Guatemala - 64% Peru - 61% Colombia - 56% Venezuela - 54% Costa Rica - 52% Panama - 47% Mexico - 43% Ecuador - 40% Bolivia - 38% Argentina - 30%