Dear pasof-ga:
Here is the research you have requested. I hope it is helpful to you.
Sincerely,
Wonko
Some economists have taken the view that globalization will eliminate
the concept of national products and technologies, national companies,
national industries, and even national economies as a whole. While
there is a great deal of evidence that globalization is having a
profound effect on the world's economies, there is reason to view such
a radical idea with skepticism. For such a series of events to occur,
it appears that fundamental changes in human nature would be
prerequisites. Furthermore, the very factors that encourage economic
production simultaneously discourage the loss of national identity.
There are many ways in which globalization is manifesting itself.
First, there is the widespread dissemination of American products and
culture throughout the globe. Companies like Coca-Cola, Nike, and
McDonald's, and their products, can be found virtually everywhere.
Although these products are broadly accepted, they are also
flashpoints for anti-American and anti-globalization sentiments. For
example, French farmers frequently attack McDonald's restaurants to
protest farm policy, and protesters in Seattle objecting to the World
Trade Organization vandalized a Starbucks location. Although these
products are sold globally and are broadly accepted, they are still
recognized as being American products rather than global products with
no particular national identity. In fact, their essentially American
identity is partially responsible for their popularity.
The role of China in the world is a remarkable demonstration of both
the power and limits of globalization. The recent rapid growth of
China is widely credited for significant increases in the cost of many
commodities. This increase has affected economies worldwide, and may
result in a rise in global inflation, particularly in the United
States. China has also become the world's factory, attracting
enormous capital inflows and producing tremendous volumes of goods for
export. Because of its very low labor costs, China has severely
challenged manufacturers in other countries, causing many industries
to shrink or cease to exist altogether in many countries. In
addition, China's trade surplus has allowed it to fund the current
accounts deficit of the United States by purchasing government
securities. This has allowed American consumers to enjoy low interest
rates, which has allowed them to purchase more Chinese goods. As a
result, the Chinese and American economies have become substantially
intertwined. However, it is an overstatement to say that the Chinese
national economy and the American national economy as separable
entities have ceased to exist. In fact, they could not be more
different.
The Chinese economy, despite recent liberalization, remains largely
controlled by national and local governments. One source of ongoing
problems is that Chinese banks are compelled to provide loans to
politically connected individuals and companies regardless of their
ability to repay the loans while deserving companies that lack
governmental sponsors cannot obtain funds. In addition, the Chinese
currency has a fixed exchange rate to the dollar, which distorts its
value in world trade. Although American and European officials have
complained noisily about China's undervalued currency, they have had
no impact on Chinese policies. Thus far, China has rejected global
views on the importance of patent and copyright protection, freely
copying and selling software, music, and movies without authorization
from or compensation to their authors. China also engages in many
protectionist measures, such as requiring foreign companies to
transfer technological knowledge to Chinese partners as a condition of
being allowed to operate in the country. Despite its extensive
industrial development, China remains a largely agricultural
population with a third world financial system.
In contrast, the United States operates a much more market centric
economy. Banks utilize profit potential and risk management to
determine whom they loan their money to. The dollar is allowed to
float freely versus other currencies, even when economic difficulties
develop as a result. For example, although American exports are now
more competitive because of the recent drop in the value of the
dollar, the decline in the dollar is partially responsible for the
considerable increase in the price of oil. Furthermore, America has a
strong history of protecting intellectual property. The concept of a
patent is even written into the Constitution. The United States
largely embraces free trade, most notably in the form of the North
American Free Trade Agreement with Canada and Mexico. Finally, the
United States is extensively industrialized with arguably the most
sophisticated financial system in the world. Companies and
governments worldwide use the securities markets of the United States
to raise funds.
Given the extensive differences between the state of their economies
and the economic philosophies that govern them, it is hard to imagine
the Chinese and American economies merging seamlessly. One need only
look to the European Union, whose member countries have far more in
common than do China and the United States, to see the limits of
globalization. Although tariffs and many other restrictions are
eliminated between the countries forming the European Union, the
national economies have remained distinct. Spain has boomed since it
joined the European Union in 1986, increasing its per capita gross
domestic product to almost 90% of the European Union average. In
contrast, France and Germany have struggled to grow at all. Because
of the large discrepancies in economic performance between the
members, it is impossible to implement an interest-rate policy for the
European Central Bank that satisfies everyone. At any given interest
rate, some countries are overstimulated and experience inflation, some
countries are driven into recession, and some countries have a
balanced economic performance. Different national government policies
with respect to budget deficits, public spending, and the degree of
socialism also influence differences in economic performance between
the countries. Even sharing a common currency has not eliminated
distinctions between the economies of the members of the European
Union.
Now, even though the countries are working on a European Constitution,
globalization is still unable to prevent countries from acting in what
they perceive to be their self-interest. For example, the French
government, eager to keep the French drug maker Aventis out of the
hands of Switzerland's Novartis, pushed for an all-French merger. A
deal with another French drug company, Sanofi, was worked out through
meetings at the French Finance Ministry. The intervention is hard to
justify on economic and industrial grounds, but it allows France to
have a national pharmaceutical champion, even though the merger is
disastrous for France's image as a magnet for investment. Global
criticism of the arrangement has been strong, but it has not stopped a
number of interventions of this type. The French government
previously bailed out the engineering firm Alstom and pressured French
banks to renegotiate its debt. Italy is rescuing Alitalia, and the
German government bailed out Philipp Holzmann AG, its second-largest
builder.
While all of these governmental interventions met with considerable
dissent from other countries, the forces of globalization were
nonetheless unable to prevent them from happening. As long as
national governments exist and have their own perceived views of what
is in their self-interest, it is hard to imagine the concept of
national companies, industries, and economies going away.
Governmental interventions are rampant worldwide, whether it is
Japanese manipulation of the exchange rate of the yen to promote
exports the Bush Administration's implementation of steel tariffs to
protect the United States' domestic steel industry.
For there to be no national products and technologies, technologies
and labor would have to be allowed to freely flow throughout the
globe. The principle of competitive advantage would also have to be
proven wrong, which seems most unlikely. Every country has different
resources available to it. Oil, for example, is a national product of
those countries that are fortunate enough to have it. Were it not a
national product, there will be no need for the United States to
maintain its extensive military presence in the Middle East to protect
its access to oil supplies there. Climate also makes some countries
much more suitable for growing certain agricultural products than
others, making them inherently national products. Moreover, it is
hard to imagine a country more strongly associated with diamonds than
South Africa.
The cost of labor also varies widely between countries, and the
relative advantage one country has over another even changes over
time. For example, many United States manufacturing jobs went to
Mexico because of its relatively lower wages. However, now that
Mexican wages have increased significantly, those same jobs are now
moving to lower cost China and India. Although it is difficult to
characterize these industries as being "national industries" to the
extent that they move over time from nation to nation, at the same
time, they do form a part of the national identity of the nation
performing them at each particular point in time. Certainly, those
countries that no longer participate significantly in those industries
have many inhabitants who view the products produced as being foreign
rather than a more neutral global.
At present, many governments find it necessary to restrict the
transfer of technology, especially those that are suited to military
purposes. Most countries are very concerned about the transfer of
nuclear weapons technologies and other technologies associated with
weapons of mass destruction. China is very concerned about acquiring
technologies because the United States has often refused to allow it
access to technologies. Therefore, China often makes technology
transfer a condition of foreign participation in the country's
economic life.
Labor movements are also significantly constrained by both geography
and law. Although citizens of the European Union are free to travel
between countries without passports, they are not allowed to work
freely in whichever member country they wish. The United States makes
some effort to limit immigration, although it is most successful with
those from geographically distant areas as opposed to those from
nearby countries. Many countries have local anti-immigration groups
within them, making it unlikely that complete freedom of labor
movement will be likely on a global scale.
Because of differences in natural and labor resources and perceived
national self-interest, it is hard to imagine globalization
eliminating the concept of national products and technologies,
national companies, national industries, and national economies.
Governments have realized that their country's economy and its
relationship to other economies are critical for national security and
for providing for the needs of their citizens. As long as the needs
of the world's people remain fragmented and divergent, it appears
unlikely that governments will forgo control over their national
economies in the interest of the global economy.
Greed and competition for resources are fundamental aspects of the
human condition and drive the vast majority of economic activity.
However, these same characteristics limit the degree of global
economic unity that can be expected. As long as there are limited
resources, one can only obtain more at someone else's expense.
Therefore, there are significant obstacles to the degree of economic
integration that a country's citizens will tolerate, particularly if
they perceive the economic integration to be at their expense.
In addition, with the conclusion of the Cold War, nationalism has
resurfaced throughout the globe, along with a corresponding resurgence
in local cultures. There has also been a strong reaction in many
areas, particularly in the Islamic world, to the global dominance of
Western culture, particularly American culture. Furthermore, even
global brands are forced to adapt to regional preferences. Coca-Cola
produces its products in different formulations and different
packaging for different markets, even when they are all branded as
Coca-Cola. The company has also found it profitable to maintain
brands that only appeal to one market. Attempts by many companies to
produce a one-size-fits-all product for the world have failed. For
example, Ford's attempt to create a "world car" resulted in a product
that delighted no one.
Although there is a greater degree of homogeneity across the world
than has ever existed before because of globalization and mass
communication media, tremendous diversity in culture and environment
still exist. Perhaps in the future a dire event that affected
everyone globally, such as the worst-case scenario for global warming,
might result in a greater degree of economic integration and create a
strong desire for global government. However, absent such an
occurrence, diversity appears to be here to stay. Given the slightest
opportunity, whether in the countries of the former Yugoslavia or the
Kurds of Iraq and Turkey, distinctive cultural and ethnic populations
want to assert their independence. As long as these human
characteristics exist, the extreme state of globalization that
essentially wipes out national identities is unlikely to arise. |
