Latin American Graduate School in Industrial Development and SME Policies Guatemala, 17th - 22th July Universidad Rafael Landivar

Globalisation: What, When, How, Why?

David Bailey Birmingham Business School

Globalisation …

What? … When? … How? … Why?

The ‘globalisation’ debate What is it? … and why is it happening?

What are the impacts of globalisation?

Is globalisation working? … are there alternatives?

The Global Economy

The Globalisation Debate

• Globalisation has been a

buzzword

for a number of years now – It was first used in a significant sense in 1983 by Theodore Levitt, to refer to ‘the globalisation of markets’ … – But it was not until the mid 1990s that we began to see the term used more widely … – And by the end of the 1990s there had been a dramatic ‘explosion’ in the use of the word – But … “in spite of a deluge of publications on the subject, our analyses of globalisation tend to remain conceptually inexact, empirically thin, historically and culturally illiterate, normatively shallow and politically naïve.” (Scholte, 2000)

So What is Globalisation?

• What does the word ‘globalisation’ mean to you?

• There is general agreement that ‘something’ fundamental is happening … the world has been, and continues to be, undergoing profound changes in the way in which it is structured/organised • However, the nature of these changes is strongly contested – There is very little agreement on what, exactly, globalisation is, and what it implies …

Categories of Globalisation?

• An Economist – “a dynamic process of growing liberty and world integration in the markets for labour, goods, services, technology and capital.” (De la Dehesa, 2000) • A Sociologist – “the compression of the world and the intensification of the consciousness of the world as a whole.” (Waters, 2000) • A Geographer – “a reterritorialisation of both socioeconomic and political-institutional spaces that unfolds simultaneously upon multiple, superimposed, geographical scales.” (Brenner, 1999) • A Politician – “Nations act in their own self interest. But … our self-interest and our mutual interests are today inextricably woven together. This is the politics of globalisation.” (Tony Blair, 2nd October 2001)

A Complex, Multifaceted Phenomenon

• ‘Globalisation’ cannot be confined to one discipline – “globalisation has been a prominent topic among geographers and sociologists as well as economists and political scientists, and is studied within every paradigm…” (Radice, 2000) • It is also characterised by “opposing tendencies” – Universalisation versus Particularisation – Homogenisation versus Differentiation – Integration versus Fragmentation – Globalisation ALONGSIDE Regionalisation … etc.

GLOCALISATION?

A Contested Phenomenon

• There are two extreme perspectives on globalisation • The hyperglobalists see globalisation as the

new economic, political, social, cultural order

in which we live, where our lives are dominated by global forces … – Their view is essentially of a

borderless world

– One where transnational firms dominate, and cultural differences are seen simply as variations in consumer preferences – “The nation state is just about through as an economic unit” (Kindleberger, in 1969) – More recently these views are associated with commentators such as Ohmae, Friedman, Reich and Giddens – A new “turbocharged” era of globalisation (Friedman, 2000)

A Contested Phenomenon

• The sceptics argue that the nation state remains highly significant, as we live in an

international world

– Internationalism is built around nationalism (Bucharin, in 1918) – So how ‘new’ is ‘globalisation’?

– What might be called “progressive nationalism” is associated with commentators such as Hirst and Thompson, Ruigrok and van Tulder, and Radice • The ground for most debate around ‘globalisation’, however, is found somewhere between these two polarised views …

Middle Ground … ?

• While the world economy has arguably been as ‘open’ at other times in history, there is something

qualitatively different

about current ‘globalisation’ – Deep integration has replaced shallow integration – This is impacting in

different

ways on the economic, political, social, cultural and natural environments • However, while such ‘globalising forces’ clearly exist, we have not reached an ‘end-state’ in which local and national factors cease to be significant – Moreover, we can’t predict that we will reach this state, as globalisation involves a complex set of intermittant, uneven processes that are inherently unpredictable

Characteristics of Globalisation

• • • New, more integrated, global markets New global (and local) actors New rules and norms Associated with these characteristics, we can identify

three key components to ‘globalisation’

1. Changing territory 2. Changing technologies 3. Spread of market capitalism

1. Changing Territory

• Scholte (2000) argues that globalisation is a new and distinctive phenomenon only when seen in terms of ‘deterritorialisation’ – Social geography is no longer

entirely

territorial – Territory still matters, but it no longer constitutes the whole of our geography – While production used to be organised within national boundaries, for example, this is no longer the case • Space is shrinking, and borders are becoming less significant

2. Changing Technologies

• Changing spatial relations are intimately associated with changes in transport, information, and communication technologies – Faster and cheaper air, sea, rail travel – Cheaper and better phone connections – Fax – Mobile phones – Internet and other electronic communications – Etc.

• These have facilitated emerging ‘global’ economic, social, cultural and political relationships

3. Spread of Market Capitalism

• The process of ‘globalisation’ that we see around us cannot be separated from the capitalist context in which it has emerged – Liberalisation of markets – Privatisation and the reduction of the role of governments – The role of the IMF and World Bank in these processes – The increasing significance of transnational corporations – New ‘global’ division of labour and ‘global’ production chains • The current form of globalisation is heavily influenced by this context … see Friedman (2000) and Stiglitz (2002) – ‘Washington consensus’ globalisation

So What Is Globalisation?

• It is a complex, multifaceted phenomenon, incorporating changes in economic, political, cultural, social relationships.

• In particular, globalisation refers to the changes in these relationships as new technologies combine with the dominant capitalist context in reducing the significance of territory • As markets and production chains become ‘global’, there are clearly economic, political, cultural and social implications for different actors … What are the implications of ‘globalisation’ for business?

Friedman’s Nine Questions …

• How fast is your company?

• Is your company harvesting its knowledge?

• How much does your company weigh?

• Does your company dare to be open on the outside?

• Does your company dare to be open on the inside?

• Does the management ‘get it’? And can you change the management if they don’t ‘get it’?

• Is your company willing to shoot its wounded and suckle the survivors?

• How good is your company at making friends?

• How good is your company’s brand?

Some Implications for Business

• Businesses need to recognise that increasingly they are operating in global market places – This presents both threats and opportunities – The Birmingham Business School, for example • Perhaps most crucially, businesses need to understand that globlisation is inextricably linked with the creation and distribution of knowledge and information – Success means staying one step ahead • There is also a need to recognise and respond to some of the ‘opposing tendencies’ – For example, regionalisation and localisation are important counterforces to global markets – Global businesses able to respond to local markets – Or local businesses able to project themselves globally?

The significance of Firm ‘Clusters’

• Globalisation does not

remove

a fundamental characteristic of economic activity: it tends to be geographically localised to some degree – Dynamic ‘clusters’ of firms can give significant advantages to both small and large businesses in competing in a global economy – Generalised clusters versus specific clusters – Traded and Untraded interdependencies • It is interesting that local ‘clusters’ of firms have become influential as ‘globalisation’ has gathered pace – See, for example, the work of Porter This has implications both for firms and societies

Implications for Societies

• Many of the implications of globalisation that we have identified for firms can also be applied to societies more generally – Freidman’s nine questions apply to countries as well as companies – This is not surprising, given that societies are built around institutions, including firms – All institutions will be influenced by processes of globalisation in some way • There are economic, social, cultural, political implications for countries and regions as the world becomes more deeply inter-connected – Again, threats and opportunities

Is Globalisation Working?

• Many people would say a strong ‘no’ – There is a large ‘anti-globalisation movement’ – Protests, for example, in Seattle, London, Davos, Genoa etc..

– This ‘movement’ incorporates many diverse groups, with different agendas – But they are linked by a belief that ‘globalisation’ is threatening certain things: culture, economics, environment etc.

• In many ways, this is an extension of concern with inequalities and tensions created by capitalism … – ‘globalisation’ takes capitalism to a more extreme, more visible stage – It highlights the inequalities that are inherent in capitalism – ‘Globalisation’ a new paradigm of capitalist economic development?

Are There Alternatives?

• Given these concerns, and given your own concerns, do you think there are alternatives to ‘globalisation’?

• Is ‘globalisation’ irreversible?

• Would it be desirable to reverse it in any case?

• My view is that we could try to reverse or stifle such trends … re-implement borders etc., but that this is not the way forward – The problems, and the frustrations, are not with ‘increasing and deepening global relationships’

per se

, but with the current form of capitalism?

– We must ask, therefore, if there are alternative forms of globalisation?

Elite Globalisation

• Current ‘Washington consensus’ globalisation might be characterised as

elite

(Sugden and Wilson, 2003) – It is based around powerful transnational firms, where decision making is concentrated – This is despite the language of

freedom

and

democracy

that are often used when talking about ‘globalisation’ (e.g. Freidman)

If after sufficient terror, intimidation, destruction of popular organisations and so on, you can ensure that power stays in the hands of the right power groups, the ones linked up to US corporations and banking institutions and the others who basically run this society, then that is democracy and everybody is happy and we praise ourselves for our glory [Chomsky, 2003]

Democratic Globalisation?

• A question, then, is whether it is possible to alter globalisation so that it becomes more ‘democratic’ • This would imply fundamental concern with

governance

– Governance of firms – Governance of governments – Governance of localities – Governance of international institutions • It is possible that such a step would address many of the concerns of the ‘anti-globalisation movement’ … – Indeed, business cannot afford to ignore these concerns – Increasing concern with ‘ethical business’ and ‘good governance’

Summary

• Today we have seen that globalisation is a complex phenomenon!

– It is multi-faceted and highly contested – There is some middle ground however, which sees

something

fundamental happening to the economic, social, political and cultural relationships around which the world is organised – These changes are influences particularly by changing geography, changing technology, and the capitalist context – In turn there are implications for business, and for societies, around the world – But questions remain as to how ‘globalisation’ can best be harnessed as a positive force, how we can make it work better – The globalisation debate today centres on these questions