Lecture 1: Introduction to Globalisation, Global-Governance, and the Global Economy
1. What is Globalisation?
• Definition: Globalisation refers to the ongoing process of increasing
interconnectedness and interdependence among countries, especially in the realms of
trade, finance, and culture. It integrates national economies into a global economy,
fostering greater economic, political, and cultural exchanges.
• Theoretical Perspective:
o Held et al. (1999) describe globalisation as a transformation in social relations
and transactions across different regions. It generates transcontinental and
interregional flows of goods, services, ideas, and power.
o A critical view by Saskia Sassen suggests that globalisation is also about the
reconfiguration of spaces and territories, driven by global financial and
corporate forces.
o Example: The rapid expansion of multinational corporations like Apple, which
operates in over 100 countries and sources materials from various global
suppliers, demonstrates how national markets have merged into a vast
interconnected global marketplace.
2. Drivers of Globalisation
• Trade Liberalization:
o Since the end of World War II, global trade has been facilitated through
international agreements. The General Agreement on Tariffs and Trade (GATT),
followed by the World Trade Organization (WTO), has played a pivotal role in
reducing trade barriers and promoting global commerce.
o Example: The WTO, established in 1995, ensured that countries like China
could enter the global market after adhering to trade rules, contributing to
China's rapid growth and integration into the global economy.
• Technological Advancements:
o Innovations in microprocessors, telecommunications, and the internet have
drastically reduced the costs and barriers of communication, making it easier
for firms to operate across borders.
o Example: The rise of e-commerce giants like Amazon is directly linked to the
ability to process transactions and manage logistics globally with the help of
advanced information technology.
• Global Value Chains (GVCs):
o GVCs refer to the division of production processes across different countries.
Companies seek to maximize efficiencies by outsourcing different stages of
production to countries that specialize in them.
o Example: Boeing’s 787 Dreamliner project exemplifies GVCs, with parts
sourced from more than 50 suppliers across 20 countries. The assembly itself
was spread across various locations, allowing Boeing to lower costs and
leverage expertise from around the world.
3. Global Governance and Institutions
• WTO and IMF:
o The WTO aims to create a rule-based global trade system that enforces
agreements on tariff reductions, trade disputes, and global trade practices.
However, it faces criticism for disproportionately benefiting wealthy countries.
o The IMF was initially designed to stabilize international monetary relations.
Over time, it shifted its role towards managing balance-of-payments crises and
debt crises. Its policies often favor market liberalization, which some argue
exacerbates inequality in developing countries.
o Example: The 1997 Asian Financial Crisis highlighted the IMF's controversial
role in imposing austerity measures and structural adjustment programs (SAPs)
on affected countries, leading to significant social and economic hardship in
places like Indonesia and Thailand.
• Role of the G20:
o The G20, formed in 1999, brings together the world’s largest economies to
discuss and resolve global issues like financial instability, climate change, and
economic inequality. It has become a key forum for addressing global
governance challenges.
o Example: The G20 summit held during the 2008 financial crisis brought world
leaders together to coordinate responses to the collapse of major banks and the
global economic downturn.
Lecture 2: Issues in Globalisation and Neoliberalism
1. Neoliberalism in the Global Economy
• Definition: Neoliberalism refers to the political-economic philosophy that promotes
free markets, deregulation, privatization of state-owned enterprises, and reduction of
government intervention in economic affairs. It emerged in the 1970s as a response to
the perceived failures of Keynesian welfare state policies and state-led development
strategies.
• Theoretical Framework:
o Hayek and Friedman: Two key proponents of neoliberalism, Friedrich Hayek
and Milton Friedman, argued that economic freedom (i.e., minimal government
intervention) is the best way to ensure efficient allocation of resources and
economic growth.
o The shift towards neoliberal policies began with the economic crises of the
1970s, including the oil shocks, stagflation, and the declining hegemony of the
United States as the world’s dominant economic power. These crises
necessitated a new economic order that favored market-led growth.
• Key Components:
o Monetarist Policies: Emphasized controlling inflation through monetary policy,
advocating for reducing government spending and cutting taxes.
o Flexible Labor Markets: Governments were encouraged to deregulate labor
laws to increase competitiveness. This has led to the rise of temporary and
precarious jobs, reducing job security in many economies.
o Privatization: Governments were urged to privatize state-owned industries to
increase efficiency and profitability.
o Financialisation: The increasing dominance of financial markets over
industrial production, focusing on speculative investment rather than productive
investment.
o Example: The UK under Margaret Thatcher and the US under Ronald Reagan
embraced neoliberalism by privatizing industries like British Telecom and
deregulating sectors such as banking, which eventually led to the global
financial crisis of 2008.
2. Fordism vs. Neoliberalism
• Fordism: Developed in the early 20th century, Fordism refers to the system of mass
production pioneered by the Ford Motor Company. It emphasized standardized
production methods, high wages for workers, and stable industrial relations. The
government played an active role in regulating the economy and maintaining labor
peace.
• Neoliberalism: Represents a break from Fordism. It embraces flexibility, global
competition, and a reduced role for the state. The focus shifted from mass production
to global value chains and digital services.
• Example: Fordism can be seen in the manufacturing model used by Henry Ford in the
early 20th century, where standardized cars were produced in large quantities at fixed
locations. Neoliberalism’s influence is evident in tech giants like Apple, where
production is distributed globally, and labor conditions are more precarious.
3. Globalisation Paradox
• Rodrik's Paradox: Dani Rodrik argues that it is impossible to simultaneously achieve
global economic integration, national sovereignty, and democratic accountability.
Global integration, he suggests, requires the sacrifice of some degree of national
sovereignty and democratic control over economic decisions.
• Three Paradoxes:
o Global Economic Integration: While it boosts economic growth, it can also
spread financial instability, as evidenced by the 2008 financial crisis.
o National Sovereignty: While countries retain political control, economic
globalization often requires countries to compromise on policies that affect
national interests.
o Democratic Accountability: As economic decisions become more global,
national governments may prioritize international economic stability over the
welfare of their citizens.
• Example: During the 2008 global financial crisis, countries like the US and Greece
experienced economic turmoil, partly due to their interconnectedness in global financial
markets. This highlights the paradox of integration leading to instability.
4. Deglobalisation and Slowbalisation
• Deglobalisation: Refers to the reversal or slowdown of the process of global integration.
Factors contributing to deglobalisation include the rise of economic nationalism, trade
wars, and protectionist policies. It became particularly pronounced after the 2008
financial crisis and accelerated in the 2020s due to events like the COVID-19 pandemic
and the Ukraine conflict.
• Slowbalisation: A term that describes the gradual slowdown of global trade and
production, particularly in physical goods, while digital and financial flows continue to
increase.
• Example: The impact of the COVID-19 pandemic on global supply chains is a classic
example of deglobalisation, as countries turned inward and imposed trade restrictions,
leading to shortages of essential goods and a rise in local production.
Lecture 3: International Development
1. What is Development?
o Definition: Development refers to the process by which poorer countries,
especially post-colonial nations, organize themselves to improve the living
standards of their citizens, eliminate poverty, and create a conducive political
and social environment for sustainable progress.
o Historical Perspective: Development is often seen as historical progress,
reflecting a continuous transformation of societies driven by human agency
(intelligence and initiative). Development assumes a steady and progressive
process in the unfolding of human history, as seen in the evolution of capitalism.
2. Modernization Theory (Walt Rostow)
o Definition: Modernization posits that societies move through fundamental
transitions from one stage to another, culminating in fully developed economies.
These transitions are driven by economic, social, and political transformations.
o Rostow’s Stages of Economic Growth:
§ Traditional Society: Dominated by agriculture with minimal
technology and low productivity.
§ Pre-Take-Off: Emergence of entrepreneurial activity and investment in
infrastructure.
§ Take-Off: Introduction of new industries and rapid growth in savings
and investment.
§ Road to Maturity: Expansion of trade and new industries replacing old
ones, with continuous growth.
§ Mass Consumption Society: A fully developed society where material
prosperity is widespread, with the focus on consumer goods and services.
o Example: The rapid economic transformations in East Asia since the 1960s,
particularly the rise of nations like South Korea and Singapore, show the
effectiveness of high investment rates, entrepreneurial activities, and state
involvement in the economy.
3. Dependency Theory
o Origin: Dependency theory emerged in Latin America in the 1960s,
emphasizing that the economic structures of developed nations exploit
peripheral countries.
o Key Ideas:
§ Raul Prebisch: Argued that the global trading system benefits
developed countries while exploiting peripheral nations.
§ Andre Gunder Frank: Proposed that the rich countries grew by
systematically exploiting their colonies, and poor countries remained
underdeveloped due to the global system’s structure.
o Criticism of Dependency Theory: It is often critiqued for being overly
deterministic, ignoring internal factors like poor governance and corruption that
can hinder development.
4. Case Study: Brazil
o Colonial Legacy: Brazil’s development was severely hindered by Portuguese
colonialism, which exploited the country's resources, particularly through
slavery. Even after independence, Brazil remained dependent on raw material
exports.
o Neo-Colonialism: Brazil continued its dependency on European markets well
into the 20th century, limiting its ability to develop a robust manufacturing
sector.
o Post-Independence: Over time, Brazil began diversifying its trade and
reducing reliance on former colonial ties. However, its development was slow
and uneven due to these historical constraints.
Lecture 4: Contemporary Issues in the Global Economy
1. Poverty and Inequality
Understanding Poverty:
• Monetary Poverty:
o Definition: Monetary poverty is typically defined by the lack of income or basic
economic resources. The World Bank defines extreme poverty as living on less
than $1.90 per day, and it estimates that around 700 million people live in
extreme poverty.
o Criticism: While this measure is widely used, it doesn’t consider other
dimensions that affect individuals' overall well-being, such as their ability to
access healthcare, education, or participate in social activities.
• Capabilities Approach:
o Definition: Proposed by economist Amartya Sen, this approach focuses on the
capabilities or opportunities that people have to live a life they value. It suggests
that poverty should be viewed as a deprivation of basic capabilities (such as the
ability to access education or healthcare) rather than just a lack of income.
o Key Concept: It broadens the understanding of poverty by emphasizing what
people can do with their resources rather than how much they have. For example,
a person with low income may still have access to education and good health,
which would improve their quality of life and functionings.
• Multidimensional Poverty Index (MPI):
o Definition: The MPI is a more comprehensive way to measure poverty. It looks
beyond income and incorporates other factors such as education, health, and
access to clean water and sanitation. MPI provides a broader view of poverty by
addressing its complex, multi-faceted nature.
o Example: The MPI for India takes into account not only income but also
indicators such as child mortality rates, nutrition, and schooling.
Inequality:
• Kuznets Curve:
o Theory: Proposed by economist Simon Kuznets, the Kuznets curve posits that
as a country develops economically, income inequality first rises and then falls.
This occurs because in the early stages of economic growth, industrialization
benefits a small portion of the population, and wealth inequality increases. Over
time, as economic growth spreads more broadly, inequality diminishes.
o Criticism: The Kuznets curve may not hold in all cases, particularly in
contemporary global economies where inequality continues to grow despite
economic growth.
• Gini Coefficient:
o Definition: The Gini coefficient is a measure of income inequality, with a value
between 0 (perfect equality) and 1 (maximum inequality). A higher Gini
coefficient indicates greater inequality in a society.
o Example: A country like Sweden, with high levels of redistribution through
welfare programs, typically has a lower Gini coefficient, indicating more equal
distribution of income, while countries like South Africa have a very high Gini
coefficient, reflecting significant income inequality.
2. COVID-19 and Vaccine Nationalism
Vaccine Nationalism:
• Definition: Vaccine nationalism refers to the tendency of wealthier nations to secure
large quantities of COVID-19 vaccines for their populations while leaving many low-
income countries without access to these critical resources.
• Implications: This disparity exposed the global health governance system's flaws, as
developed countries, such as the UK and the US, made large investments in vaccine
production and acquisition, while many low-income nations faced severe shortages.
• Example: Wealthier countries like Canada, the EU, and the US secured vaccines for
more than their entire populations, while countries in Africa and Asia were left waiting
for access.
Intellectual Property Issues:
• TRIPS Agreement: The Trade-Related Aspects of Intellectual Property Rights (TRIPS)
agreement under the WTO governs global standards for intellectual property (IP),
including patents for medicines and vaccines. These rules have often prevented
countries from producing generic versions of vaccines.
• Reforms: The pandemic raised calls for reforming IP rules to make vaccines and other
medical supplies more accessible to lower-income nations. Some countries advocated
for temporary waivers of patent protections during the pandemic to enable broader
vaccine distribution.
• Example: The Coalition for Epidemic Preparedness Innovations (CEPI) and Gavi, the
Vaccine Alliance, worked to promote equitable vaccine distribution, especially to low-
and middle-income countries. However, access to vaccines remained unequal despite
these efforts.
3. Deglobalization and Supply Chain Disruptions
Impact of COVID-19 on Global Trade:
• Global Supply Chain Disruptions: The COVID-19 pandemic exposed vulnerabilities
in global supply chains, especially in industries dependent on just-in-time (JIT)
manufacturing systems. The pandemic caused severe disruptions in production and
logistics, as factories closed, borders were sealed, and labor shortages occurred.
• Example: The global automotive supply chain was heavily impacted in the early
months of the pandemic, with companies like Ford and Toyota facing production halts
due to shortages of components and labor disruptions across the world.
Reshoring and Regionalization:
• Reshoring: As countries recognize the risks of dependency on distant supply chains,
reshoring refers to the process of bringing manufacturing back to home countries. This
is seen as a way to reduce exposure to global disruptions, improve national security,
and create jobs.
• Regionalization: Another response is the move toward regionalized supply chains,
where production is concentrated within specific regions rather than globally, in order
to mitigate risks and strengthen local economies.
• Example: During the pandemic, many companies started exploring alternatives to
global supply chains. For instance, some US-based companies have sought to relocate
their manufacturing from China back to the US or neighboring countries in Latin
America to reduce reliance on Asia.
