THE

CONTEMPORARY
WORLD

PROF. DAN LHERY SUSANO

GREGORIOUS, MAED, LPT,
SMRIEDr, FMERU,FMERC
PROF. DAN LHERY SUSANO
GREGORIOUS, MAED, LPT, SMRIEDr,
FMERU,FMERC

• PRINCIPAL
• RESEARCHER
• EDUCATOR
What is
CONTEMPORARY
WORLD?

• Refers to circumstances
and ideas of the present
age, where it deals with
problems and issues
related to environment,
population, wealth,
power, tensions and
conflicts.
Why study CONTEMPORARY WORLD?

b. To developed
a. To be aware about
competencies and construct
Contemporary World
knowledge about problems
problems and issues that all
and issues and become
societies must be
aware of our roles and our
concerned.
responsibilities as citizen.
Globalization
 What is
Globalization?
Global industrialism or
globalization is a process of
forging international political,
economic, religious, and socio-
cultural interconnections 7-11 Beijing

KFC Kuwait
 Globalization Definition
• Variety of definitions, centering around the
world becoming “smaller” and more
interconnected in the areas of commerce,
culture, and politics
• Causes: technological advances in
communication, travel, and computational
power, expansion of trade
Thomas Friedman, “The Lexus and the Olive
Tree”
• A globalist system has replaced the Cold War system
• The new system has unique rules, logic, pressures and incentives driven by
international capitalism
• Features integration: free flow of capital, goods, ideas more broadly, faster,
deeper than anytime in the past.
• The “Golden Straightjacket”: must abide by goals of free market principles,
efficiency. Rewarded if you do.
• New key players: The “Electronic Herd.”
• Globalization promotes cultural homogenization, the “Big Mac.”
 Thomas Friedman’s
Definition of Globalization
 Friedman: Globalization’s New Structure and
Balance of Power
• Traditional balance between states (countries), U.S. is
the paramount player
• Balance between states and global markets: states
can’t ignore the market any longer without costs
• Balance between individuals and states: people
influence governments through the market at home
and abroad (for good and evil).
• Globalization produces “super-empowered
individuals
Important Conclusions from Friedman’s Argument

1. Rewards. Those who participate in

globalization are rewarded, though there are
winners and losers.
2. Peace Dividend. Those engaged in
globalization have too much to lose with war.
3. Democratic Dividend. Free movement of
information with markets produces drive for
freedom and liberty—seeds of democracy.
History of Globalization
According to Thomas
Friedman
 The Stages of Globalization
(From Thomas Friedman in The World is Flat)
• Globalization 1.0 (from 1492 to 1800)
• Globalization 2.0 (from 1800 to 2000)
• Globalization 3.0 (from 2000 to the present)
Globalization 1.0

Christopher Columbus
 Globalization 2.0 (first half)

Railroads

Steam engine
Globalization 2.0 (second half)
Satellites

Fiber optics

Apple Mac Pro

OpenMoko open source smart phone
 Globalization 3.0

3.0

2.0
1.0
Globalization 3.0 (continued)

Schematic Map of the Internet

Aspects of Globalization
 5 ASPECTS OF GLOBALIZATION

1. ECONOMIC
2. TECHNOLOGICAL
3. CULTURAL
4. POLITICAL
5. MILITARY
THESE ASPECTS ARE ALL INTERCONNECTED!
*********************
After this lecture, can you give 1 example of each of the
above?
1. Economic Globalization
 1. Economic Globalization
TODAY:
Economies Are Increasingly Linked Together
EXS: NAFTA (MX, CA, US), The EU, WTO (World Trade
Organization)

WTO
• Only global international organization dealing with the
rules of trade between nations
• Goal: help producers of goods and services, exporters, and
importers conduct their business
1. ECONOMIC GLOBALIZATION
MULTI-NATIONAL
CORPORATIONS
• OLD: Dutch East India
Company?
• 1602 company of Dutch
merchants & independent
trading companies
• Spice trade monopoly in East
Asia
• Power to colonize territories &
enslave indigenous people
• Indonesia & South Africa
 1. ECONOMIC
GLOBALIZATION
• NEW: Nike, Wal-Mart, Royal/Dutch Shell
• Top 100 multinationals are all US-owned companies!
• Royal/Dutch Shell: global group of energy and
petrochemical companies, operating in more than 140
countries and territories, employing more than
112,000 people
2. Technological
Globalization
 2. TECHNOLOGICAL
GLOBALIZATION
• “World Wide Web” has exploded in last 10 years

• Computers can move money around world = “finance capital”

• Silicon Valley is 9th largest economy in world!

Africa
• Number of telephones is decreasing
• More computers in Manhattan than all of Africa!
• Post-colonial infrastructures don’t support technology
3. Cultural Globalization
 3. CULTURAL GLOBALIZATION
• Cultural Imperialism = Dominance of one culture over others
• Hollywood movies, MacDonald’s, Disneyland, Starbucks
• Dominance of the English language and invasion of other languages
• Do people all over the world have the same taste?

Africa
• “Culture Industry” = opportunities for Africans to sell their culture in the
“global market” that values traditional culture
3. CULTURAL GLOBALIZATION

McArabia Kofta
4. Political Globalization
 4. POLITICAL GLOBALIZATION

The United Nations: Global assoc. of govts. facilitating

cooperation in international law, security, economic
development, and social equity
• Whose interests does the UN represent?
• The US and the UK were the only nations in support of
going to war in Iraq
• Can a global politics with social values exist?
• Alternative political gatherings: Annual World Social
Forums since 2001, The Piece Process @ Gav!
4. POLITICAL GLOBALIZATION
South Africa
• In 2001, US pharmaceutical corporations sued South African
companies for infringing on AIDS medication patent laws

• In 2003, President George W. Bush announced the Emergency

Plan in 2003 - the largest international health initiative in history
by one nation to address a single disease

• HIV/AIDS Situation in 2004

HIV Infected: 5.3 million
AIDS Deaths: 370,000
AIDS Orphans: 1.1 million
5. Military Globalization
 5. MILITARY GLOBALIZATION
Nuclear Bombs F/A-22 Raptor
 5. MILITARY
GLOBALIZATION
• Global alliances become clear during war time
• Ex: Today’s US alliance with Britain in wars against
Afghanistan and Iraq
• What will happen with North Korea and nuclear
weapons?
Africa
• “Trade in Arms” = US sold $227 million in arms to AF in
1990s
• US train and provide weapons for African armies on both
sides of their civil wars (ex. Mobutu civil war in Congo)
• US is the #1 exporter of weapons globally
• US is the last on the list of exporters of non-military aid to
the developing world
 5. MILITARY GLOBALIZATION
Smart Bombs Sidewinder Missiles
Consequences/Effects of
Globalization
 Globalization Consequences/Effects
• Consequences cited by various scholars and
activists:
• Cheaper goods and services
• Growing wealth for certain actors
• Environmental damage
• Exploitation of labor
 Globalization Consequences/Effects
• Consequences cited by various scholars and
activists (cont.):
• Mixing of cultures:
• Dominant Western culture eroding traditional
cultures
• Backlash from those who want to maintain
traditional cultures
• “Lexus and the Olive Tree” (Friedman)
• “McWorld vs. Jihad” (Barber)
 Globalization Consequences/Effects
• Consequences cited by various scholars and
activists (cont.):
• Diseases spread more rapidly
• Economic crises spread more rapidly
• Increased trafficking of humans and drugs
• Terrorism/asymmetric warfare made easier
 Globalization Consequences/Effects
Global Culture: Homogenization
 Technology (Internet, TV, cell phones etc.) is sweeping away cultural
boundaries creating the possibility and even the likelihood of a global
culture.
 Global entertainment companies shape the perceptions, values, and
dreams of people, everywhere.

 This spread of values, norms, and

culture tends to promote Western ideals
of capitalism and consumerism.
 Resulting in the disappearance of local
cultures, traditions, and identities
replaced by a single commodity/ single
identity world – the Westernization of
culture
Ladies only line Saudi Arabia
 Globalization Consequences/Effects
Asymmetry in Power Relations and Flows
 Coca-colonization: Coke, McDonald’s, Levi’s, MTV, Disney, computer games,
American (or American style) TV shows, look-alike shopping malls with look-
alike goods
 the meaning of good, appropriate, success changes
 Banana Republicanization
 Move from the dominant to the weaker

Big Bird does China

like to teach the world to sing
 Summary of
Consequences/Effects
Pros and Cons to Globalization
 Pros
 increases economic
prosperity and opportunity
 higher degrees of political
and economic freedom in the
form of democracy
 Improved standard of living
– reduction in poverty
 Improved gender relations
 Increased life-span
Cons  Increased environmental damage
 increased poverty, inequality, injustice
 erosion of traditional culture
 Corporations are motivated by profit
and have little concern for people
 economic globalization developments
feed into ethnic, religious, and factional
tensions that lead to wars and help
breed terrorism
 Terrorists now globally interconnected
and empowered with knowledge, create
a whole new category of warfare based,
in part, on the disruption of the
interconnections which are both created
by and necessary for globalization
Corporations shape political policy of
countries e.g. over fishing
Trade
 Role of Trade with Globalization
• A key element of economic globalization
• Dramatic increases in trade over the past 200 years
• Technological advances (most notably the steam engine)
powered expansion of trade in 19th and early 20th centuries
• After setback of Great Depression and World War II, trade
grew again, accelerating with collapse of communist bloc
and advances in information technologies
• Institutions such as GATT (later WTO) have facilitated trade
globally
• Growth of regional free trade blocs
 Economic Approaches to Trade
• Approaches to trade
• Mercantilist/autarkic practices
• Liberal, “free trade” policies
• A mix of the two extremes (protecting certain
domestic industries, etc.)
 Effects of Trade
• Differences in countries’ exports (primary
products vs. high-tech manufactured goods) can
lead to dependency relationships and inhibit
development of poorer countries
• “Free trade” vs. “fair trade”
• Comparative and absolute advantage (see
lecture #10)
 Free Trade Controversy
• Free trade and barriers to trade
• WTO (previously GATT)
• Most favored nation and reciprocity principles
• Efforts to reduce tariffs, subsidies, quotas, and
other barriers to free trade (and ongoing disputes,
such as agricultural subsidies by wealthy countries)
• Regional free trade agreements (e.g., NAFTA)
• Conflict with WTO goals
 Summary of GATT Rounds

Round N of Subjects and Main Outcomes Value of Trade Average Average Post
Countries Modalities Covered Tariff Cut Round Tariffs
Geneva 23 Tariffs; Concessions on $ 10 billion 35%
1947 Item-by-Item 45,000 tariff lines
Negotiation
Annecy 33 Tariffs; Modest tariff 37%
1949 Item-by-Item reductions
Negotiation
Torquay 34 Tariffs; 8,700 tariff 26%
1950 Item-by-Item concessions
Negotiation
Geneva 26 Tariffs; Modest tariff $2.5 billion 15%
1956 Item-by-Item reductions
Negotiation
Dillon 26 Tariffs; Tariff adjustments $4.9 billion 20% 17%
1960-1961 Item-by-Item following creation of
Negotiation EEC
Kennedy 62 Tariffs; 30,000 tariff lines $40 billion 35% 8.7%
1962-1967 Linear cuts bound
Tokyo 102 Tariffs; NTBs; $155 billion 34% 6.3%
1973-1979 Linear cuts;
Codes
Uruguay 103 start, Tariffs; NTBs; WTO $3.7 trillion 39% 4.0%
1986-1994 128 end Item-by-Item and Dispute Resolution
Linear;
WTO
See Supplemental Readings
 Regional Trade Agreements
• Besides economic organizations, regional trade agreements
form a key part of the institutional structure of the world
economy
• Regional trade agreements have proliferated around the
world since the beginning of the 1990s
 Five Types of Regional Trade Agreements
• 1. Partial trade agreement – two or more
countries liberalize trade in a selected group of
product categories
• 2. Free trade area (FTA) – trade in goods and
services fully liberalized between two or more
countries
• North American Free Trade Agreement
(NAFTA)
 Five Types of Regional Trade Agreements
(cont.)
• 3. Customs union (CU) – an FTA plus a common
external tariff (CET)
• European Union in the 1970s and 1980s
• MERCOSUR in South America
• 4. Common market – a CU plus free mobility of
factors of production
• European Union in the 1990s
Slide 2-63
 Five Types of Regional Trade Agreements
(cont.)
• 5. Economic Union – common market with
coordination of macroeconomic policies
(including common currency, harmonization

of standards and regulations)

• United States
• Canada
• European Union
Global Institutions that
Affect IPE
 International Institutions
• The three global organizations playing a major role in
international economic relations are:
• The International Monetary Fund (IMF)
• The World Bank
• The World Trade Organization (WTO)

Let’s take a closer look at the functions

of these organizations…
IMF
 The IMF
• Founded by the Bretton Woods meetings between the Allies in July
1944
• Each of the 184 members charged a quota
• 25% in SDRs or convertible currencies
• US quota is SDR 37,149.3 million (largest)
• Palau quota is SDR 3.1 million (smallest)
• The size of the quota determines the member’s voting power
• 250 basic votes + 1 voter/SDR 100,000 quota
• US has 371,743 votes (17.11%) Palau 281 votes.
 The IMF
• The IMF was established to:
• Promote international monetary cooperation;
• Promote exchange stability and orderly exchange
arrangements
• To foster growth and high levels of employment,
and
• to provide temporary financial assistance to
countries to help ease balance of payments
adjustment
 The IMF
• Fundamental disequilibrium and exchange crisis
• Crisis occurs when a country runs out of
foreign exchange reserves – a major currency
or gold that can be used to pay for imports
and international borrowings
• IMF conditionality – requirement for the
borrowing member to carry out economic
reforms in exchange for a loan
The World Bank
 The World Bank

• Also founded at the Bretton Woods

Conference
• Founded as the International Bank for
Reconstruction and Development (IBRD)
• World Bank has 184 members
 The World Bank
• Main functions: development lending
• Today, IBRD is one of the five subgroups making up the World
Bank Group
• IDA (International Development Assn.),
• IFC (International Finance Corp.),
• MIGA (Multilateral Investment Guarantee Agency),
• ICSID (Int’l Cent. For Settlement of Investment Disp.)
WTO
 From GATT to WTO
• Uruguay Round Agreement signed in 1994
• The round established the WTO:
• 144 members as of 1 January 2002
• reaches beyond GATT to new trade issues;
• has a more effective dispute settlement
mechanism; and
• monitors national trade practices more
consistently
 The WTO
• Main Tasks of the WTO
• Administering WTO trade agreements
• Forum for trade negotiations
• Handling trade disputes
• Monitoring national trade policies
• Technical assistance and training for LDCs
• Cooperation with other international agencies
 The WTO
 Interdependence Norms
 Liberalization – negotiations to reduce protection.

 Nondiscrimination – enshrined in the concept of most

favored national status (MFN): every WTO member must

treat each of its trading partners as it treats its most
favored partner
 National treatment – imports must be given a similar

treatment on the domestic market as domestically

produced goods
 The WTO
• Sovereignty Norms
• Reciprocity – negotiations proceed in
terms of exchange of “concessions” of
substantially equivalent value.
• Safeguards – right of government to
preserve economic stability through
(nondiscriminatory) protection
recognized.