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Summary of 17 pages for the course Globalisation and Global Governance at School of Oriental and African Studies (Coursework material)
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GLOBALIZATION AND GLOBAL GOVERNANCE – summary and notesIs globalization in crisis? Yes, but unlikely the crisis will stop it, it will lead to a reconfiguration of the system.
Components:
- Economy (slow-down of international trade, but new rcep -quad)
- Politics (nationalism, populism)
- Social (inequalities, migration crises, health systems)
- Technology (rise of tech)
- Environment
Trump, Brexit, Globalization in crisis? – policy journal (4 June 2018)
Economic + political progress grounded in market principles (world aligned with this western value)
BUT more and more doubts: since 2008 crisis that exposed fragility of capitalism/global markets
- Illiberalism, nationalism, authoritarianism, populism (west) = on the rise
- Instability in Middle East + North Korea
- Islamist fundamentalist threat
- Votes for Brexit + Trump
Recent developments (Covid-19) more political opposition due to rising inequalities BUT economic
integration will not be undone easily + national responses insufficient
BUT globalization is set to continue anyway due to
(1) technology: 1. reduction of distance + its costs (space-time compression) + 2. fragmentation of
production processes through value chains (breaking classic importer-exporter dynamic in favor of a
circulation of components) + 3. intense financialization (reduced since the crisis) thanks to flow of data
(2) politics: supporting role through open trade policies + reductions on restrictions + average tariffs fell
from 35% to 5%
Now this seem in crisis after Trump + Brexit as seem to have a protectionist platform BUT higher the cost of
going backwards now + more difficult due to levels of economic integration and technological development
Brexit = reaction vs status quo
Trump = protectionist agenda, but this will affect US production + competitiveness due to US integration in
supply chains
So, no major risk of de-globalization + renationalized production
(trade restrictions are today norms, standards, certification requirements) these are the real
issue + they are more politically sensitive (pesticides, GMOs and animal health): heterogeneity of
systems for consumer protection = obstacle to opening international trade further
Today’s model unsustainable in
1. Economics issues -
2. Environment issues – climate change + biodiversity endangered (Indonesia rainforests)
3. Social issues (reduction in poverty BUT rising inequality) + social system designed in 19 th-20th not good
after shock of globalization winners and losers (US redistribute 35%, UE redistribute 45%) but there are
difficulties for the losers resulting in political opposition vs globalization
,INTERNATIONAL SYSTEM which is supposed to give collective responses to global issues : too slow
- IMF insufficient during the financial crises
- WTO stalled since Doha
- ILO is weak
- International climate agreement is partial (Trump-US away from Paris agreement, Biden in again)
- Insufficient means vs international terrorism (demonstrated by attacks in France, Vienna)
- Corporate tax competitions + exploitation of loopholes by multinationals
- Regulations are fragmented among US, EU and China (now: RCEP, QUAD economic agreements)
- Regional divisions
- US-China tensions (Thucydides Trap) (Trump view of international trade China as stealing jobs
from US despite this being almost at full employment + it is driven by US consumption)
- Europe = a model between US-hyper capitalism and China’s state capitalism + with a clear identity=
social market economy with clear set of values (less tolerant of inequalities, concerned w
environmental issues (UE Green Deal) + access to culture (and health now agenda to have a
collective health system) + geographical disparities (UE Recovery Fund) + at the fore of scientific +
economic developments
BUT needs stronger security policy (antiterrorism) + control of external borders (migration crisis –
Greek, Italy) + weak on innovation (US-China better in that) + national politics = challenge for
collective action
While there are losers of globalization, this does not legitimate protectionism which would still hit the
poorest of society. What should be addressed are the imbalances in social security, training, labor market,
geographical disparities.
In Africa growing middle class will hopefully stabilize situation BUT migration will continue
International system NOT disintegrating, still based on Westphalian model with sovereign power of nation
states BUT the system of multipolarity combined with national sovereignty = unstable + need to break the
monopoly granted to nation states to manage IR + diversify with other actors (cities, NGOs, companies).
ISSUES: data privacy, security, governance of Internet
Coronavirus weekly: where next for globalization after the crisis? – The Conversation (27 May 2020)
Lockdown measures eased – some trends are reshaping trade + global economy
Crisis = unlikely to put a stop to globalization rather Covid-19 = reconfiguration of global system
- China trying to expand government control over its economy
- Global consumption – undermined by the US recession
- Value chains – shortening in some sectors
Impact of the pandemic on globalization
(1) China’s international trade: to understand economy shock after covid-19 look at china’s recent trade:
worse-affected Chinese imports = machinery + luxury goods; exports fallen drastically for goods whose
production is labor-intensive (ie furniture) + for capital goods (ie nuclear reactors) these trends could be
long-lasting: countries > aware of the fragility of global value chains BUT without undermining completely
globalization
(2) Tensions between Australia and China (now RCEP – QUAD)
, (3) Return of the local economy: due to uncertainty, prefer to turn to more local forms of economy (Canada
in area of fisheries – policies in north western Ontario to help local people benefit from fish caught in
Thunder Bay, usually destined to be exported)
(4) Over golden days: fragility of economy already before pandemic due to China-US trade tensions.
Countries were building up gold reserves then just before crisis demand slowed
CHINA’S RECOVERY
(1) protection and control premier Li Keqiang speech on government’s recovery strategy focus on
protection + control = vigilance vs virus = core for macro/micro-policies onwards (May 22)
HARD TIMES
(1) on you own: US companies closing + rising unemployment (+33%) + people unable to immediate
financial needs for food, care and shelter (despite federal government’s efforts)
crisis revealed US major flaws in its social safety net
Pandemic hit developing countries the hardest:
(1) Food insecurity: in low-income countries poverty + food insecurity (these could kill more people than
the virus)
(2) Pandemic poverty: Indonesia, the poorest at the mercy of the virus; 3.6 million could face poverty as a
result of the pandemic
(3) Refugees struggling: plight of refugees in Nairobi, East Africa, low-income (most of earnings from daily
street sales) > affected by the disease
CORONAVIRUS IS A GLOBAL CRISIS, NOT A CRISIS OF GLOBALIZATION – Financial Times (10 Mar 2020)
Virus revealed costs + fragility of global supply chains = triggering a backlash to globalization
BUT supply chains already shortening before the virus hit + companies still see the advantages of global
trade + consumer benefit from it + it makes world safer
Recent global disruptions: US-China trade conflicts + Fukushima earthquake +nuclear accident dangers
posed by highly concentrated supply chains (not international ones)
Companies usually think just of costs when arranging operations they have to also bear in mind the risk
- “crises underline the need for companies to design their supply chains around risk
competitiveness”
So, companies not localizing supplies, BUT mitigate risks with regional diversification (=opposite of
undoing the global nature of supply chains)
CASE of Fukushima earthquake: much of global microchip supply chain passed through Japan (many of
lower-tier suppliers clustered near earthquake)!! after customers saw the risks + shift sourcing to Taiwan
They did not shift to domestic chip production:
(1) Microchips = example of how local specialization spread across the globe provides better
products (best chip manufacturing equipment: from Holland; strongest chip designs: from US; best
foundries: in Taiwan)
Also, fallacy to believe that all threats originate abroad (even domestic threats!!) – a crisis might start
anywhere
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