CHAPTER 2:

The Structures
of Globalization
 2

LEARNING
OUTCOMES
 3

At the end of the lesson, the

students should be able to:
 Define economic globalization; identify the
factors that facilitate economic
globalization;
 Define modern world system; and,
 Articulate a stance on global economic
integration.
 4
GLOBAL ECONOMY vs WORLD
ECONOMY
Global economy World economy
• Is also referred to as world • Is exclusively limited to
economy. human economic activity and
• This term refers to the is typically judged in
international exchange of monetary terms.
goods and services that is • Typical examples are illegal
expressed in monetary units drugs and other black market
of money. goods which by any standard
• It may also mean as the free are a part of the world
movement of goods, capital, economy, but for which these
services, technology, and is by definition no legal
information. market of any kind.
 5

GLOBAL ECONOMY
 In some contexts, "global" or
"International" economy is distinguished
and measured separately from national
economies while the world economy" is
simply an aggregate of the separate
country's measurements.
 6

GLOBAL ECONOMY
 Global economy or economic
globalization is concerned on the
globalization of production, finance,
markets, technology, organizational
regimes, institutions, corporations, and
labor.
 7

GLOBAL ECONOMY
 While economic globalization has been expanding
since the emergence of trans-national trade, it has
grown at an increased rate due to an increase in
communication and technological advances under
the framework of General Agreement on Tariffs and
Trade and World Trade Organization, which made
countries gradually cut down trade barriers and
open up their current accounts and capital accounts.
 8

GLOBAL ECONOMY
 This recent boom has been largely
supported by developed economies
integrating with majority world through
foreign direct investment and lowering
costs of doing business, the reduction of
trade barriers, and in many cases cross
border migration.
 9

MARKET INTEGRATION
 When prices among different location or related
goods follow the same patterns over a long period
of time, market integration exist.
 Similarly, when groups of prices often move
proportionally to each other and when this relation
is very clear among different markets it is said that
the markets are integrated.
 10

MARKET INTEGRATION
 Hence, it could be concluded that market
integration is an indicator that explains
how much different markets are related to
each other.
ROLE OF INTERNATIONAL 11

FINANCIAL INSTITUTIONS IN
THE CREATION OF GLOBAL
ECONOMY
International Financial Institution (IFIS)
• It is chartered by more than one country and
therefore are subjects to international law.
• Its owners or shareholders are generally national
governments, although other international
institutions and other organizations occasionally
figure as shareholders.
ROLE OF INTERNATIONAL 12

FINANCIAL INSTITUTIONS IN
THE CREATION OF GLOBAL
ECONOMY
International Financial Institution (IFIS)
• The most prominent IFIS are creations of multiple
nations, although some bilateral financial
Institutions (created by two countries) exist and are
technically IFIs.
• The best known IFls were established after World
War II to assist in the reconstruction of Europe and
provide mechanisms for international cooperation
in managing the global financial system.
ROLE OF INTERNATIONAL 13

FINANCIAL INSTITUTIONS IN
THE CREATION OF GLOBAL
ECONOMY
International Financial Institution (IFIS)
• Today, the world's largest IFI is the European Investment
Bank:
1. with a balance sheet size of €573 billion in
2016.
2. This compares to the two components of the World
Bank, the IBRD (assets of $358 billion in 2014)
3. and the IDA (assets of $183 billion in 2014).
• For comparison, the largest commercial banks each have
assets of $2,000-3,000 billion.
ROLE OF INTERNATIONAL 14

FINANCIAL INSTITUTIONS IN
THE CREATION OF GLOBAL
ECONOMY
The International Financial Institutions (IFIS) are:
1. International Monetary Fund (IMF)
2. Multilateral Development Banks (MDB) which include:
a. World Bank Group
b. African Development Bank
c. Asian Development Bank
d. Inter-American Development Bank
e. European Bank for Reconstruction and Development
ROLE OF INTERNATIONAL 15

FINANCIAL INSTITUTIONS IN
THE CREATION OF GLOBAL
ECONOMY
• The last four (4) of these each focus on a single
world region and thus are often called Regional
Development Banks (RDB).
• Global in scope are International Monetary Fund
and the World Bank.
• They are also specialized agencies in the United
Nation system but are governed independently of it.
ROLE OF INTERNATIONAL
16
FINANCIAL INSTITUTIONS IN
THE CREATION OF GLOBAL
ECONOMY
MEMBERSHIP COMPOSITION OF IFIS:
× only sovereign countries are admitted as member-owner
× broad country membership to include borrowing
developing countries and developed donor countries
× membership in regional development banks include
countries around the world as members (not limited to
countries from the region)
× has its own independent legal and operational states
ROLE OF INTERNATIONAL
17
FINANCIAL INSTITUTIONS IN
THE CREATION OF GLOBAL
ECONOMY
MAIN OBJECTIVES:
1. IMF provides temporary financial
assistance to member countries to help
ease balance of payments adjustments.
ROLE OF INTERNATIONAL
18
FINANCIAL INSTITUTIONS IN
THE CREATION OF GLOBAL
ECONOMY
MAIN OBJECTIVES:
2. MDBS provide financing for development to
developing countries through:
 long term loans (with maturities of up to 20
years) at interest rates way below market rates.
Funding comes from international capital
markets and relend to borrowing government
in developing countries.
ROLE OF INTERNATIONAL
19
FINANCIAL INSTITUTIONS IN
THE CREATION OF GLOBAL
ECONOMY
MAIN OBJECTIVES:
 very long-term loans (sometimes called credits
with maturities of 30 40 years) at interest rates
below market rates. Funding for loans come
from direct contributions by government in the
donor countries.
 Grant financing by some MDBs for technical
assistance advisory service or project
preparation.
ROLE OF INTERNATIONAL
20
FINANCIAL INSTITUTIONS IN
THE CREATION OF GLOBAL
ECONOMY
• All IFIS are active in supporting programs
that are for the global economy - in
addition to their primary role of financing
and providing technical assistance to
programs at the country level.
 21

HISTORY OF GLOBAL
MARKET INTEGRATION IN
THE TWENTIETH CENTURY
• Labor market integration occurred between
1882 and 1936 in an area of Asia stretching
from South India to South-eastern China
and encompassing the three Southeast
Asian countries of Burma, Malaya and
Thailand.
 22

HISTORY OF GLOBAL
MARKET INTEGRATION IN
THE TWENTIETH CENTURY
• By the late nineteenth century, globalization, of which a
principal feature was the mass migration nineteenth century,
globalization of which a principal feature was the mass
migration of Indians and Chinese to Southeast Asia, gave rise
to both an integrated Asian labor market and a period of real
wage convergence. Integration did not, however, extend
beyond Asia to include core industrial countries. Asian and
core areas, in contrast to globally integrated commodity
markets, showed divergent trends in unskilled real wages.
 23

HISTORY OF GLOBAL
MARKET INTEGRATION IN
THE TWENTIETH CENTURY
• By the 1880s steamships had largely
replaced sailing vessels for transport within
Asia as well as to Western markets, and
shipping fares had begun to fall sharply.
 24

HISTORY OF GLOBAL
MARKET INTEGRATION IN
THE TWENTIETH CENTURY
• Also, already underway was the mass migration of
Indian and Chinese workers, principally from the
labor-abundant areas of Madras in India and the
provinces of Kwangtung (Guangdong) and Fukien
(Fujian) in Southeastern China, to land-abundant
but labor-scarce parts of Asia.
 25

HISTORY OF GLOBAL
MARKET INTEGRATION IN
THE TWENTIETH CENTURY
• Chief among the immigrant-receiving countries
were Burma, Malaya and Thailand (Siam) in
Southeast Asia.
• Indian and Chinese labor inflows to these countries
constituted the bulk of two of three main late
nineteenth- and early twentieth-century global
migration movements, the other being European
immigration to the New World.
 26

HISTORY OF GLOBAL
MARKET INTEGRATION IN
THE TWENTIETH CENTURY
• Immigration to Southeast Asia was almost entirely in
response to its growing demand for workers which in turn
derived from rapidly expanding demand in core industrial
countries for Southeast Asian exports.
• Studies by Latham and Neal (1983) and by Brandt (1985,
1989) established the development of an integrated Asian
rice market beginning in the latter part of the nineteenth
century.
 27

GLOBAL CORPORATION
• While many use "global" in the same way as
international when it comes describing a business,
some analysts make distinctions between how each
operates.
• On a basic level, a global corporation is one that
operates in more than one country.
• Particularly in the United States, the term can mean
different things to different contexts, with the
characteristics of a global corporation varying
accordingly.
 28

GLOBAL CORPORATION
• Business analysts and academics, such as the
ground-breaking Michael Porter at Harvard
University, defined global businesses more
narrowly and distinguish them from other
operations overseas.
• He defined a global business as one that maintains a
strong headquarters in one country, but has
investments in multiple foreign locations.
 29

GLOBAL CORPORATION
• Such investments may involve direct investments in
foreign assets, such as manufacturing facilities or
sales offices.
• The headquarters generally is its home country,
though some moves to more favorable regulatory or
taxation locations over time.
• Global corporations strive to create economies of
scale by selling the same products in multiple
locations and limiting local customization.
 30

GLOBAL CORPORATION
• In the world of finance and investment, a global
corporation is one that has significant investments
and facilities in multiple countries but lacks a
dominant headquarters.
• Global corporations are governed by the laws of the
country where they are incorporated.
 31

GLOBAL CORPORATION
• A global business connects its talents, resources and
opportunities across political boundaries.
• Because a global corporation is more invested in its
overseas locations, it can be more sensitive to local
opportunities -- and also more vulnerable to threats.
• A company that does business in Africa, for
example, might find itself dealing with the
implication from a local Ebola outbreak as well as
its commercial operations.
 32

GLOBAL CORPORATION
• In contrast, an international company is one that has
a headquarters, for example in the United States,
but also does business overseas and might have a
large presence in multiple areas.
• Such company would be governed by U.S.
regulations, assuming its headquarters remain in
U.S., but may also have foreign subsidiaries such as
the Philippines which is governed by local laws.
 33
GLOBAL INTERSTATE
SYSTEM
• World-systems are defined by the existence of a
division of labor.
• The modem world-system has a multi-state political
structure (the interstate Hem) and therefore its
division of labor is international division of labor.
• In the modern world-system, the division of labor
consists of three zones according to the prevalence
of profitable industries or activities: core, semi
periphery, and periphery.
 34
GLOBAL INTERSTATE
SYSTEM
• Countries tend to fall into one or another of these
interdependent zones core countries, semi-
periphery countries and the periphery countries.
• Resources are redistributed from the
underdeveloped, typically raw materials-exporting
poor part of the world (the periphery) to developed,
industrialized core.
 35
GLOBAL INTERSTATE
SYSTEM
• World-systems, past world-systems and the modern
world-systems, have temporal features.
• Cyclical rhythms represent the short-term
fluctuation of economy, while secular trends mean
deeper long run tendencies, such as general
economic growth or decline.
 36
GLOBAL INTERSTATE
SYSTEM
• The term contradiction means a general controversy
in the system, usually concerning some short term
vs. long term trade-offs.
• For example, the problem of under consumption,
wherein the drive-down of wages increases the
profit for the capitalists on the short-run, but
considering the long run, the decreasing of wages
may have a crucially harmful effect by reducing the
demand for the product.
 37
GLOBAL INTERSTATE
SYSTEM
• The last temporal feature is the crisis: a crisis
occurs if a constellation of circumstances brings
about the end of the system.
• The world-systems theory stresses that world-
systems (and not nation States) should be the basic
unit of social analysis.
• Thus we should focus not on individual states, but
on the relations between their groupings (core,
semi-periphery, and periphery).
 38

GLOBAL GOVERNANCE
• This term global governance is sometimes referred
to as world governance.
• Global is a movement towards political cooperation
among transnational actors, negotiating responses
to problems that affect more than one state or
region.
• Institutions of global governance-the United
Nations, the International Criminal Court, the
World Bank, etc. -tend to have limited or
demarcated power to enforce compliance.
 39

GLOBAL GOVERNANCE
• The modern question of world governance exists in
the context of globalization and globalizing regimes
of power: politically, economically and culturally.
• In response to the acceleration of worldwide
interdependence, both between human societies and
between humankind and the biosphere, the term
"global governance" may mean the process of
designating laws, rules, or regulations intended for
a global scale.
 40

GLOBAL GOVERNANCE
• Global governance is not a singular system. There
is no "world government" but the many different
regimes of global governance do have
commonalities.
• While the contemporary system of global political
relations is not integrated, the relation between the
various regimes of global governance is not
insignificant, and the system does have a common
dominant organizational form.
 41

GLOBAL GOVERNANCE
• The dominant mode of organization today is
bureaucratic rational – regularized and codified.
• It is common to all modern regimes of political
power and frames the transition from classical
sovereignty to what David Held describes as the
second regime of sovereignty - liberal international
sovereignty.
 42

EFFECTS OF GLOBALIZATION
GOVERNANCE
• According to the disciplining hypothesis,
globalization restrains governments by inducing
increased budgetary pressure.
• As a consequence, governments may attempt to
curtail the welfare state, which is often seen as a
drag on international competitiveness, by reducing
especially their expenditures on transfers and
subsidies.
 43

EFFECTS OF GLOBALIZATION
GOVERNANCE
• This globalization-induced welfare state
retrenchment is potentially mitigated by
citizens' preferences to be compensated for
the risks of globalization ("compensation
hypothesis").
 44

WORLD SYSTEM
• World system deals with inter-regional and
transnational division of labor, which divides the
world into core countries, semi-periphery countries,
and the periphery countries.
• Core countries focus on higher skill, capital-
intensive production, and the rest of the world
focuses on low-skill, labor-intensive production and
extraction of raw materials.
 45

WORLD SYSTEM
• This constantly reinforces the dominance of the
core countries.
• Nonetheless, the system has dynamic
characteristics, in part as a result of revolutions in
transport technology, and individual states can gain
or lose their core (semi-periphery, periphery) status
over time.
 46

WORLD SYSTEM
• This structure is unified by the division of labor.
• It is a world-economy rooted in a capitalist
economy.
• For a time, certain countries become the world
hegemon; during the last few centuries, as the
world-system has extended geographically and
intensified economically, this status has passed from
the Netherlands, to the United Kingdom and (most
recently) to the United States.
 47

WORLD SYSTEM THEORY

• This theory is also known as world-systems
analysis or would systems perspectives.
• World system theory is a multidisciplinary, macro
scale approach to world history and social change
which emphasizes the world-system (and not nation
states) as the primary (but not exclusive) unit of
social analysis.
 48

INSTITUTIONS THAT GOVERN

INTERNATIONAL RELATIONS
• Refer to the module …
 49

INTERNATIONALISM VERSUS
GLOBALIZATION
• INTERNATIONALIZATION refers to the
increasing importance of international trade
international relations, treaties, alliances, etc.
• International, means between or among nations.
• The basic unit remains the nation, even as relations
among nations become increasingly necessary and
important.
 50

INTERNATIONALISM VERSUS
GLOBALIZATION
• GLOBALIZATION refers to global economic integration
of many formerly national economies into one global
economy, mainly by free trade and free capital mobility, but
also by easy or uncontrolled migration.
• It is the effective erasure of national boundaries for
economic purposes. International trade (governed by
comparative advantage) becomes interregional trade
(governed by absolute advantage).
• What was many, becomes one.
 51

INTERNATIONALISM VERSUS
GLOBALIZATION
• The very word "integration" was derived from
"integer", meaning "one," "complete," or "whole."
• Integration is the act of combining into one whole.
• Since there can be only one whole, only one unity
with reference to which parts are integrated, it
follows that global economic integration logically
implies national economic disintegration.
 52

INTERNATIONALISM VERSUS
GLOBALIZATION
• By disintegration it does not mean that the productive
plant of each country is annihilated, but rather that its
parts are torn out of their national context (dis-
integrated), in order to be reintegrated into the new
whole, the globalized economy.
• As the saying to make an omelette you have to break
some eggs."
• The disintegration of the national egg is necessary to
integrate the global omelette.
 53

INTERNATIONALISM VERSUS
GLOBALIZATION
• In the classical nineteenth-century vision of
Smith and Ricardo (2016) the national
community embraced both national labor
and national capital, and these classes
cooperated, albeit with conflict, to produce
national goods largely with national natural
resources.
 54

INTERNATIONALISM VERSUS
GLOBALIZATION
• These national goods then competed in
international markets against the goods of
other nations, produced by their own
national capital/labor teams using their own
resources.
• This is internationalization as defined above.
 55

INTERNATIONALISM VERSUS
GLOBALIZATION
• In the globally integrated world of the late twentieth
century, however, both capital and goods are free to
move internationally.
• One little-noticed, but important consequence of free
capital mobility is to totally undercut Ricardo's
comparative advantage argument for free trade in
goods, because that argument was explicitly and
essentially premised on capital being immobile
between nations.
 56

INTERNATIONALISM VERSUS
GLOBALIZATION
• But the conventional wisdom seems to be that if free
trade in goods is beneficial, then free trade in capital
must be even more beneficial!
• In any case, it doesn't longer make sense to think of
national teams of labor and capital in the globalized
economy.
• Instead, global capitalists competing with each other
for both laborers and natural resources, as well as
markets, in all countries.
 57

CONTEMPORARY GLOBAL
GOVERNANCE
• Global governance or world governance is a
movement towards political cooperation among
transnational actors, aimed at negotiating responses
to problems that affect more than one state or
region.
• Institutions of global governance-the United
Nations, the International Criminal Court, the
World Bank, etc. – have limited or demarcated
power to enforce compliance.
 58

CONTEMPORARY GLOBAL
GOVERNANCE
• The modern question of world governance exists in the
context of globalization and globalizing regimes of
power: politically, economically and culturally. In
response to the acceleration of worldwide
interdependence, both between human societies and
between humankind and the biosphere, the term "global
governance" may name the process of designating laws,
rules, or regulations intended for a global scale.
 59

CONTEMPORARY GLOBAL
GOVERNANCE
• Global governance is not a singular
system. There is no "world government"
but the many different regimes of global
governance do have commonalities.
 60

THE UNITED NATIONS (UN)

MAIN FUNCTIONS:
 The main function of UN is to maintain
peace and security for all of its member
states.
 The UN does not have its own military
but it has peacekeeping force which are
supplied by the member states.
 61

THE UNITED NATIONS (UN)

MAIN FUNCTIONS:
 On approval of the UN Security Council,
these peacekeepers are often sent to regions
where armed conflict has recently ended to
discourage combatants from resuming
fighting.
 In 1988, the peacekeeping force won a
Nobel Peace Prize for its actions.
 62

THE UNITED NATIONS (UN)

Other functions of UN:
 The UN aims to protect human rights
and provide humanitarian assistance
when needed. In 1948, the General
Assembly adopted the Universal
Declaration of Human Rights as a
standard for its human rights operations.
 63

THE UNITED NATIONS (UN)

Other functions of UN:
 The UN currently provides technical assistance
in elections, helps to improve judicial structures
and draft constitutions, trains human rights
officials, and provides food, drinking water,
shelter, and other humanitarian services to
peoples displaced by famine, war, and natural
disaster.
 64

THE UNITED NATIONS (UN)

• The UN plays an integral part in social
and economic development through its
UN Development Program.
• This is the largest source of technical
grant assistance in the world.
 65

THE UNITED NATIONS (UN)

• In addition, the World Health
Organization, UNAIDS, The Global
Fund to Fight AIDS, Tuberculosis, and
Malaria, the UN Population Fund, and
the World Bank Group to name a few
play an essential role in this aspect of
the UN as well.
 66

THE UNITED NATIONS (UN)

• The UN also annually publishes the
Human Development Index to rank
countries in terms of poverty, literacy,
education, and life expectancy:
 to investigate any dispute or
situation which might lead to
international friction;
 67

THE UNITED NATIONS (UN)

 to recommend methods of adjusting such
disputes or the terms of settlement;
 to formulate plans for the establishment of a
system to regulate armaments;
 to determine the existence of a threat to the
peace or act of aggression and to
recommend what action should be taken;
 68

THE UNITED NATIONS (UN)

 to call on members to apply
economic sanctions and other
measures not involving the use of
force to prevent or stop aggression;
 to take military action against an
aggressor;
 69

THE UNITED NATIONS (UN)

 to recommend the admission of new
members;
 to recommend to the General
Assembly the appointment of the
Secretary-General and, together with
the Assembly, to elect the Judges of
the International Court of Justice.
 70

THE UNITED NATIONS (UN)

ROLE OF UN TODAY AND THE
FUTURE
• For the future, the UN has established
what it calls its Millennium
Development Goals.
 71

THE UNITED NATIONS (UN)

ROLE OF UN TODAY AND THE
FUTURE
• Most of its member states and various
international organizations have all agreed to
achieve these goals relating to reducing poverty,
child mortality, fighting diseases and epidemics,
and developing a global partnership in terms of
international development by 2015.
 72

THE UNITED NATIONS (UN)

ROLE OF UN TODAY AND THE
FUTURE
• Some member states have achieved a number of
the agreement's goals while others have reached
none. However, the UN has been successful over
the years and only the future can tell how the
true realization of these goals will play he out.
• The above functions are embodied in the UN
charter.
 73

THE UNITED NATIONS (UN)

THE UN GENERAL ASSEMBLY
• The UN General Assembly was established in
1945 under the UN Charter.
• The General Assembly occupies a central
position as the chief deliberative, policymaking
and representative organ of the United Nations.
 74

THE UNITED NATIONS (UN)

THE UN GENERAL ASSEMBLY
• It provides a unique forum for
multilateral discussion of the full
spectrum of international issues covered
by the Charter. the codification of
international law.
• The Assembly meets in regular session .
 75

THE UNITED NATIONS (UN)

THE UN GENERAL ASSEMBLY
• It also plays a significant role in the
process of standard-setting and
intensively from September to
December each year, and thereafter as
required.
 76

THE UNITED NATIONS (UN)

FUNCTIONS AND POWERS OF THE
UN GENERAL ASSEMBLY
• Consider and make recommendations on
the general principles of cooperation for
maintaining international peace and
security, including disarmament;
 77

THE UNITED NATIONS (UN)

FUNCTIONS AND POWERS OF THE
UN GENERAL ASSEMBLY
• Discuss any question relating to
international peace and security and,
except where a dispute or situation is
currently being discussed by the
Security Council, make
recommendations on it;
 78

THE UNITED NATIONS (UN)

FUNCTIONS AND POWERS OF THE
UN GENERAL ASSEMBLY
• Discuss, with the same exception, and
make recommendations on any question
within the scope of the Charter or
affecting the powers and functions of
any organ of the United Nations;
 79

THE UNITED NATIONS (UN)

FUNCTIONS AND POWERS OF THE UN
GENERAL ASSEMBLY
• Initiate studies and make recommendations to promote
international political cooperation, the development
and codification of international law, the realization of
human rights and fundamental freedoms, and
international collaboration in the economic, social,
humanitarian, cultural, educational and health fields;
 80

THE UNITED NATIONS (UN)

FUNCTIONS AND POWERS OF THE
UN GENERAL ASSEMBLY
• Make recommendations for the peaceful
settlement of any situation that might
impair friendly relations among nations;
• Receive and consider reports from the
Security Council and other United
Nations organs;
 81

THE UNITED NATIONS (UN)

FUNCTIONS AND POWERS OF THE
UN GENERAL ASSEMBLY
• Consider and approve the United
Nations budget and establish the
financial assessments of member states;
 82

THE UNITED NATIONS (UN)

FUNCTIONS AND POWERS OF THE
UN GENERAL ASSEMBLY
• Elect the non-permanent members of the
Security Council and the members of
other United Nations councils and
organs and, on the recommendation of
the Security Council, appoints the
Secretary-General.
 83

THE UNITED NATIONS (UN)

MEMBERSHIP IN THE UNITED
NATIONS
• Today (2018), almost every fully recognized
independent states are member states in the UN.
• As outlined in the UN Charter, to become a
member of the UN a state must accept peace and
all obligations outlined in the Charter and
willing to carry out any action to satisfy those
obligations.
 84

THE UNITED NATIONS (UN)

MEMBERSHIP IN THE UNITED
NATIONS
• The final decision on admission to the
UN is carried out by the General
Assembly after recommendation by the
Security Council.
CHALLENGES OF GLOBAL 85

GOVERNMENT IN THE 21ST

CENTURY
• On June 13, 2016, The Hague Institute
welcomed Irina Bokova, Director
General of UNESCO to speak on
"Challenges of Global Governance in
the 21st Century" as part of the ongoing
Distinguished Speaker Series at its
Institute.
CHALLENGES OF GLOBAL 86

GOVERNMENT IN THE 21ST

CENTURY
• Bokova noted that while new
technologies have created new pathways
to prosperity, trade and inter-cultural
dialogue, the increasing fragmentation
of the international community is a
cause for concern.
CHALLENGES OF GLOBAL 87

GOVERNMENT IN THE 21ST

CENTURY
• Climate change, poverty, violent
conflict, intolerance and extremism
present direct threats to the unity and
well-being of the international
community.
CHALLENGES OF GLOBAL 88

GOVERNMENT IN THE 21ST

CENTURY
• Bokova emphasized that we must learn,
at the heart of our cities and
communities to live together.
• The Hague Institute's recent report on
the role of cities in conflict prevention is
a good example of how to develop
innovative and sustainable practices to
foster communal harmony.
CHALLENGES OF GLOBAL 89

GOVERNMENT IN THE 21ST

CENTURY
• Bokova also observed that the alarming
number of individuals displaced by
conflict, which reached a record high in
2015, continues to put pressure on
countries across the globe.
CHALLENGES OF GLOBAL 90

GOVERNMENT IN THE 21ST

CENTURY
• Migration to Europe has put core values to
the test, while the capacities of receiving
states in the Middle East, like Lebanon and
Jordan, are being pushed to the limit.
• Attacks on cultural rights and cultural
heritage particularly in Syria, Iraq and Mali,
threaten inter-cultural tolerance.
CHALLENGES OF GLOBAL 91

GOVERNMENT IN THE 21ST

CENTURY
• Bokova suggested three points to
address these challenges:
1. Openness of mind and out-of-the-box
thinking is crucial. New ideas must be
transformed into norms.
CHALLENGES OF GLOBAL 92

GOVERNMENT IN THE 21ST

CENTURY
2. The international community must
build resilient societies.
3. Urged new thinking about
peacebuilding.
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• In the same topic, Paul Collier (2018),
an economist has addressed the plight of
the poorest of the world's poor (those
living or less than $7.25 a day according
to him), in his award-winning book,
"The Bottom Billion."
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• In his talk, Collier argues "a billion
people have been stuck living in
economies and have been stagnant for
40 years, and hence diverging from the
rest of mankind."
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• He says that we can and should help
alleviate their suffering through an alliance
of compassion and enlightened self-interest;
compassion because we are looking at a
human tragedy, and enlightened self-interest
because the combination of economic
divergence and global social integration
"will build a nightmare for our children."
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• Collier argues that this is doable because
we've done it before, and he points to
U.S. efforts in the late 1940s and 1950s
to rebuild Western Europe to prevent it
from falling into the Soviet bloc.
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There were four components of post-war
U.S. assistance: aid, trade, Security, and
governments.
1. First, there was the 1948 Marshall Plan-
a massive injection of foreign aid.
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2. Second, the United States reversed its
pre-war protectionist trade policies,
opening up its markets to Western
Europe and institutionalizing trade
liberalization.
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3. Third, the United States reversed its
security policy, shifting from pre-war
isolation to a massive military presence
in Western Europe and other parts of
the world.
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4. The United States tore up its "Eleventh
Commandment-national sovereignty-and pursued an
aggressive internationalist policy, becoming
instrumental in the founding of the United Nations
(UN), the Organization for Economic Cooperation
and Development (OECD), and the International
Monetary Fund (IMF), and, according to Collier,
also encouraging the creation of the European
Community.
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Refer to the module …
 102

RELEVANCE OF THE STATE

AMIDST GLOBALIZATION
• Some questions are asked:
 Are States still relevant in a
phenomenon of globalization?
 How important is the State in the
contemporary era of globalization?
 103

RELEVANCE OF THE STATE

AMIDST GLOBALIZATION
• Ali Wayne (April 27, 2009) an
economist-writer scholar, these
questions had been discussed for a long
time.
 104

RELEVANCE OF THE STATE

AMIDST GLOBALIZATION
• John Herz argued in 1957 that the state
would become irrelevant because of its
inability to defend against nuclear
attack.
• Johan Galtung predicted ten years later
that it would disappear as individuals
began to develop identities at levels
below and beyond that of the state.
 105

RELEVANCE OF THE STATE

AMIDST GLOBALIZATION
• The Economist countered in 1995 that
the state "may have more durability than
people realize, because it is still the sole
possessor of what is needed to be that
basic unit."
 106

RELEVANCE OF THE STATE

AMIDST GLOBALIZATION
• A rough dichotomy has emerged amidst
this surge of interest.
• There are those who see the world as
"flat," "borderless" and "weightless," to
cite but a few of the familiar
formulations.
 107

RELEVANCE OF THE STATE

AMIDST GLOBALIZATION
• They argue that the state is irrelevant
because it cannot keep pace with
economic forces.
• Then there are the critics who assert that
the state is relevant because it can
influence the direction that those forces
take.
 108

RELEVANCE OF THE STATE

AMIDST GLOBALIZATION
• In an April 2008 report, the International
Monetary Fund (IMF) noted that, "The
highest likelihood of a single default and the
likely number of defaults in the event of a
single default in the group - a measure of
contagion risk within the global banking
system - have both risen significantly
[between 2007 and 2008]."
 109

RELEVANCE OF THE STATE

AMIDST GLOBALIZATION
• Today's financial crisis does little to
inspire confidence in the state's ability. It
has resulted in the destruction of over
$50 trillion in wealth equal to 71% of
last year's world output.