Iv – Groupe de travail : Mondialisation/Délocalisation IV – Gruppo di lavoro : Mondializzazione/Delocalizzazione. Globalization/De-Localization Andrzej Potocki



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IV – Working Group : Globalisation/Delocalization.

IV – Groupe de travail : Mondialisation/Délocalisation.

IV – Gruppo di lavoro : Mondializzazione/Delocalizzazione.

Globalization/De-Localization

Andrzej Potocki – rapporteur (SD) – Poland

Bruxelles, 11-12/11/2010

4ème Congrès

Congresso

4th Congress

Andrzej Potocki

Stronnictwo Demokratyczne – The Alliance of Democrats

International Secretary

GLOBALIZATION / DE-LOCALIZATION

Report of the EPD Working Group

a good part of globalization consists of an enormous variety of micro-processes that begin to denationalize what had been constructed as national — whether policies, capital, political subjectivity, urban spaces, temporal frames, or any other of a variety of dynamics and domains… (Saskia Sassen, Territory, Authority, Rights…)



  1. The definitions and descriptions

Globalization describes a process by which regional economies, societies, and cultures have become integrated through a global network of communication, transportation, and trade. The term is sometimes used to refer specifically to economic globalization: the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology. However, globalization is usually recognized as being driven by a combination of economic, technological, socio-cultural, political, and biological factors. The term can also refer to the transnational circulation of ideas, languages, or popular culture through acculturation.

Globalization as the international system replaced the Cold War system. It relies on two principles:

Firstly, the idea that freedom, human rights and democracy are the most efficient means of sustaining growth and development.

Secondly, globalization implies a panel of policies based on the Washington consensus: fiscal discipline, a redirection of public expenditure priorities toward fields offering both high economic returns and the potential to improve income distribution, such as primary health care, primary education, and infrastructures, tax reform, interest rate liberalization, a competitive exchange rate, trade liberalization, liberalization of inflows of foreign direct investment, privatization, deregulation (to abolish barriers to entry and exit), secure property rights and so on.

In short, globalization is the integration of democracy, legal reforms, capital, technology, and information across national borders, in a way that is creating a single global market and a global village. As a result, there is an increase in global wealth: by 1950 world GDP was about $4, 000 billion. Today, it accounts for more than $13, 800 trillion.

What is more, globalization also means a shift and the entrance in the informative age.

The word 'globalization' was first employed in 1930, to denote a holistic view of human experience in education. An early description of globalization was penned by the American entrepreneur-turned-minister Charles Taze Russell who coined the term 'corporate giants' in 1897, although it was not until the 1960s that the term began to be widely used by economists and other social scientists. The term has since then achieved widespread use in the mainstream press by the latter half of the 1980s. Since its inception, the concept of globalization has inspired numerous competing definitions and interpretations, with antecedents dating back to the great movements of trade and empire across Asia and the Indian Ocean from the 15th century onwards.

The United Nations ESCWA has written that globalization ‘is a widely-used term that can be defined in a number of different ways. When used in an economic context, it refers to the reduction and removal of barriers between national borders in order to facilitate the flow of goods, capital, services and labour. . . although considerable barriers remain to the flow of labour. . . Globalization is not a new phenomenon. It began in the late nineteenth century, but it slowed down during the period from the start of the First World War until the third quarter of the twentieth century. This slowdown can be attributed to the inward-looking policies pursued by a number of countries in order to protect their respective industries. . . however, the pace of globalization picked up rapidly during the fourth quarter of the twentieth century. . . ’

Tom J. Palmer of the Cato Institute defines globalization as ‘the diminution or elimination of state-enforced restrictions on exchanges across borders and the increasingly integrated and complex global system of production and exchange that has emerged as a result. ’

Thomas L. Friedman has examined the impact of the ‘flattening’ of the world, and argues that globalized trade, outsourcing, supply-chaining, and political forces have changed the world permanently, for both better and worse. He also argues that the pace of globalization is quickening and will continue to have a growing impact on business organization and practice.

Noam Chomsky argues that the word globalization is also used, in a doctrinal sense, to describe the neoliberal form of economic globalization.

Herman E. Daly argues that sometimes the terms internationalization and globalization are used interchangeably but there is a significant formal difference. The term ‘internationalization’ (or internationalisation) refers to the importance of international trade, relations, treaties etc. owing to the (hypothetical) immobility of labour and capital between or among nations.

Takis Fotopoulos argues that globalization is the result of systemic trends manifesting the market economy's grow-or-die dynamic, following the rapid expansion of transnational corporations. Because these trends have not been offset effectively by counter-tendencies that could have emanated from trade-union action and other forms of political activity, the outcome has been globalisation. This is a multi-faceted and irreversible phenomenon within the system of the market economy and it is expressed as: economic globalisation, namely, the opening and deregulation of commodity, capital and labour markets which led to the present form of neoliberal globalisation, political globalisation, i. e. , the emergence of a transnational elite and the phasing out of the all powerful-nation state of the statist period, cultural globalisation, i. e. , the worldwide homogenisation of culture, ideological globalisation, technological globalisation, social globalisation.


  1. Globalization Results in De-localization

Many of the activities that previously involved face-to-face interaction, or that were local, are now conducted across great distances. There has been a significant de-localization in social and economic exchanges. Activities and relationships have been uprooted from local origins and cultures. One important element in this has been the separation of work from the home (and the classic move to the suburbs - see Putnam's discussion of the impact on this on local social relations). But de-localization goes well beyond this. Increasingly people have to deal with distant systems in order that they may live their lives. Banking and retailing, for example, have adopted new technologies that involve people in less face-to-face interaction. Your contact at the bank is in a call centre many miles away, when you buy goods on the internet the only person you might speak to is the delivery driver. In this last example we move beyond simple notions of distance and territory into a new realm. When we buy books from an internet supplier like Amazon our communications pass through a large number of computers and routers and may well travel thousands of miles, the computers taking our orders can be on a different continent, and the books can be located anywhere in the world. The 'spaces' we inhabit when using the internet to buy things or to communicate (via things like chatrooms and bulletin boards) can allow us to develop a rather different sense of place and of the community to which we belong.

Not everything is global, of course. Most employment, for example, is local or regional - but 'strategically crucial activities and economic factors are networked around a globalized system of inputs and outputs'. What happens in local neighbourhoods is increasingly influenced by the activities of people and systems operating many miles away. For example, movements in the world commodity and money markets can have a very significant impact upon people's lives across the globe. People and systems are increasingly interdependent.



  1. The Effects of Globalism

Various aspects of globalization affect the world in several different ways:

Industrial - emergence of worldwide production markets and broader access to a range of foreign products for consumers and companies. Particularly movement of material and goods between and within national boundaries. International trade in manufactured goods increased more than 100 times (from $95 billion to $12 trillion) in the 50 years since 1955. China's trade with Africa rose sevenfold during 2000-07 alone.

Financial - emergence of worldwide financial markets and better access to external financing for borrowers. By the early part of the 21st century more than $1. 5 trillion in national currencies were traded daily to support the expanded levels of trade and investment. As these worldwide structures grew more quickly than any transnational regulatory regime, the instability of the global financial infrastructure dramatically increased, as evidenced by the Financial crisis of 2007–2010.

Economic - realization of a global common market, based on the freedom of exchange of goods and capital. The interconnectedness of these markets, however, meant that an economic collapse in one area could impact other areas. With globalization, companies can produce goods and services in the lowest cost location. This may cause jobs to be moved to locations that have the lowest wages, least worker protection and lowest health benefits. For industrial activities this may cause production to move to areas with the least pollution regulations or worker safety regulations.

Health Policy - On the global scale, health becomes a commodity. In developing nations under the demands of Structural Adjustment Programs, health systems are fragmented and privatized. Global health policy makers have shifted during the 1990s from United Nations players to financial institutions. The result of this power transition is an increase in privatization in the health sector. This privatization fragments health policy by crowding it with many players with many private interests. These fragmented policy players emphasize partnerships and specific interventions to combat specific problems (as opposed to comprehensive health strategies). Influenced by global trade and global economy, health policy is directed by technological advances and innovative medical trade. Global priorities, in this situation, are sometimes at odds with national priorities where increased health infrastructure and basic primary care are of more value to the public than privatized care for the wealthy.

Political - some use ‘globalization’ to mean the creation of a world government which regulates the relationships among governments and guarantees the rights arising from social and economic globalization. Politically, the United States has enjoyed a position of power among the world powers, in part because of its strong and wealthy economy. With the influence of globalization and with the help of The United States’ own economy, the People's Republic of China has experienced some tremendous growth within the past decade. If China continues to grow at the rate projected by the trends, then it is very likely that in the next twenty years, there will be a major reallocation of power among the world leaders. China will have enough wealth, industry, and technology to rival the United States for the position of leading world power.

Informational - increase in information flows between geographically remote locations. Arguably this is a technological change with the advent of fibre optic communications, satellites, and increased availability of telephone and Internet.

Language - the most popular first language is Mandarin (845 million speakers) followed by Spanish (329 million speakers) and English (328 million speakers). However the most popular second language is undoubtedly English, the ‘lingua franca’ of globalization: About 35% of the world's mail, telexes, and cables are in English. Approximately 40% of the world's radio programs are in English. About 50% of all Internet traffic uses English.

Competition - Survival in the new global business market calls for improved productivity and increased competition. Due to the market becoming worldwide, companies in various industries have to upgrade their products and use technology skilfully in order to face increased competition.

Ecological - the advent of global environmental challenges that might be solved with international cooperation, such as climate change, cross-boundary water and air pollution, over-fishing of the ocean, and the spread of invasive species. Since many factories are built in developing countries with less environmental regulation, globalism and free trade may increase pollution and impact on precious fresh water resources. On the other hand, economic development historically required a ‘dirty’ industrial stage, and it is argued that developing countries should not, via regulation, be prohibited from increasing their standard of living.

Cultural - growth of cross-cultural contacts, advent of new categories of consciousness and identities which embodies cultural diffusion, the desire to increase one's standard of living and enjoy foreign products and ideas, adopt new technology and practices, and participate in a ‘world culture’. Some bemoan the resulting consumerism and loss of languages. Spreading of multiculturalism, and better individual access to cultural diversity (e. g. through the export of Hollywood). Some consider such ‘imported’ culture a danger, since it may supplant the local culture, causing reduction in diversity or even assimilation. Others consider multiculturalism to promote peace and understanding between people. A third position that gained popularity is the notion that multiculturalism to a new form of monoculture in which no distinctions exist and everyone just shift between various lifestyles in terms of music, cloth and other aspects once more firmly attached to a single culture. Thus not mere cultural assimilation as mentioned above but the obliteration of culture as we know it today.

Travel and tourism. WHO estimates that up to 500, 000 people are on planes at any one time. In 2008, there were over 922 million international tourist arrivals, with a growth of 1. 9% as compared to 2007.

Greater immigration, including illegal immigration. The IOM estimates there are more than 200 million migrants around the world today. Newly available data show that remittance flows to developing countries reached $328 billion in 2008.

Spread of local consumer products (e. g. , food) to other countries (often adapted to their culture).

Worldwide fads and pop culture such as Pokémon, Sudoku, Numa Numa, Origami, Idol series, YouTube, Orkut, Facebook, and MySpace. Accessible to those who have Internet or Television, leaving out a substantial segment of the Earth's population. Worldwide sporting events such as FIFA World Cup and the Olympic Games.

Incorporation of multinational corporations into new media.

Social - development of the system of non-governmental organisations as main agents of global public policy, including humanitarian aid and developmental efforts.

Development of a Global Information System, global telecommunications infrastructure and greater trans-border data flow, using such technologies as the Internet, communication satellites, submarine fibre optic cable, and wireless telephones.

Increase in the number of standards applied globally, e. g. , copyright laws, patents and world trade agreements.

The creation of the international criminal court and international justice movements.

Crime importation and raising awareness of global crime-fighting efforts and cooperation.

The emergence of Global administrative law.

Religious - The spread and increased interrelations of various religious groups, ideas, and practices and their ideas of the meanings and values of particular spaces. Most statistical sources make Christianity the most popular current religion worldwide, with Islam second, Hinduism third, and Buddhism fourth.


  1. Threads of globalization

Globalization has generated significant international opposition over concerns that it has increased inequality and environmental degradation, thus lowering the quality of life.

Some also view the effect of globalization on culture as a rising concern. Along with globalization of economies and trade, culture is being imported and exported as well. The concern is that the stronger, bigger countries such as the United States, may overrun the other, smaller countries' cultures, leading to those customs and values being faded away. This process is also sometimes referred to as Americanization or McDonaldization.

In many poorer nations globalization is the result of foreign businesses utilizing workers in a country to take advantage of the lower wage rates. Specifically, these policies may lead to use of child labour, forced labour, violating freedom of association, right to organize and bargain collectively, as well as the right to decent working conditions.

On the other hand those negative side-effects are partially caused by the limitations to free flow of labour.

A flood of consumer goods such as televisions, radios, bicycles, and textiles into the United States, Europe, and Japan has helped fuel the economic expansion of Asian tiger economies in recent decades. However, Chinese textile and clothing exports have recently encountered criticism from Europe, the United States and some African countries. In South Africa, some 300, 000 textile workers have lost their jobs due to the influx of Chinese goods. The increasing U. S. trade deficit with China has cost 2. 4 million American jobs between 2001 and 2008, according to a study by the Economic Policy Institute (EPI). A total of 3. 2 million – one in six U. S. factory jobs – have disappeared between 2000 and 2007.

Opportunities in richer countries drives talent away from poorer countries, leading to brain drains. Brain drain has cost the African continent over $4. 1 billion in the employment of 150, 000 expatriate professionals annually. Indian students going abroad for their higher studies costs India a foreign exchange outflow of $10 billion annually.

It is becoming increasingly difficult to maintain food security in a world beset by a confluence of ‘peak’ phenomena, namely peak oil, peak water, peak phosphorus, peak grain and peak fish. Growing populations, falling energy sources and food shortages will create the ‘perfect storm’ by 2030, according to the UK government chief scientist. He said food reserves are at a 50-year low but the world requires 50% more energy, food and water by 2030. The world will have to produce 70% more food by 2050 to feed a projected extra 2. 3 billion people and as incomes rise, the United Nations' Food and Agriculture Organisation (FAO) warned. Social scientists have warned of the possibility that global civilization is due for a period of contraction and economic re-localization, due to the decline in fossil fuels and resulting crisis in transportation and food production.

Globalization has also helped to spread some of the deadliest infectious diseases known to humans. One example of this occurring is AIDS/HIV. Due to immigration, approximately 500, 000 people in the United States are believed to be infected with Chagas disease. In 2006, the tuberculosis (TB) rate among foreign-born persons in the United States was 9. 5 times that of U. S. -born persons.

The United Nations Office on Drugs and Crime (UNODC) issued a report that the global drug trade generates more than $320 billion a year in revenues. Worldwide, the UN estimates there are more than 50 million regular users of heroin, cocaine and synthetic drugs. The international trade of endangered species is second only to drug trafficking. Traditional Chinese medicine often incorporates ingredients from all parts of plants, the leaf, stem, flower, root, and also ingredients from animals and minerals. The use of parts of endangered species (such as seahorses, rhinoceros horns, saiga antelope horns, and tiger bones and claws) has created controversy and resulted in a black market of poachers who hunt restricted animals. In 2003, 29% of open sea fisheries were in a state of collapse.


  1. The Present and the Future

We still see globalization as a problem, as a threat, as a phenomenon which is leading us to the unknown. We are aware of a possible depletion of raw materials, irreversible damage to the environment, and increase imbalance between the richest and poorest. These fears have been naturally strengthened by the shock of the current financial crisis.

The developing countries are gaining competitiveness and at the same time this implies delocalization of European companies which sometimes causes closures, therefore redundancies. However, the growth in the developing countries is opening new markets.

The delocalization is an inevitable phenomenon, but it not only has a negative side, it will depend on the way we tackle this trend to transform a risk into an opportunity.

Not everything is going to be manufactured outside Europe, in countries with low labour costs. As all those products where the key is price, will not be made in EU, we should work on the rest of the characteristics like design, technology, transport, the quality of the workforce. . . Consistently we are forced to innovate in products and services.

However, amid concerns about poor quality and higher freight costs, some big manufacturers are already moving production back to Europe or US. This process require further support. Free flow of labour will also work for further equalization of labour conditions in developed and developing countries.

Three future areas where the EU has to be ahead, so where knowledge and technology have to be applied are:



  • Life, taken in general terms: from cosmetics to biotechnology.

  • The shortage of energy and the climate change will develop not only new sources of energy but new methods of manufacturing.

  • The need and the desire of mobility. New infrastructures and new means of transport.

Politically, further support to democratization in developing countries will also build a barriers against the decrease of global poverty. It still remains a big challenge. However, between 1965 and 2008, average income almost tripled. Life expectancy in poor countries increased 20 years on average. Infant mortality rate fell by half. 37% of people in poor countries were undernourished in 1970. The figure has fallen to 18% in 2006.

Since World War II, barriers to international trade have been considerably lowered through international agreements. Elimination of some barriers include poorer countries in a world market. Main areas of policies should strengthen some of the processes promoting free trade started by GATT, as:



  • elimination of tariffs, creation of free trade zones with small or no tariffs;

  • reduced transportation costs, especially resulting from development of containerization for ocean shipping;

  • reduction or elimination of capital controls;

  • harmonization of subsidies for local businesses;

  • harmonization of intellectual property laws across the majority of states, with more restrictions;

  • supranational recognition of intellectual property restrictions.

The EU should also strengthen the efforts to support free flow of people, goods, ideas and labour. More, taking into account that globalization favours human rights and the emancipation of women, Europe should use the political and economical opportunities to promote those values. Political reform is a pre-requisite. Societies must eliminate civil war, predatory conducts, and discrimination against women and ethnic minorities. When freedom is enlarged, technical progress can be harnessed to serve the interests of poor people.

Global culture must be supported by global education. This is the only solution to gather universal and identity and to solve problems arising from ethnic diversity.

Cultural globalization, driven by communication technology and the worldwide marketing of Western cultural industries, was understood at first as a process of homogenization, as the global domination of American culture at the expense of traditional diversity. However, a contrasting trend soon became evident in the emergence of movements protesting against globalization and giving new momentum to the defence of local uniqueness, individuality, and identity. Europe should invest in people through better education and training.

What is more, as education raises, people consume more spiritual goods. This evolution authorizes a sustainable growth: Material goods use resources and bring negative externalities such as pollution. On the contrary, spiritual goods which are mainly made up of ideas, need a few resources and have only positive externalities. It means that the fight against pollution also depends on the level of education.



Further recommendations include:

  • Creation of quality jobs.

  • Meeting the EU´s 2020 objectives to cut greenhouse gas emission by 20%.

  • Increase of renewable sources of energy (20% of its needs).

  • Research & development should use 3% of GDP of Europe.



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Acknowledgments

The author wishes to express his gratitude to all members of the Working Group for their contribution. Your texts, as well as books and quotations delivered to me, are the core of this report.



I also thank all the people in EPD and IDE who supported me in the process of leading the Group and creating the report, especially Gerard Deprez, who encouraged me to take the responsibility for the WG and Flaminia Baffigo, Cristina Bruschetti and Luca Bader, who patiently assisted in all practical matters.

Warsaw, October 2010


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