Critically assess the main drivers of the globalization process

Essay 2012 9 Pages

Business economics - Economic Policy


Table of content

1. Introduction

2. The term ‘Globalisation’

3. Main drivers of the globalisation process

4. International governance and its institutions

5. Critically assessment of international governance

6. Conclusion

7. Reference list

1. Introduction

‘The central challenge we face today is to ensure that globalization becomes a positive force for all the world’s people, instead of leaving billions of them behind in squalor’ (Annan 2000, p.6). This statement both emphasises the requirements of the globalisation process insistently and demonstrates the complexity referring to the lack in equity both between people and states. But who is responsible for justice these days in our ever changing world? This is one aspect to be considered in the course of this assignment.

The purpose of this essay is to critically assess the main drivers of the globalisation process. Therefore, the term globalisation will be defined briefly and the main drivers will be stated. The author will then focus on one main driver and will explain shortly his choice. Within the main part the major governance institutions will be introduced shortly before the chosen driver will be evaluated critically. Finally the essay will end with a concise conclusion.

2. The term ‘Globalisation’

Globalisation is an ongoing process, which dates back many years in history and occupies the hu- man race every day. It could be pragmatically seen as a process of ‘growing together’ of different markets to one global market. But this would comprehend only a part of the reality. Nevertheless, there is in fact no standard definition of the term globalisation. It differs between various points of view. According to Clarke and Dela Rama (2006, p.XV) globalisation ‘manages to encompass both a sense of explosively expanded opportunities, and massively deepening insecurities, simultane- ously integrating and fragmenting the world’. They centralise the scope of this phenomenon with its extremes. However, based on the influence on the interaction between countries and on both the national and international society, globalisation can be described as a tremendous complex entity. It is the consequence of the flow and exchange of services, goods, capital, labour and technology across international borders, even without geographical limits. (Chatterji and Gangopadhyay 2005; Dicken 2011; IMF Staff 2008).

3. Main drivers of the globalisation process

Globalisation is structurally advanced by certain driving forces, the so-called main drivers. Basically researchers differ in the amount of drivers such as Chatterji and Gangopadhyay (2005, p.1) refer to ‘seven key aspects’, whereas Johnson and Turner (2010) relate to five drivers. It will be oriented on their five main drivers in this at hand essay. These encompass accurately the wide spread of globally linked issues, which have an impact of the world’s constitution. Johnson and Turner (2010) state as follows:

- First driver is ‘The Changing Economic Paradigm - from Demand Management to Neo- liberalism’ (p.21)
- Second driver is ‘The Spread of International Governance and Regulation’ (p.23)
- Third driver is the ‘Finance and Capital Spread’ (p.24)
- Fourth driver is ‘The Diffusion of Information and Communications Technology’ (p.25)
- Fifth driver is the ‘Social and Cultural Convergence’ (p.26)

In order to conduct a precise critically assessment within the main part, it needs to be exposed what the most important driver is and why. According to Colander (2005) the aspect of strong de- velopment in technology has a great influence on the evolution of international economy. This is in some way relativised by the argumentation of Frankel (2000), who suggested technology as being a field to drive costs for particular areas such as communication and transportation constantly lower. However, Dicken (2011) pointed out that there is no single driver to be highlighted, even not the technological development. It is rather an interaction of many, in this case of all five. Hence, it can be argued that the diffusion of information and communications technology is an important aspect to be considered within the process of globalisation, but it is not the main driver to focus on. It rather strengthens the interdependences between different national economies or multinational operating companies. Thus, it simplifies operations significantly and makes it much more efficient. Although focusing on technology barely, the other drivers are essential as well. But they are all rather implications within the globalisation’s progress such as for capital, social and cultural issues. However, the spread of international governance and regulation can be considered as being the main driver. This is maintained by Brühl and Rittberger (2001). International relationships between both domestic markets and their protagonists, not only referring to economy but also to several other areas, need to be regulated. Basically limits should be defined. Hence, this governance issue can be seen as a scope or framework, in which globalisation takes place. It is an instrument, which has influenced significantly the past development of globalisation and will have a major impact on this phenomenon in future as well. Consequently the international governance is the central term to examine. Therefore the scope includes global issues as well.

4. International governance and its institutions

Referring to international governance and its upcoming critical evaluation it is useful to define briefly the deeper meaning of the term governance and to introduce major institutions. According to the Organisation for Economic Co-operation and Development (OECD), cited in Robertson (2000, p.1126), governance is ‘the exercise of economic, political and administrative authority to manage a nation’s affairs’ and its three main goals are ‘to provide the population with physical security,…to guarantee the stable reproduction of their natural environment, and…to ensure their livelihood…’ (Brühl and Rittberger 2001, p.6). The most important institutions can be visualised as per below figure:

illustration not visible in this excerpt

Figure 1. Major governance institutions in the global economy (extracted from Dicken, 2011, p.55)



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Globalisation Governance WTO World Bank United Nations Globalisation drivers




Title: Critically assess the main drivers of the globalization process