The economic dimension of globalisation

Lubomír Mlčoch

Characteristics of global economy

The international trade across national, and even continental, borders in Antiquity, the discovery of the ‘New World’, and the colonial invasions of European powers in modern times resulting in the two World Wars of the 20th century, were the preceding stages in the evolution of the capitalist market economy. Globalisation is characteristic of the ‘global age’ (Radim Palouš), which brought fundamental technological innovation in communications, media, and computer technology, and the mass accessibility, affordability and acceleration of transportation on a global scale. High-speed internet connection, ‘e-money’, and a dense airway network have resulted in the Earth ‘shrinking’ and economic time accelerating to such a degree that global information exchange can now take place in ‘real time.’ It is only our generation who has perceived the world as a single whole. And Jeffrey Sachs has formulated his vision that it is only our generation who has got the chance – as the first ever – to consider eradicating poverty on a global scale.

International economy is no longer vertically divided into separate national economies, but it implies numerous levels or types of market activities that horizontally spread over a virtual area - replacing the physical geography of national borders by quasi-geography of market structures, transactional costs and information cyber-space. Finances represent a central mechanism that binds these diversified structures into an integral network – a structure in which relative prices of all goods, services and equities are established.

There are two major levers of globalization: the internationalization of production and finances.

Major channels of globalization

The central channels of globalization are direct investments and international trade. These are made possible by the intensive removal of barriers to the production, the abundance of information owing to the progress of technology, and seemingly global domination of the utilitarian ideology.

The development of information technologies & fast information transfer at low costs creates an image of global knowledge of economic protagonists about all relevant aspects of business environment. Pivotal exponents of all the mentioned globalization generators are transnational companies, which economically dominate in many ways over the sovereignty of many countries whose financial systems have increasingly been becoming parts of the transnational financial structures.

The economic internationalization trends are also to a great extent favored by international financial institutions, the IMF and the World Bank. In accordance with this, the standard of a functioning market system implies a model based on the pronounced individualism of protagonists, on marketing resolutions of as many social conflicts as possible and on marginalizing the role of the state in economic transactions.

• Multinational Corporations
• Global Markets
• Capital Markets and ‘Financialisation’ of the World

Consequences

• Labour Markets, Migration, Marginalisation and Exclusion, Brain Drain
• The Poverty Issue, Debt Cancellation, and Alternative Visions for Globalisation
• Distribution of Labour and Capital in a Globalised World

Policy for problem mitigation

• Global Regulation, Global Business Ethics, and Global Common Good

Sources

• Dembinski, P. (ed.) (2003). Economic and Financial Globalization. What the Numbers Say. New York – Geneva : United Nations.
• Drabek, Z. (2001). Globalisation under Threat. The stability of trade policy and multilateral agreements. Cheltenham : Edward Elgar.
• Globalization in Crossfire (2003). Finance & Common Good, No.15/2003.
• Globalization. Ethical and Institutional Concerns. The Pontifical Academy of Sciences, Vatican City 2001.
• Branislav Mitrović, Zoran Stefanović. Globalization and evolutionary processes in contemporary economy. Facta universitatis Series: Economics and Organization Vol. 4, No 1, 2007, pp. 21 – 27 Retrieved from http://facta.junis.ni.ac.yu/eao/eao200701/eao200701-03.pdf
• Mlčoch, L. The economic dimension of globalisation. In:Dlouhá, J., Dlouhý, J., Mezřický, V. (eds.) (2006) Globalisation and global problem. Textbook of University Cource 2005–2007. pp 11–24. Univerzita Karlova v Praze, COŽP. [index.php?title=Special:Booksources&isbn=808707601X ISBN 80-87076-01-X]. Dostupné z www <http://www.czp.cuni.cz/knihovna/globalizace.pdf>
• Stiglitz, J. (2002). Globalization and Its Discontents. W.W. Norton & Co.
• Sachs, J. (2005). The End of Poverty. London : Penguin books.