OPINION Vol.1, No.1 June 2013 - National Defence University

the establishment of the Bretton Woods institutions of International Monitory Fund (IMF) and World
Bank in 1944, and subsequently to the General Agreement on Tariff and Trade (GATT) in 1947. The
GATT's successor was the World Trade Organization (WTO) in 1995. 5 t the end of the second World
War the economic centrality went to North America from where the New York Stock Exchange (NYSE)
became the economic headquarters of the world. The end of Second World War also ushered in the
period of rivalry between two economic systems “capitalism & communism”. 6
Dimensions of Globalization
Economic Globalization. Economic globalization refers to increasing economic interdependence of
national economies across the world through a rapid increase in the cross-border movement of goods,
services, technology and capital. It can conveniently be termed as the oldest and the most enduring form
of globalization. 7
Political Globalization. Although technology is often considered the driving force behind the
globalization process, politics or 'ideology' is the main driver, because the word 'globalization' only
gained currency after the demise of communism. 8 As the conflicts between the nations intensified, there
was a growing need for lasting contacts and consultative bodies. Diplomats and embassies were the first
step in that direction, followed by an exponential growth in inter-governmental organizations and
institutions to deal with international problems. 9
Cultural Globalization. This is an important aspect of globalization which is greatly assisted by the
media and information blitz. The phenomenon referred to as the westernization of our consumption and
entertainment culture is implied by the globalization of the market economy, and thus of consumer
society. The media revolution is now so persuasive and pervasive that it can erode national cultures and
traditional values. 10
International Political Economy. This is about the inter-play of economics and politics in the world
affairs. The traditional approach to the IPE is based on three concepts i.e. Liberal, Mercantilist and
Marxist traditions. In Liberal traditions, the idea is that in a free market economy, profit will
automatically flow towards the investment where it is most profitable to invest. This is a utopian concept
and is almost oblivious to the political dimension of the Realists’ world. In Marxist, the world economy
is seen as an arena of competition, but not among states. Capitalism is the driving force in the world
economy. In the Mercantilist theory, globalization is an arena of inter-state competition. 11 The
contemporary mainstream approaches in international political economy are as under:-
Realism. Realists assert that principles are subordinated to policies and that there can be no
community beyond borders and that the state is the supreme good. The concept revolves around
the 3 Ss, i.e. Statism, Survival and Self-help. 12
Liberalism. It is a political philosophy or worldview founded on the ideas of liberty and
equality, which supports international integration and cooperation. 13
Constructivism. The constructivist view assumes that the domain of international economic
interactions is not value-free, and that economic and political identities, in addition to material
interests, are significant determinants of economic action. 14
Role of Media and IT. Today’s media has tremendous potential in affecting the social, cultural,
religious and human aspects of any item of information. The Arab uprising is a case in point. Both a
product of globalization as well as a catalyst, the internet connects computer users around the world.
From 2000 to 1 st Quarter 2012, the number of Internet users globally rose from 394 million to 2.3
Billion 15 .Some of the effects of Media include greater awareness of international affairs, cultural impact,
speedy flow of information and tools to shape the opinion of the masses.
Drivers of Globalization
International Trade. International trade means that countries become more interconnected through the
exchange of goods and services. Between 1950 and 2010, world trade grew 34-fold in volume terms 16 .
MNCs are major traders and account for a large proportion of international trade. International trade is
aided by the concepts of trans-border transactions, trans-border production, trans-planetary money and
trans-planetary security. For example, Ford makes gearboxes in its factory in Bordeaux and exports them
to its assembly plants in other European countries.
Financial Flows. The financial flows are in two forms:-
OPINION Vol.1 No.1 67 June 2013