Is globalisation really a global phenomenon?

Table of Contents

Introduction

What is globalization?

Does globalization exist?

Spatial and social inequalities

Bibliography

Introduction

What does globalization mean? Is it really a global phenomenon? What are the consequences of it in the developed and developing countries?

By studying the book of Saskia Sassen “Cities in a World Economy” and the book of Manuel Castells “The Rise of the Network Society” I try to find answers to my questions.

What is globalization?

Manuel Castells defines the global economy as a new economy.

For him the new economy is informational, global, and networked to identify its fundamental distinctive features and to emphasize their intertwining.

“It is informational because the productivity and competitiveness of units or agents in this economy fundamentally depend upon their capacity to generate, process, and apply efficiently knowledge-based information. It is global because the core activities of production, consumption, and circulation, as well as their components (capital, labour, raw materials, management, information, technology, markets) are organized on a global scale, either directly or through a network of linkages between economic agents. It is networked because, under the new historical conditions, productivity is generated through and competition is played out in a global network of interaction between business networks.”^[1]

For Saskia Sassen the notion of a global economy has become deeply entrenched in political and media circles all around the world. Yet its dominant images –the instantaneous transmission of money around the globe, the information economy, the neutralisation of distance through telematics- are partial representations of what really globalization is.

“What lacks in this abstract model are the material processes, activities, and infrastructures crucial to the implementation of globalization”.^[2]

One of the most important changes over the last 20 years has been the increase in mobility of capital at both the national and especially the trans-national levels.

This mobility has configured different areas as key-sites in the world economy, while other areas have turned to be obsolete. (Sassen 2000)

“Increased capital mobility not only brings changes in the geographic organization of manufacturing production and in the network of financial market, but it also generates a demand for types of production needed to ensure the management, control, and servicing of this new organization of manufacturing and finance. The mobility of capital also includes the production of a broad array of innovations in these sectors. These types of production have their own location patterns; they tend toward high levels of agglomeration”.^[3]

Cities tend to be the places of this concentration.

“One of the factors influencing the role of cities in the new global economy is the change in the composition of international transactions. The current composition of international transactions shows this transformation very clearly. For instance, foreign direct investment (FDI) grew three times faster in the mid 1980s than the growth of the export trade. Furthermore, by mid 1980s, investment in services had become the main component in FDI flows, whereas before it had been in manufacturing or raw materials extraction. These trends became even sharper in the 1990s. By 1999, the monetary value of international financial flows was vastly larger than the value of international trade and FDI.”^[4]

In the 1800s, when the world economy consisted largely of trade of raw materials, agricultural products, or mining goods the crucial sites were harbours, plantations, factories, and mines. Historically, this has meant that a large number of countries in Africa, Latin America, and the Caribbean were key sites in this geography.

Cities were already servicing centres at that time: the major cities typically developed alongside harbours. Trading companies depended on multiple industrial, banking, and other commercial services were also located in cities.

Cities however, were not the key production sites for the leading industries in the 1800s, the production of wealth was centred elsewhere.

When finance and specialized services became the dominant component of international transactions in the early 1980s, the role of cities was strengthened. Today, international trade continues to be an important fact in the global economy, but it has been overshadowed both in value and in power by international financial flows. In the 1980s, finance and specialized services emerged as the major components of international transactions. The crucial sites for these transactions are financial markets, advanced corporate service firms, banks, and the headquarters of trans-national corporations (TNCs). These sites lie at the heart of the process for the creation of wealth, and they are located in cities. (Sassen 2000)

Certainly, harbours continue to be strategic in a world of growing international trade, and also massive industrial districts are in many ways strategic sites for international activity, but they do not really represent what is the world economy today: an economy related more and more to services and financial transactions rather than production and transportation of goods.

According to Saskia Sassen there are three main places that represent the new forms of economic globalization: export processing zones, offshore banking centres, and global cities.

Export processing zones, are areas in low-wage countries where firms from developed countries can locate factories to process and/or assemble components brought in from and re-exported to the developed countries. Special legislation was passed in several developed countries to make this possible. Tax breaks and cheap labour in the zones are additional incentives. These zones are a key mechanism in the internationalisation of production. Powerful company can therefore operate in undeveloped countries avoiding laws and the right of the workers that otherwise they have to respect in their own developed countries.

[...]

^[1] Manuel CAS tells, 1996, The rise of the network society (second edition),

Blackwell Publishers, Oxford,

^[2] Saskia Sassed, 2000, Cities in a world economy (second edition),

Pine Forge press, Thousand Oaks, London, Delhi

^[3] Saskia Sassen, 2000, Cities in a world economy (second edition),

Pine Forge press, Thousand Oaks, London, Delhi

^[4] Saskia Sassen, 2000, Cities in a world economy (second edition),

Pine Forge press, Thousand Oaks, London, Delhi