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The New 21st Century Global Economy Politics Essay

Paper Type: Free Essay Subject: Politics
Wordcount: 3140 words Published: 1st Jan 2015

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The new Global Economy of the 21st century has greatly affected the national and international economy. This Global economy is composed of interactive forces that create globalization such as revolution in Information Technology and communication whilst Economic globalization occurs due to trade liberalization and ultimate support of the revolution in the technologies. This Economic Globalization has abolished the barriers of borders with the advent of the new concepts such as trade liberalization, which has largely supported the international economic interdependency and economic integration. Such Global environment has also developed challenges for the world regarding the role of entrepreneurs and international organizations. The determination of role of these entrepreneurs would most probably affect the economic growth throughout the world. The Globalization has also brought about the rapid change in the economic environment which sometimes causes economic disruption in the way to low production growth. In this runaway nation states are becoming transitional modes of economic organization and regulation’ because they can no longer effectively regulate their own national economies.

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The emergence of Globalization and its large effectiveness has developed different phenomenon about it. These phenomena mainly agree to idea of the global economical growth yet it shares great deal of the differences. In this respect, Hyperglobalist and Sceptics explain different views about the Globalization and Economic Globalization. In this paper, Hyperglobalist and Sceptics views about the Globalization have been discussed in term of comparison and contrast of both views. This paper is considerable view of comparison and contrast of the views with particular reference to Transnational Corporations. A transnational corporation has their headquarters in one country and operates wholly or partially owned subsidiaries in more than one country. Transnational Corporation has become some of the most powerful economic and political entities in the world today. Since the Transnational Corporation is the active player of economic globalization, the contrast and comparison of the study, in this regard, important to understand the differences of both perspectives of Globalization.

The Globalization and the Economic Globalization

According to Myint (2006), there is vast scope in the definition of the Globalization as it expresses the diverse meanings and all meaning makes different sense. The history of the Globalization is as older as human itself because man has been travelling from his creation and the process of inter-social and inter-cultural activity has been in the history as part of the human. Myint (2006) explains that the Globalization is basically denationalization process. The concept of the denationalization came into being with the creation of the nationalization or nationalism, when human intended to fight for the territory and establishing separate states. Though the concept of denationalization was not used yet the concept was present there.

Modern concept of the Globalization is different in the way that it is born after the term Internationalization. To understand the term Globalization, it must be understood that Globalization does not only refer to the denationalization but a process which has occurred through the past as a result of development of Internationalism in the nations (Delbruck 1993). The basic difference between the Globalization and Internationalism is that Globalization refers to a process of denationalization; on the other hand Internationalization denotes the cooperative activities of nations led by their leaders (Fox and Walker, 1996).

Held and McGrew, et al, (1999) describe the Globalization to be understood as process of transformation of world into an organized social relation and transactions. This relation and transaction takes place among the continents and regions through network. Besides, it is an interaction of nations. They characterized the Globalization with four types of change. At first, it is an expansion of social, economical and political activities across borders and continents. Secondly, it is identified as an intense, and the increasing magnitude, flows of trade, finance, investment, culture, etc. Third, it is connected with a accelerating of global interactions of the nations. And, fourth, the increasing intensity, extensity and rapidity of these interactions are linked with their intense effect such effects of distant events is highly important and particular national developments have considerable global consequences. It can be sum up as the broad, intensifying, accelerating, and increasing effect of world-wide interconnectedness.

Economic Globalization refers to International trade which is the cross-border trade of goods and services. Globalization is significantly Economic Globalization therefore economy has a leading role. Other elements of Globalization are the consequences of the effects of Economic Globalization, and extracted from Economic Globalization (Van Cap, 2002). Economic Globalization is a level of high Economic Internationalization. Economic Globalization has originated along with the socialization development of the forces of production in the international area. In old societies, national states survived quite independently without depending of one another, with little relationship and interaction with each other. But with the development of production forces and increased in commodity exchange, markets grew and gradually crossed boundaries. The commencement of international relationships was the beginning internationalization (Van Cap, 2002).

Economic Globalization is an increasing economic interdependence of national economies across the world through a fast boost in cross-border movement of goods, service, technology and capital. Economic globalization is such tendency emerged from the Economic Internationalization and is modified by the objective necessity of Economic Internationalization. Some aspects of the world economy internationalization are a fundamental principle for Economic Globalization (Van Cap, 2002). In the area of economics, globalization demonstrates the growing acceptance of free markets as well as private enterprise as the chief tool for promoting economic activities. The increasing significance is gathered in such way as trade in goods and services, foreign investment, transportation of technology, transnational enterprises operations, business communications, and migration. The integration form of Global Economic also shows sharp inequalities. It is measured in different term such as trade, foreign investment, technology transfers and transnational enterprises activity; and the most transactions occurs among the developed nations (United Nations Research Institute for Social Development, 1997).

Three perspectives on the globalization are offered as the sceptics, the Hyperglobalist, and the transformationist view. Each offers a different explanation and thesis of globalization, and suggests different views.

The Hyperglobalist

The Hyperglobalism is the first perspective in the Globalization debate (Held et al. 1999). The hyperglobalist debate that changes that are made by the Globalization are very reflective that they have irretrievably changed the political economy of national strategy of countries. The nation’s states’ powers which are demonstrated as hollowed out by a large boost in mobility of capital as a result to the computer based financial and commercial stream which have developed a global economy for the first time whose main streams are simply not to control by national governments they are powerless to control it (Baker, Gamble & Seawright, 2002).

The Hyperglobalizers believe that the Globalization is a new era of human history which has made the traditional nation-states to have behaved unusual and unattainable business units in a global economy (Ohmae, 1995). This perspective of the Globalization commonly benefits an economic logic and, provides the opportunity of the single global market and the law of global competition as the indication of man progress and development. Hyperglobalizers also debate that the Economic Globalization has brought about a denationalization of the world economies through the transnational corporations and networks of production, finance and business. In such denationalized economy, national governments are referred to more than transmission for global investment, simple transitional associations slot in between growing strong local, regional and global machinery of governance. Strange (1996) explains it that the distant units of global markets are now stronger than the countries to whom eventual political power over economy is supposed to go the deteriorating power of countries is showed in an increasing dissemination of power to other associations and to local and regional units. In this regard, many hyperglobalizers have mutual assurance that Economic Globalization is building latest forms of institution that are displacing, or that ultimately succeed, nation-states as the key economic and political component of world society.

In this structure there is remarkable deviation between the neoliberals who receive the victory of person independence and the market standard over country authority and the essential or neo-Marxists for whom modern globalization symbolize the victory of an tyrannical global investment (Ohmae, 1995). But despite deviational ideological certainty, there is a shared composition of faiths that globalization is mainly an economic occurrence; that a ever more incorporated global economy exists in modern world; that the demand of global investment enforce a neoliberal economic restraint on all national governments that politics no more act of the possibilities but rather the exercise of developed economic management.

Moreover, the Hyperglobalizers state that Economic Globalization is producing a new form of winners and losers in the global economy. The old North-South categorization is debated as a growing survivalist as a new global categorization of labour reinstates the typical central-edge framework with a more complicated structure of economic power. In contrast to this background, authorities must control the social consequences of the Globalization (Ohmae, 1995). Nevertheless, they also must much control in a context in which the restriction of global financial and competitive principles form democratic models of social protection unsustainable and mean the failure of related welfare state strategies. There is evidence which indicates that the Globalization is not global in its true essence but rather a myth. At collective level, the intraregional trade which occurs among the region actually build a economical bloc rather than economical integration of the regions. The Hyperglobalist debate that the Globalization is a denationalization of the economies may be proved as true yet it cannot be declared as ‘Global’ since this economical tie is found among particular states which are united to trade with each other for their own economical strengths.

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Transnational Corporation, the idea which came into being after the emergence of the Globalization, is not actually Transnational or multinational organization. The transnational corporation or multinational corporation is such an enterprise that manages the production and provides services in more than one country (Roger, 2000). It is seen that the Regionalism is far stronger than the Globalization as the creation of regional economic blocks prefer to trade within the blocks states and there is increasing trend of the Regionalism. The Multinational Enterprises today manage within their domestic region at best are bioregional and competing across two triads of the EU, and Asia. Though there are few Multinationals which operate globally whereas few Multinationals Enterprises are example of globalization. But this fact cannot be ignored that today the largest 500 Multinationals Enterprises are intended towards the intensification of regional trade and prefer to invest in the America, and Asia and Europe. Moreover, Transnational Corporations exert a great deal of power in the world economy. Many corporations are more powerful than the states that seek to regulate them. 

The Sceptics

According to the Sceptics perspective of the Globalization, this economical integration is not new. The classical period of human history has evidence that same level of economical integration was in practice in old times. They believe that today there are different terms to define them while they exist in old times in different form but their objective was also business. They state that the flow of trade, production, capital, and labor which is seen now is nothing extraordinary as they exist in that time too. To Sceptics, the Globalization is the implication of the integrated global economy where there is only one price exists and this form of the Globalization is the real integration of economies (Hirst and Thompson, 1996b). The supporters with a skeptical perspective reject the notions of the development of a global culture. By comparison the sceptical position is more careful about the revolutionary role of globalization.

To Sceptics, the recent globalization is totally a myth and not as global as it is claimed to be. The Sceptics believe in an entirely economistic conception of globalization, and connect it mainly with a wholly integrated global market. By competing that levels of economic integration are kind of ideal type and such integration remains much less important than in the late nineteenth century the age of the classical Gold Standard, the sceptics are determine to explain that the contemporary globalization is absolutely based on exaggeration (Hirst, 1997). Thus, the sceptics regard the Hyperglobalist perspective as basically wrong and with flaws and immature since it miscalculate the lasting power of national governments to control global economic activity. Sooner than being out of control, the forces of globalization rely on the authoritarian power of national governments to guarantee progressing economic liberalization. For the Sceptics, the contemporary evidence indicates that the current economic activity that is undergoing importantly based on the Regionalization because the global economy grows in the direction of three main trading blocs such as Europe, Asia and North America (Hirst and Thompson, 1996b).

The contemporary global economical activity, in comparison with the classical Gold Standard period, is less integrated and does not fit to its real meaning of Globalization (Hirst and Thompson, 1996a). Current globalization is based on regionalism and regionalism and globalization are contradictory in their true essence. Contemporary globalization is limited to geographical boundaries and does not evolve around the globe (Gordon, 1988). The Sceptics are likely to reduce the assumption that globalization anticipates the existence of a less state-centric order. It is quite different from the concept of considering national governments as powerless by international essentials. They indicate the increasing superiority in the authorization and denationalized economic activity. Governments should not be considered as the passive or unimportant unit of globalization but, on the other hand, the fundamental component.

Transnational Corporation or Multinational Organizations, according to Sceptics, are far from the concept of a single global market and the most business activity by transnational Corporation takes place in regional blocks. There is lack of uniform spread of American market capitalism and global markets are not homogenized. Government authority and difference in culture has parted the world into different many triad blocks of North America, the European Union and so on. Competitor Multinational Enterprises from the triad struggle for market share in their region and increase the economic competency. There are only a few sectors which is globally integrated and a global strategy such as consumer electronics.


The operational networks of Multinational Enterprises are the real drivers of ‘Globalization’. Globalization, which encourages to an open opportunity to states to have integrated economical markets, in practice is against its conceptualization. Transnational corporations or Multinational Enterprises adopt the strategy of triad and regional business rather than performing as a really globally. Hyperglobalist consider this globalization which is actually based on regionalism as growing opportunity while there is evidence that many largest Multinationals remain in their own regions. It seems that they fro real ignore this view of contemporary globalization and fall for the triad economical blocks of particular states within their region.

The world automobile businesses are based on triad and not global. In fact, there is no global automobile car. Over 90 per cent of cars are produced and sold in Europe. There is general misunderstanding about globalization that Multinational Enterprises are globally huge and extremely influential. Research demonstrates that it is not true. Multinational Enterprises are not huge. The largest 500 multinationals are stretch across the triad economies of the EU, and Asia. Recent research proves that 500 of these multinationals, 198 have their headquartered in NAFTA countries, other 156 have their headquarters in the EU, and 125 in Asia.

In addition, these multinationals, which are based on triad, struggle for share and profit in global market across a variety of industrial and trade sectors (Rugman, 1996). Another misunderstanding about globalization is that multinational organization produce standardized products for the global market and due to the competency in production techniques can rule over the local markets. In fact, multinationals change their products for the local market. The example is the production of cars which is not produced globally. There is rather regional production of cars like European and Japanese factories are run by local suppliers and they also provide every necessary material to these producers thus these products are rather regional than global. The concept of contemporary globalization has really misunderstood or exaggerated by the Hyperglobalist and their views about globalization are revolved around the myth and in contrast to sceptics it is based on unrealistic.


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