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Globalisation

What is globalisation? What is its history and what does it bring to the world? Are all regions of the Planet concerned by this phenomenon?

I- Globalisation, an ancient movement for the spread of capitalism in the world

1. A simple little definition of globalisation

Globalisation corresponds to a "widening of the field of activity of economic agents (companies, banks, stock exchanges...) from the national framework to the global dimension. [...] It implies a generalised interaction between the different parts of humanity" (Larousse definition).

Globalisation is a very vast movement of diffusion of capitalism on a worldwide scale. This movement is based on a close and permanent link between the different parts of the Planet. It tends to increase the interdependence of economies in a market system with an international dimension.

In concrete terms, globalisation means the free circulation of productive resources (currencies, technologies, human resources, etc.) beyond the national framework. Take, for example, a European entrepreneur who has capital to invest. He may do so in a production unit set up in China, equipped with American or Japanese equipment, with a view to producing a consumer good which will be manufactured with cheaper raw materials (imported from an African country or South Korea) before being sold throughout the world. This will enable it to reduce its production costs.

2. A long-term process with variations in intensity

"Goods and capital have not stopped travelling simultaneously. [...] Long before the 20th century, the export of capital was a daily reality, for Florence as early as the 13th century, for Augsburg, Antwerp and Genoa in the 16th. In the 18th century, capital ran through Europe and the world". (Fernand Braudel, Les Dynamiques du capitalisme, Champ Flammarion, 1988).

A historical process that was accomplished in stages

Some historians, like Fernand Braudel, believe that the economic structure of the modern world already existed in antiquity. For example, it is known that China, as early as the 2nd century BC, had set up a commercial network that enabled it to sell its silk production as far as Iran and the West. Subsequently, in the Middle Ages, at the time of the Great Discoveries, a true merchant capitalism was established with triangular trade.

1850-1914, the first globalisation

The 19th century was a period of expanding trade and intensifying capital exchanges throughout the world. The so-called "globalisation" itself accelerated under the impetus of the great European powers (Great Britain, France, Germany) and the United States, whose influence became global. The flow of goods is increasing, customs barriers are gradually being lowered and capital exchanges are intensifying. The United Kingdom and France are the world's two leading investors, financing projects on every continent. The first FTN (Firme Transnationale) is created. It is Singer, an American company that exports sewing machines.

1914-1945 and the return to protectionism

However, the First World War put an end to the process. This marked the beginning of 30 years of protectionist withdrawal during which France and Great Britain were busy managing their respective colonies' demands for independence. Japan and Germany, for their part, took the lead in establishing their own privileged trading zones.

The 45-70s and the second globalisation

The United States is committed to rebuilding a global trading system that works for the United States and provides opportunities for its burgeoning economy. At the end of the Second World War, the Bretton Woods Agreement (1944) and the GATT (General Agreement on Tariffs and Trade, 1947), which became the WTO (World Trade Organization) in 1995, structured a new globalization. Large companies are beginning to internationalise. In the 1970s, the two oil shocks introduced new key players into the global economic game: the oil-producing countries. At the same time, Newly Industrialised Countries (NICs) emerged (the Four Dragons and the Asian Baby Tigers). Exchange rates became very floating.

Further acceleration of globalisation at the end of the 20th century

Over the past 30 years, the process of globalization has intensified dramatically under the combined effect of emerging States, the multiplication of free trade areas, unprecedented development of transport, communications and the creation of multinational firms with global strategies and capabilities, and the development and interconnection of financial markets. Moreover, the decline of the communist world (with Russia's transition to the liberal system in 1991 and its accession to the WTO in 2011, China's opening up to capitalism in 1978 and its accession to the WTO in 2001), reinforces the phenomenon.

II- Increased links between territories, societies and actors

The opening up of economies and the multiplication of exchanges of all kinds (economic, cultural and social) favoured by technological progress over the last 30 years have given a new face to our Planet: globalisation is turning the world into a "global village".

1. Connected and interdependent spaces

Globalisation is a process in which territories and human societies are in strong and constant contact through flows of various kinds (flows of goods, transport flows, migratory flows, knowledge flows, etc.). It tends to bring people and spaces closer together while making them interdependent with each other.

A striking example: the social network Facebook. Created in 2004 by the American computer science student Mark Zuckerberg, Facebook is today the most visited social network on the planet (750 million accounts open).

2. A process made possible by several factors

  • An institutional factor

  • The willingness of some governments (notably the United States) to reduce barriers to international trade in goods led to the GATT agreements which allowed for a reduction in customs duties.

  • The formation of regional blocs (European Union, NAFTA, APEC) has encouraged the growth of "intra-regional" trade with the gradual abolition of customs duties between Member States.

  • A technical factor

  • From the 19th century onwards, the expansion of international trade was based on the formidable technological innovations that took place in the field of transport (particularly maritime) and telecommunications: the invention of the telegraph, the replacement of clippers with sails and wooden hulls by steam and metal-hulled steamers, the spread of the steam engine and the development of the railway, the birth of the telephone, etc. are all technical causes of globalisation. Indeed, these innovations, combined with the carrying out of major works such as the digging of the Suez Canal (1869) or the opening of the Panama Canal (1914), made it possible to reduce transport times and costs (the cost of maritime transport, for example, fell by 70 per cent between 1850 and 1914) and a globalisation of service activities (banking, insurance).

  • Closer in time, other technological advances are undoubtedly at the origin of the extraordinary expansion of globalisation that the Planet has experienced since the end of the 20th century: 1956, first container ship and first transatlantic telephone cable, 1962, first communication satellite, 1976, first personal computer, 1979, first mobile telephone, 1982, birth of the Internet, 2006, first Airbus A 380.

  • The internationalisation of production processes

The strategies of large firms have evolved. For several decades, most of the time, in order to reduce their costs, they have been extending their production activities abroad. Thus, they have become transnational companies.

3. Consequences of this linking of territories

  • The revolution in transport and communications and the extraordinary multiplication of commercial exchanges, human, scientific and other, have a very specific consequence. No space, no territory can no longer escape the phenomenon of globalisation.

  • However, the Planet has not become a homogenized whole. Some States are very well integrated into globalization, others much less so. The globalization index (which ranges from 0 to 100) measures the three dimensions of globalization (economic, social and political) on the basis of 24 variables. It shows that 14 of the 15 most globalized States are European, while 9 of the 15 least globalized States are African and Oceanian.

III- Globalisation differentiates between areas

Globalisation is a complex phenomenon. Based on a logic of integration or exclusion of territories (on many scales), it draws a hierarchical world between centres of impulse, more or less integrated and dominated peripheries, and margins that do not benefit from the valorisation of territories that it can allow elsewhere.

1. Globalisation, a source of wealth and development

Globalisation is an economic driver of growth. It enhances the value of certain territories whose states have adapted to capitalism. It is a source of wealth for them. The Triad States (United States, Western Europe, Japan, etc.) have long since benefited from it, but today it is the turn of the emerging States, the rapidly developing countries of South-East Asia and Latin America, and in particular the BRICS group (Brazil, Russia, India, China and South Africa), which have adopted the model, to benefit from strong economic growth (5.7% on average in 2010, compared with the world average of 3%) and to become part of the "global village". It is largely thanks to globalisation that hundreds of millions of Chinese and Indians have been able to rise out of extreme poverty.

2. Globalisation that does not apply to all territories

Globalisation leads to a differentiation of spaces and creates new territorial disparities at different scales (metropolitan, regional, national, regional and global). On the one hand, as we have shown, it tends to facilitate the linking of economies and societies throughout the world, but on the other, it feeds behaviours of rejection and exclusion, whether voluntary or involuntary. For example, while trade has been increasing steadily over the last 50 years, it is still concentrated among the Triad states, to which emerging countries have been added to a lesser extent. Many countries are not, or very little, concerned by this increase in flows.

  • The LDCs (least developed countries of the Planet, mainly sub-Saharan African States) are excluded from the sharing of the wealth it generates. Africa accounts for only 1% of international trade. Most of its member states are often specialised in the export of agricultural products, which means that their economic - and therefore social - health is subject to international prices, which have been on a clear downward trend for decades.

The last one-party socialist regimes such as Cuba or North Korea do not benefit from this either, due to their political isolation.

  • As international trade is mainly conducted by sea via container ships, landlocked countries or regions, i.e. those without coastlines or ports, are not well integrated into the global dynamic.

Take China as an example. This country has an extremely developed coastline to the east, towards which many flows (of goods, people, knowledge, tourism, etc.) converge and from which many flows (of goods, people, knowledge, tourism, etc.) depart, which is very well integrated into globalisation, whereas the interior of the country is proving to be increasingly poor and not very integrated into globalisation as we move westwards.

Competition from rich and developed countries, whose exports are subsidised, is ruining local producers in the poor regions of the world.

Conclusion

Globalisation is a process of the spread of capitalism on the surface of the planet. This diffusion has taken place in stages. Some historians believe that its foundations were laid as early as antiquity, before it really took hold in the mid-19th century. Globalisation leads, through the multiplication of flows of all kinds, both tangible and intangible, to the networking and linking of territories, which can be explained, to a very large extent, by the extraordinary technical progress made in the field of transport and telecommunications since the 19th century.

It is also at the origin of a certain phenomenon of valorisation of territories: a source of wealth, it boosts economic growth, which allows the metropolises, regions and States that benefit from it to develop. On the other hand, not all regions of the world are integrated into the "global village" of globalisation. Some territories are excluded from the global trade circuit and do not benefit from the wealth it generates.

Written by Clément Calles