Sunday, July 15, 2012

Part II: Global Economy - 21st Century Style

International trade and investment is not actually a new phenomenon in itself. The growth of trade and investment across borders began over five hundred years ago as part of European imperialism. 

In this day and age though, it is becoming increasingly easier for corporations to move investment from one country to another, in many cases this also involves national governmental support. For example, in the Mexican financial crisis of late 1994-early 1995 where American interest rates rose seven times in 12 months, caused billions to flow out of Mexico in response to the good news of higher interest rates in America, causing Mexico to run out out of foreign exchange reserves (US$6bn by December 1994). This caused the Mexican government to devalue the peso, causing this time foreign capital to flow out of Mexico in fear of greater devaluation! Eventually a US$52bn rescue package accumulated by the International Monetary Fund (IMF) for Mexico, meant that Mexico lost control over its own economy. The outside world, the IMF and the USA began to dictate how Mexico would run its monetary policies (Thurow, L., p.31).

This is just one example of how global economics affect nations worldwide. But increasingly so, in the last fifty years the size of overseas investment by European, North American and East Asian corporations has seen a dramatic surge. This dramatic surge has seen corporations grow more powerful and increasingly playing a commanding role in international economic policies. Their products are now able to dominate consumer markets across the world, helping to rename these establishments as 'transnational corporations' (TNCs).

In the mid-1970s, business corporations in industrialised countries faced an energy crisis which threatened their increasing profits, in order to overcome this they started to take advantage of nations with cheap labour where they in turn, increased their investment in. Exploitation of cheap labour overseas was key strategy to produce even cheaper products enabling them to dominate consumer markets worldwide. Also during this time, international trade barriers such as tariffs, subsidies, import controls and taxes on imports were successfully removed. Hence the creation of the 'free market'; free in the sense that corporations had more freedom to accumulate profits.

In countries where workers did not have social rights in the first place, their governments and the 'free market' refused to recognise these rights which lead to violent worker's repression, loss of social protection, cuts in government spending on welfare and education, privatisation of public services and utilities, and cheaper unprotected labour for exploitation.

With reference to the acclaimed documentary, 'The Corporation', TNCs have actually been classed as mentally insane if one was to take their status as a legal 'person'. This is why globalisation is sometimes also defined as 'capitalism is the age of electronics' (Greenfield, G. and Pringle, T.; 2001).

Change. Today. Fast.

'Half of humanity has never made a phone-call' (Thabo Mbeki, G7 summit [1])

Not all developing countries have been fortunate enough to experience the great advancements in information technology this global revolution has bestowed upon us. Despite the rapid expansion of the Internet, information technology inequalities do exist, and a great portion of the globe are still bereft of its benefits. One of the main obstacles is the lack of a modern and robust telecommunications infrastructure. Forty-nine countries (thirty-five of which are African) have less than one telephone per 100 people. India has eight million phone lines for over 900 million people (Al-Suwaidi, J., p.2).  This indicates that the information gap between developed and developing nations is in fact, increasing.

Another factor is that the network society is dominated by natives and ethnic majorities. For foreigners and ethnic minorities who lack the skills and do not speak or command the dominant English language, they are alienated even further from joining the global revolution (Van Dijk, J., 1999).

Information is not, in itself, power, but it aids those who possess power and the mass media plays a crucial role in the maintenance of information levels both for citizens and governments. During the 1950s, structural-functionalist thinking was dominant and sought to explain the developing world's need to move from a 'traditional' to a hegemonous 'modern' set of attitudes and behaviours. The basic psychology of the traditional individual was needed to be altered to one that veers away from religion to secularism with emphasis on acceptance of scepticism, risk-taking and personal efficacy, social trust and the environment. This shift rendered traditional values as deficient and hindering to the mobilization process. The consequences were mass media operated for the interests of the dominant elite, a rise in numbers of criminal/disturbed individuals suffering from psychological disorientation, increased drug use, crimes, and fraudulent spirituality (Morgan, D. p.93).  

This dominance of elite's version of modernity brought up in 1966 by Barrington Moore, was also echoed in 1971 by Antonio Gramsci who spoke of the concept of 'hegemony'. Gramsci conceptualized hegemony to be stemmed from the notion that the most dominant social group in society has the ability to influence direction, intellectually and morally, over a society not by mere military force but by creating consent through ideological control of 'cultural production and distribution'. And that such a system exists through the control of mass media, schools and religious bodies. Whereby authority is bestowed by the government, this consent is 'organised' and those that are consenting are 'educated to do so' (Thussu, D., 2006).   

Despite all this globalization hype, according to the Human Development Report (UNDP, 2003) per capita levels declined in 54 countries in the 1990s and 1.38 billion workers across the world lived on less than $2 a day (ILO, 2004); poverty elimination and inequalities between 'haves' and 'have nots' is clearly not a major issue on the 'elitist' agenda.


Although the age of globalisation has brought many changes in its tide, some positive and others negative, instability in this phase of transition to an increasingly global world, is imminent. But instabilities are not created by the technologies though, they are only exasperated by them. Unless all nations become full participatory actors in this global revolution, the gap between the rich and the poor will widen; increasing marginalisation in tow. And this gap will increase cultural, religious and ethnic conflicts inter-regionally and across borders.

Kofi Annan at the World Bank conference said that, '[w]hat is so thrilling about our time is that the privilege of information is now an instant and globally accessible privilege. It is our duty and responsibility to see that gift bestowed on all the world's people, so that all may live lives of knowledge and understanding [2]' (Global Knowledge Conference, June 1997).

The future is truly in our hands.   


Al-Suwaidi, J. The Information Revolution and the Arab World: It’s Impact on State and Society, The Emirates Centre for Strategic Studies and Research, 1998, p.2, 3

Morgan, D. Mass Media and the Policy Process, 1996, p.93

Thurow, L. The Information-Communications Revolution and the Global Economy, (1997) p.11, 31

Thussu, D. International Communication: Continuity and Change, 2006, Hodder Education, p.53, 97

Dijk, J. The Network Society, 1999, Sage Publications, p. 148

UNDP, Human Development Report 2003: Millennium Development Goals: A Compact Among Nations to End Human Poverty, 2003, Oxford University Press

ILO, World of Work Magazine No. 50, March 2004: Toward a fair globalisation, Global Employment Trends, 2004

[1]    Quoted in Al-Suwaidi, J. The Information Revolution and The Arab World, p. 2
[2]    Quoted in Al-Suwaidi, J. The Information Revolution and The Arab World, p. 3

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