Globalization and its discontent

Globalization and its discontents by Joseph Stiglitz

In his book, the former chief economist of the World Bank, Joseph Stiglitz, takes a very critical look at globalization. Based on his experience in the world economy, he tries to eradicate the wide-spread view that globalization only brang about positive things such as an improvement in the standard of living of people or the alleviation of poverty only to name a few. In his study, Stiglitz focuses on the failures of globalization and speaking of those introduces three world organizations , the World Bank, the IMF and the WTO, which he consideres as the driving forces behind the failures being committed.While hopes for development of third world countries were high, reality has turned out to be cruel and relentless. Contrary to all the promises of alleviating poverty and raising the standard of living in developing countries, globalization has actually caused the chasm between rich and poor to increase. Furthermore, the countries which indeed profit from open trade and free market policies are the rich and industrialized countries whereas poor countries have to suffer even more and burden the externalized costs produced by the West. Stiglitz believes that the World Bank, the IMF and the WTO’s policies hinder developing countries from building up a growing and healthy economy. Those institutions which were put in place to assist developing countries in that transition process do not act as representatives of their interests. Coupled with loans are usually extensive conditionalities which the borrowing country has to commit to in order to receive the loan. These loan conditionlaties tend to be very demanding and especially witnessed at the example of African countries such as Ethopia have proven to be devastating for the prevalence of democracy and local economic growth. On the other hand, they allowed for the enrichement of multinational corporations. The IMF’s response to economic development was the idea of a market economy, without the installment of institutions to ensure the protection of local businesses. The IMF urged developing countries to liberalize their local markets causing their economies to destabilize by massive inflows of short-term investment capital. Inflation followed causing dramatically rising interest rates. As a result widespread bankruptcies were on the agenda, followed by massive unemployment and the prompt withdrawal of foreign capital. Left alone to deal with the economic disaster, the countries also have to cope with social unrests, famines and contaminations due to infectious diseases.The author decries that the IMF and the World Bank’s policies are driven by rich countries’ greed and striving for profits which greatly exceed their social awareness of third world countries which are in need for development.On the other hand, Stiglitz gives examples of countries which successfully managed the transition from a developing to a growing economy. China and South Asia, nowadays the two greatest emerging markets, resisted IMF conditions and declined any of its money. The author views South Asia’s denial of aid from the IMF as key to a successful development.In spite of the fact that globalization has not kept many of its promises, Joseph Stiglitz believes that globalizaton can in fact bring about positive change and enrich everyone in the world, even the poor. Yet, he emphasizes that it is fundamental to rethink the approach and the ideas used to manage globalization. Therefore, it goes without saying that a change in the structure of the IMF, World Bank and WTO is unavoidable. In the past, these institutions have abused their exclusive rights and priviliges which had devastating consequences for many developing countries and the environment. Stiglitz argues for a reform of the IMF and the World Bank as they lack accountability and transparency. These obscure organizations made arguable decisions to overcome legal barriers which helped them to realize the idea of rapid market liberalization. Furthermore, the author demands the extension of voting rights to developing countries which are clearly underrepresented among the member countries. Given the present global situation marked by problems like overpopulation, pandemics and economic disasters, the need for equitable growth is more urgent now than ever. The methods and approaches taken to tackle these problems should be specific for every developing country. Change has to happen gradually and selective policies should be adopted which would meet and benefit an individual country’s needs. According to Stiglitz, it is even more important to promote the prevalence of democracy which he consideres the base for successful development. A strong political background is the solid fundament for a country’s aim to achieve economic growth and development.

ELAIC vs POB

The authors’ focus on detail is represented in the extensive study of their characters. Disregarding the human vs. animal aspect, Oscar and the lion pride are both exposed to unusual circumstances which force them to give up the life they knew before and undergo a drastic life change. The main characters represent a bigger group of people which has experienced the same destiny at the terrorist attack of 9/11 or the Iraq war. Thus, the two books are similar in the way that they focus on the situation of a few characters which characterizes the lives of millions of people in the world.

The author’s idea to integrate more than one storyline is a striking aspect in his book “Extremely Loud and Incredibly Close”. This idea enhances his message to the reader and follows a big theme in the book which focuses on the different ways that people cope with tragedies. As opposed to “Extremely Loud and Incredibly Close”, the comic only has one storyline. However, the author still manages to distinct between the different characters in the pride which makes the fact that the lions represent a group of people more believable. Either way both authors make effective use of the structure in their books to support their ideas and messages to the reader.

Questions

1.Who owns fresh water resources? Who should?

The government of the country where the water resources are located, own them. However, they often sell the water resources to companies and therefore lose ownership. This is adventageous for the population, because companies charge too much money for the water and it the government should own water resources in order to take care that every one has even access to this necessity.

2.What did your presentation do well? What will you improve next time?

A positive aspect about my presentation was that it provided a good link to the thesis and backed it up with information from both point of views. There is still much room for improvement such as using more terminology and improving the design of the power point.

Global trade is slowing

Global trade is slowing

Global trade is slowing

The Japanese export market did not survive the economic crisis without harm. In the previous years, Japan could always rely on increasing demand for its export from developing and emerging countries, but the drop in exports of 7,7 % in Ocotober has shown that emerging-economy demand for its goods has also been hit. Japan is only an example of a rich country which is affected by slowing trade. Germany which is known for its high-quality exports has also experienced a heavy decline. Since high-quality goods have high elastic demand, the demand for these goods decreases massively when there is an economic crisis. Poor countries, however, who normally produce cheap quality goods are better off at the moment, because the goods tend to be necessities that people still buy in bad times. Poor countries are facing the problem that they are lacking trade credit for finance due to the global shortage in liquidity caused by the financial crisis. Now, export credit agencies and the World Bank try to restore the liquidity in the market by providing more money.

Squeezing the accelerator

Due to economic recession, hedge funds believed that the car company VW would also have problems selling its cars. That's why they thought VW shares were highly overvalued and would soon be falling. So, hedge funds lended 12 % of the VW shares from investors and did something called a short selling. However, hedge funds hadn't taken into account that the biggest VW investor, Porsche, had a cash-settled call option to increase its present shares at VW from 35 % to 74 %. So when Porsche announced that it wants to increase its shares at VW, this caused an explosion of the share value of VW. Thus in order to minimize losses, hedge funds had to quickly buy VW shares at a much higher value at which they had lended them. This again caused the value of VW shares to rocket. Early estimates suggested that the hedge funds' losses could be as much as $ 30 billion.

One world

One world

Due to globalization,national companies have become more integrated in the gloabl economy. The positive side of globalization is that it has the potential to increase productivity and living standards everywhere. However, critics of globalization predict that increasing competition from low-wage developing countries will destroy jobs and push down wages in rich economies. Even 50 years before World War 1, there was a period of globalization which was driven by reductions in trade barriers and a sharp fall in transport costs. This previous trend of globalization ended with Worl War 1, which was the cause for trade protectionism and tight restricitons on capital movement. After World War 2, big economic powers realized that it was important to reduce trade barriers in order to recover. They set up an arrangement on tariffs and trade, called the Bretton Woods system. In the 1970s the Bretton Woods system collapsed which led to the rebirth of the global free market in which goods and money were floating. The two factors, an improvement in technology and liberalization, were responsible for the increased flows of money and goods. Methods used to measure the degree of product- market integration have shown that many countries openness to trade hasn't changed a lot since 1913 and that prices converge across countries which is due to the persistence of import barriers. Product markets are not even close to being integrated across borders as within a nation and even the financial markets are not fully integrated yet. While product and capital markets have become increasingly integrated, labour markets have not, since labour is less mobile than it was in the second half of the 19th century. These facts don't conclude that globalization is not happening. As opposed to the pre 1914 globalization period where large parts of the world didn't participate in the world economy, more economies than ever are taking part in the globalization process today. In the future, new technology will encourage further integration and make it even harder for protectionist governments to block trade. In addition, organizations like the World Trade Organization give stability to free trade. All that awards globalization a good foundation to be more durable than it was before World War 1.

globalization

Globalization

This text focuses on the definition of important economic terms. Globalization is a movement that leads to more indipendence and its main effect is the dramatic increase of the amount of international trade and thus companies are able to sell their products in every market of the world. There are different types of corporations: multinational corporations with manufaturing, sales or service subsidies in more than one country, conglomerates whose asset growth is mainly due to the aquisition of other firms with unrelated products, and lastely merger which result from a fusion of two or more corporations. Competition is another important economic aspect. Its characterized by sellers of a product competing with other sellers and buyers of a product competing with other buyers in order to supply or aquire an economic service or good. One theme in the history of competition has been the monopoly, which means that there is only one seller of a certain product, who is able to control the prices in this particular industry. When talking about monopolies, the term "cartel" also has to be mentioned. Cartels are national or international organizations of manufacturers or traders that by agreement control the prices of goods in a particular market.