Globalization and Its Consequences: Economic Crossroads

Whether talking about his “McDonald’s Theory” or “Dell Theory” or that the “world is flat,” Thomas Friedman offers a provocative argument about where we now are international, how we got there, and where we are going. Explain and assess his views, including their security implications, touching as well on his critics.

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Since modern society is moving at a galloping pace towards globalization and world economic integration, it seems most reasonable to reconcile for a moment and consider the economical problems first, as Friedman (2005) thinks. From his point of view, the current situation that the world is facing now is what can be called the epicenter of globalization. Emphasizing that the processes of the latter are far from being over, he notes that the chief goal of modern economics and politics is to comprise the economical elements to make the most efficient use of what Thomas himself called “the flat world”.

Emphasizing that the globalization issues which mankind is currently dealing with are no novelty for the world and that the earlier generations have witnessed the attempts to bring the world economical issues into a single entity, Friedman (2005) explained that one of the core issues of the modern world is to trace the mistakes and the valuable experiences from the past to understand the mechanics of the globalization processes which are currently going on.

Realizing the opportunities that the flat world opens in front of mankind, it will be possible to create strategies for improving the existing economical system, as Friedman (2005) explained. With help of the economical innovations, the world will be able to progress further and faster, which is, no doubts, one of the key goals of the modern states.

Driving the examples of both the successful campaigns and the most notorious failures of the world entrepreneurs, Friedman (2005) is trying to work out a certain algorithm for economical progress, find the key that unlocks the path to well-being. An effective economical system will work magic on modern mankind, which Friedman (2005) understands pretty well.

However, it must be admitted that the famous economist and theorist also has a theory of his well worth considerations. With help of the ideas suggested by Freidman, the future can be changed into a more comfortable environment for the people.

Thus, according to Freidman, one of the most crucial elements of the modern economy and the idea that must be considered from the platform of the flat world as soon as possible is globalization and the shapes it takes in different countries. With the examples of the most famous corporations applying the idea of the flat world into practice in the most efficient way, it becomes evident that using the modern technologies and the mass media efficiently, it would be possible to achieve not only great success with the rise of the individual entrepreneurship but also to create the links which will contribute to the globalization process continuation and the further integration of the economies of various countries.

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Driving the example of McDonald’s Theory, Friedman (2005) clarifies several economically significant issues of the world trade and the psychology of a customer. Explaining that the countries linked with the mutual trade are highly unlikely to become political opponents, Friedman (2005) suggests the panacea from not only wars but also all possible conflicts among the countries. Indeed, bound with the same business, the partners involved would rather prefer to stay in peace and continue their journey to economic prosperity. Thus, the economist suggests an efficient way to help the world abandon the conflict aspects and start increasing the level of the state economy. Offering the system of high economical and financial profit to the rest of the countries, Friedman (2005) emphasizes that such Utopia is possible only when taking account of the middle class first. Introducing the latter as the stronghold of world peace and the beginning of economical prosperity, Friedman (2005) makes it clear that the state powers must consider the needs and the wants of the middle-class layer of the population first:

You know in Lexus I wrote that no two countries would fight a war so long as they both had McDonald’s. And I was trying to give an example of how when a country gets a middle class big enough to sustain a McDonald’s network, they generally want to focus on economic development. That is a sort of tipping point, rather than fighting wars. (Freedman 2005)

Another example of company development that is to be considered by economists, according to Freidman, is the Dell Computers case. Despite the simplicity of the story that underlies the situation, it proves colossally efficient within the given range of countries. Bound by the same company business and contributing to its global success, the countries simply do not have either time or reason to conflict with each other – and they are considerably reluctant to, as well – once the peace is broken, the source of stable and considerably big income is going to drain. Thus, glued by the common idea and the economical aim, the countries benefit both in the economical and political spheres, which must be admitted a doubtless achievement of the modern corporation. As Friedman (2005) put it, “The Dell Theory says that no two countries that are part of the same global supply chain will ever fight a war as long as they’re each still part of that supply chain.” (YaleGlobal 2005). As it turns out, the reasons for such behavior has not only the mercenary pretext underlying it but also common sense, for “Now, the big test case in China and Taiwan. Both are suppliers of the main parts of computers. If they go to war, don’t try to order a computer this month because you’ll have a real problem.” (YaleGlobal 2005).

One of the breakthroughs in the world of economics, Friedman’s (2005) idea of the “flatness” of the world, turns out to be quite a simple yet efficient working theory. Considering Friedman’s idea, the “flatness” of the world can be demonstrated by the interaction between its elements. Being placed in a single space, the elements start interacting, all intertwined in a single “circle of life”, which Friedman’s theory demonstrates. Instead of observing the economies of separate states as they are, Friedman takes the global economic system as a whole where each conflict and event is of certain importance. Like a clockwork mechanism where each detail takes its place, the world market is the sphere where no state with its economics can exist separated from the rest of the countries. Therefore, Friedman drives to the idea that the more countries interact to create the integrated trade zone, the better. With the positive impact which the society will gain from such a position taken by the government, the countries will be able to continue the progress once started. Driving an example of the famous Dell chain, Freidman claims:

From an analytical point of view, the drama that’s unfolding, in terms of the Lexus and the olive tree today, is the intersection of our traditional olive tree urges – nationalism, ethnicity, religion, identity – interacting now with a flat world, interacting with Dell Computer and its supply chain. (Freedman 2005)

Thus, Friedman explains that the state of affairs in a separate country depends greatly on its level of world integration; however, the economist admits that there are certain cases when the flat world stops being flat. Such a case is the state of affairs in Africa where people have very little links with the rest of the world, namely with Europe and the USA: “But I fully recognize that although it’s reached the tipping point, there are still a lot of people who are not part of it. Africa is not part of it because it hasn’t learned to globalize.” (Friedman 2005). Thus, Friedman parries the blows of his critics who consider that the theory of his does not take such countries as India, Africa, and China into consideration. Yet the economist proves that it does – and these countries do have a niche in his theory, carefully considered and well-though. Allowing countries to progress in their way and at the pace which they are used to, Friedman nevertheless provides a theory which could improve the existing economical situation and enhance world safety largely. However, as Bandana Shiva said, Friedman’s viewpoint cannot be considered as objective as well; as she claims, “Friedman has reduced the world to the friends he visits, the CEO’s he knows, and the golf courses he plays at.”(Shiva) Thus, the question of the reasonability of globalization remains open.

Based on the readings in the course text, “Producing Security: Multinational Corporations, Globalization, and the Changing Nature of Conflict,” assess the security implication of the global weapons production and sales system. As part of your response, explain Brooks’ ideas and critique the proposition that globalization has forever affected the way all states procure and produce weapons.

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Because the idea of globalization offers several ambiguous and controversial issues, the opinions concerning the given political and economical phenomenon prove to be strikingly different. Thus, Brooks considers the system suggested by the global integration and globalization a deceptive theory leading the world to nowhere – or, to be more precise, to the next economical crisis or even collapse. Assigning the primary importance of the state’s economical and political position to weapon production, Brooks concludes that, hindering the latter, the global trade integration will lead the world into another economical labyrinth.

What Brooks makes the basis of his argumentation is the fact that the efficient system of the world trade does not certify the state security any longer. Instead, the system of integrated trade ruins the security construction gradually. Once applied to practice, the new idea of the global trade space will affect the level of state security worldwide, which is a great concern for economists all around the world. Thus, it is necessary to consider all the negative effects of the world’s economical integration as well. According to Brooks,

The analysis in this book reveals that the scales have decisively shifted against a strategy of autarkic defense production: no state, including the great powers, can now effectively remain on the cutting edge in military technology if it does not pursue significant internationalization in the production of weaponry. (Brooks).

Considering the problem from such an angle, Brooks approaches the idea that the process of globalization is likely to hinder the development of states and countries, decreasing their protection level and thus making them potential victims of the states which are better equipped and are more experienced in the military issues. Once the approach of integrated economics is undertaken, the situation becomes irreversible, Brooks warns. Thus, connecting the issues of military weapons and globalization in particular countries, Brooks shatters the popular myth about the exclusive amenity of the globalization process.

Therefore, the issue of the globalization becomes the double-sided sword which can bring both positive effect and considerable harm. Determining the dangers which the process conceals thus becomes the problem of paramount importance. According to Brooks, the impact of globalization will drag the consequences that are likely to shatter the state defense system to the core.

One of the most important and reasonable arguments of Brooks is the fact that the globalization process will inevitably drag the shift in the security environment of countries, which in its turn will result in the weakening of the defense system. Once countries are united economically to create a single trade space, the process of encompassing the system of defense in each of the participant countries will become times complicated (Brooks). Thus, the defense system of the states integrated into the globalization process will suffer as well as a number of the local industries.

Even though the prognoses for globalization are mostly positive, Brooks is still inclined to believe that mankind cannot conceive the scale of the changes which globalization is going to bring into the world. Only considering each of the results of globalization, an objective evaluation of the process is possible.

Differentiating between the positive effect of international trade and the positive effect of the international commercial, Brooks clarifies that the latter is far more plausible. It must be mentioned though that Brooks denies the positive effect of both: “his sanguine view of commerce as having a strong, positive effect on interstate relations has not been universally embraced. Indeed, many have argued the opposite is true.” (Brooks). Thus, the sales system might benefit from the active globalization process, yet the impact which the latter would have on the state of the national security of the country will be despicable.

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Arguing about the idea that commercial can bring certain benefits to the trading system of the country, Brooks mentions Hamilton’s observations:

After running through a series of historical examples, Hamilton ultimately concludes that numerous wars were “founded upon commercial motives” and that the “spirit of commerce in many instances administered new incentives” for conflict (Brooks).

According to Brooks’ ideas, the tiny benefits which commercializing and globalizing processes will drag will be reduced to zero. Asking an important question, “Do trade flows influence security?”, Brooks clarifies that the implications of the links between the security of the state and its trade system have been greatly exaggerated. Accordingly, the new ideas of what a state’s economical and political security is must be reestablished before providing any systems of world integration. Having a crucial impact on the further development of the state, such considerations will provide the necessary level of security in the country. Otherwise, Brooks warns, serious conflicts within the state are likely to arise (Brooks).

Considering Brooks’s theory more closely, one cannot but admit that the geographic dispersion of the MNC which the globalization drags as one of the indispensable conditions causes negative influence. Reshaping the security system within the boundaries of the countries involved in the globalization process, the regional economic integration will cause the most negative effects which in their turn will finally scotch the “autarkic defense production” (Brooks).

It seems that Brooks’s arguments are sufficient to suggest that globalization will cause certain negative consequences. However, it still seems that the fears for the catastrophic effects of the globalization process are excessively exaggerated. Although the idea of the integrated world market does not seem so alluring any more, Brooks omits one of the key positive effects of the globalization process, which is the increase in the quality of facilities suggested to the population. Referring to the IMF report, it would be reasonable to consider the following idea:

There is substantial evidence, from countries of different sizes and different regions, that as countries “globalize” their citizens’ benefit, in the form of access to a wider variety of goods and services, lower prices, more and better-paying jobs, improved health, and higher overall living standards (IMF Staff)

What must be taken into account as well as the well-being of the developing countries? With help of the improvements that globalization will bring to the developing countries, it will be easier to help the latter progress. Therefore, the idea of globalization has the right to exist and to be put into practice. If the probable positive effects of the process null and void the drawbacks, this remedy must be tried – even though, as Brooks said, this is no panacea (Brooks). Moreover, “it can increase many countries’ susceptibility to shocks and can subject states to checks and disciplines that circumscribe sovereignty”(Yusuf). Once the leading countries help the developing ones, lending them a helping hand in the sphere of economics, the problems of poverty and the economical crises can be avoided for a certain period. It must be admitted though that some of the poorer countries may not participate in the process of globalization: “or many of the poorest least-developed countries the problem is not that they are being impoverished by globalization, but that they are in danger of being largely excluded from it.” (The World Bank Group). According to Moore, “Marginalization, not globalization, is the threat to the developing world” (The World Bank Group). Thus, it is more reasonable to suggest that globalization has to take a different shape.

Is globalization a positive or negative factor in the world? Respond using concrete examples, data, and theoretical perspectives provided by our readings and videos. In your response, comment both on the economic impact on persons and countries and on the way security in the international system is affected. If you determine globalization is a generally positive phenomenon, can domestic political support for it be built/maintained in countries, and what factors are relevant to this effort? If you determine globalization is a generally negative phenomenon, what is to be done? Is it possible to move away from globalization? What would be the security implication of either deepening globalization or dialing it back?

Because of the plurality of opinions concerning the issue of globalization, it is quite hard to provide an unequivocal judgment of the effects which the above-mentioned process is bound to cause. However, taking into account the ideas expressed by the world’s leading experts in economics and politics, it is possible to suggest that the world is not ready for such an important step yet.

Although globalization is not designed to worsen the world situation, on the contrary, provides a set of ideas for improving the position of several countries, it is evident that the process of globalization might trigger a range of positive effects. One of the aspects of globalization that must be mentioned is the fact that it has been designed to help developing countries overcome the difficulties in establishing themselves on the world economics stage. Because of such “philanthropic” ideas, the process has all the rights to be considered a positive one.

Second, the process of globalization concerns the integration of the states of the world into a free-trade zone, which is also extremely important both for developing countries and for the leading ones. Interconnected with the same economical process, states will be able to correlate the processes going on in separate countries. As Brooks mentioned,

The findings of this book collectively indicate that the globalization of production now acts as a force for stability among the great powers. Put most precisely, the conclusion of this study is that the increased geographic dispersion of MNC production will, ceteris paribus, increase the stability of great power relations. (Brooks)

Indeed, with help of the power integrating the states into a single economical body with all its parts correlating with each other, numerous countries will benefit. What must also be kept in mind is the fact that in case of creating the integrated economical zone, the government tax revenue is highly likely to be increased, like it happened in 2002: “And among OECD countries, government tax revenue as a percentage of GDP increased from 25.5 percent in 1965 to 36.6 percent in 2006.” (IMF Staff).

Yet it must be admitted that the world is not ready at present to conduct the policy which will lead to finishing the globalization process. One of the most obvious reasons for such a decision is the fact that even the leading specialists in the sphere of economics cannot conclude the possible consequences of the globalization process. Since the meanings for globalization’s future effect prove strikingly different, almost diametric, each of the reasons must be considered with due care.

It seems that at present the negative suppositions concerning the globalization effects outweigh the positive ones, which means that it would be a good idea to refuse from encouraging the globalization process. Another reason for such a decision is the fact that globalization is often perceived as a panacea for the world’s economical and political woes, whereas in fact, it is not. It would be a mistake to think that globalization enhanced the decrease in terrorism rates; according to Moises Naim, the state of affairs is much more complicated:

The problem is that other forms of conflict and violence have soared. The number of people killed or injured by terrorists has gone from about 7,000 in 1995 to more than 25,000 in 2006. Very often, these terrorist attacks are either directly carried out by foreigners or planned, funded, and coordinated by networks that operate internationally. (Naim 2009)

Doubting the reasonability of globalization processes means that there is more to its results than meets the eye. Despite the positive aspects of the process, the negative prognoses give sufficient food for thoughts, not to mention that some of the negative effects cannot be foreseen and will come into the light only as the process will come to an end.

Another issue that must be considered is the decreasing level of safety in the countries joining the globalization process. Once it reaches the critical point, the essence of the entire process will dissolve in the economical and political problems that the globalization process will trigger. The abovementioned allows suggesting that the world is not ready for globalization and its results yet.

However, it must be mentioned once again that the process of globalization is irreversible, which means that certain efforts must be applied to slow it down somehow. “The most internationally-minded, globally linked movement the world has ever seen” (Klein), as Naomi Klein called this phenomenon, it must be considered thoroughly. Though such an approach could seem harmful to the natural development of world economics, it can be justified by the wish to help people get ready for another global change in their life. Unless the process of globalization is moderated somehow, certain countries will not be able to endure the sudden and irreversible change.

Speaking of the security implications for hindering the process of globalization, it would be reasonable to suggest that the level of security in separate countries will increase. Since the process of economical merging of the countries resulted in the reduction of the security rates in several countries, calling the process back could help the nations reestablish their national security system.

Another important impact of slowing down the globalization process will be the cessation of the MNC geographical dispersion, or, at least, restricted to certain areas. Such change is of paramount importance for several states since the dispersion of the MNC requires particular conditions, otherwise, the dispersion process will be of no use for the country where it currently takes place, as Brooks explained:

The geographic dispersion of MNC production can enhance the prospects for peace by contributing to the consolidation of deep regional economic integration among long-standing rivals, but only under certain conditions. (Brooks)

Therefore, it is necessary that the politicians and economists took account of every single detail concerning the globalization issues and had a certain idea of what this process can lead to. As long as the world does not have at least a vague idea of what globalization will lead to, this process is highly unlikely to be encouraged.

With help of reasonable actions undertaken by the experts in economical and political spheres, humankind is likely to achieve success in building an integrated trade society, yet at present, other issues on the level of separate states must be tackled. According to the economical prognoses, once the problems of separate countries are solved, it will be possible to continue the globalization process without fearing for the global security and the political difficulties standing in the way of the countries and creating obstacles on the trail to the economic success. Once the issue of globalization is reconsidered and the track of the process is somehow coordinated, people can be certain that the process will not affect the stability and prosperity of their state.

Reference List

Brooks, Stephen G. “Introduction”, n.d., Chapter 1 in Producing Security: Multinational Corporations, Globalization, and the Changing Calculus of Conflict. Princetown University Press, Web.

Friedman, Thomas L., interview by Nayan Chanda, Online Database, YaleGlobal, Web.

IMF Staff. Globalizaion: A Brief Overview. International Monetary Fund,2008. Web.

Klein, Naomi. Revisiting No Logo, Ten Years Later. Naomi Klein, 2009. Web.

Michael Moore: Globalization & Development: Its Implications and Institutions. The World Bank Group, n.d. Web.

Naim, Moises. Think Again. Moises Naim. 2009, Web.

PREM Economic Policy Group and Development Economics Group. Assessing Globalization. The World Bank Group. 2000. Web.

Shiva, Vandana. The Polarized World of Globalization. 2005. Web.

Yusuf, Shahid. Globalization and the Challenge for Developing Countries. The World Bank Library. 2011. Web.

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