5.1 Impact of Global Economic and Technological Forces

Global Economic and Technological forces have shaped the policies of nations all across the globe in recent decades, more than ever. In this topic you will learn more about globalization and liberalization, two predominant processes in Political Economy that have created both negative and positive results. 🤔

Globalization and Economic Liberalization 

Before we begin our analysis of globalization and economic liberalization, here is a reminder of what they mean: 

** Economic Globalization refers to the process of increasing interconnectedness and interdependence between countries. It led to the growth of International trade, the re-structuring of economies through Multinational Companies, and a higher exchange of ideas and values. **

** Economic Liberalization refers to the process of removing government intervention in trade, investment, and other movements of capital.  **

How did Globalization and Liberalization occur? 

There is a combination of factors that have brought the world under the process of globalization.🌎 The main cause is the development of technology 👩‍💻. Advancements in the areas of transportation, internet, and communication were key to facilitate an easier connection between nations in the world. The exchange of ideas began to take place quicker, more efficiently, and has resulted in positive impacts such as higher access to information and research, and higher efficiency and profitability to companies and nation-states. 

Another important component of globalization are the Multinational companies. These corporations establish operations center in different countries, for a myriad of reasons that increase their profits, such as cheaper labor, more access to raw materials and technology that is exclusive to other nations. MNCs collect resources and opportunities of different nations to become more efficient. Immigration has also contributed to globalization, as immigrants are actively engaging in the interchange of languages, culture and ideas. 

It is important to recognize that globalization and economic liberalization are connected.🔄 Economic liberalization has made it easier for states to buy and sell goods across borders. By removing obstacles to trade, nations begin to rely more on each other for imports and exports, consequently contributing to the process of globalization. Examples of economic liberalization actions taken by nations include the reduction of removal of tariffs and the implementation of free trade agreements.

💡Remember: Tariffs are fees imposed on importing goods from other countries and makes them more expensive. The adoption of tariffs usually aims to protect and boost domestic industry and make certain products more "difficult" (expensive) to consume. 

International Organizations have played an important role in bringing about economic liberalization in the global market. IOs such as the International Monetary Fund (IMF) and World Trade Organization (WTO) have pushed for these economic policies, advocating for the economic growth of all nations. This economic ideology also shapes the expectations of the population. For instance, the adoption of more neoliberal economic policies in Nigeria 🇳🇬 and China 🇨🇳 has made the population more hopeful for the economic future of both countries. These policies have also led the Mexican 🇲🇽 middle-class to grow more. 

Conflicts of Globalization and Liberalization 

Economic growth comes with a cost, and the course countries in this course have experienced the negative impacts of intense globalization and liberalization. Here are a couple examples: 

• Conflicts with MNCs - Due to the fact that MNCs have grown to be very powerful, they have infringed domestic laws on labor, the environment and taxes, leading them to become entities that have created their own laws within nation-states.
• Inequality - Some individuals may enjoy more economic freedom than others.
• Increased demands being placed on governments by civil society groups - Economic liberalization has come with a cost to the environment and labor, which directly affects people's lives. As a response, civil society groups have become even more important to advocate for government intervention and comprehensive policies that combat these negative impacts.
• Protests by students and disenfranchised groups - Groups that have been left out of the economic freedom that liberalization promotes also have risen up to advocate for government protection of their rights.
• Arrests of protesters and imposition of social media restrictions - Advocates that oppose the government's handling of the economic system have been responded with violence and internet shutdowns in more authoritarian countries. This is a common practice by the Iranian government whenever a new wave of protests gets out of hand.
• Empowerment of once-marginal, nationalist, and populist groups that blame the government for changes in culture and economic conditions - A current wave of alt-right movements across the world (especially in Europe) have brought power to people that distrust the government and advocate for less intervention in the economy. One example of a nationalist movement is BREXIT 🇬🇧, as one of its goals was to let go of the ties with other European Nations and partially restore British supremacy.

In the next topic guide we will discuss the handling of the course countries considering all of all these economic transformations ➡️