globalization theory revised1
TRANSCRIPT
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Globalization Theory• Prof George Ritzer• Keele Programme
• Feb 2010
Globalization
The spread of worldwide practices, relations, consciousness, and
organization of social life
(Ritzer, 2008, p. 447).
• Sociology: the systematic and scientific
study of human groups, social
systems and institutions.
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©Pine Forge Press, an imprint of Sage
Publications, 2004
Bureaucracies: Max Weber
• A bureaucracy is a large hierarchical organization that is governed by formal rules and regulations and that has a clear specification of work tasks.
• Needed to accomplish feats such as building cities, governing large populations etc.
©Pine Forge Press, an imprint of Sage
Publications, 2004
Characteristics of Bureaucracies
• Division of labor: Specialization of different people or groups in different tasks, characteristic of most bureaucracies
• hierarchy of authority: Ranking of people or tasks in a bureaucracy from those at the top, where there is a great deal of power and authority, to those at the bottom, where there is very little power and authority
• Impersonality
• How does a university provide an example of these 3 characteristics?
TRANSFORMATIONALISTS
Globalization:Main force of changes
on political, economical
and social levelsNew world order
which needs some
adaptation and
transformation Anthony Giddens
TRANSFORMATIONALISTS
• Globalization determines new international order• International relations are influenced by
globalization• States have to adjust their role to the new
situation• New institutions come into picture and new
regulations must be applied
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Criticisms – Anthony Giddens
• Argued globalization is very real.
• Critical globalization treated as primarily an economic phenomenon.
• Globalization influenced by communication.
• Critical people treat globalization as an out there phenomenon, far removed from the individual.
Criticisms – Ulrich Beck• Work centered on his critique of globalism.• Globalism: the view that the world market eliminates or
suppliants political action – that is, the ideology of rule by the world market, the ideology of neoliberalism (Gane, 2001, p. 84).
• Reduction of globalization to one dimension – economics. • Proposed a reflexive theory of globalism based on two main
concepts: globality and globalization.• Globality: refers to the collision of economic, cultural, and
political forms in world society (Gane, 2001, p. 84). • Globalization: denotes the processes through which sovereign
national states are criss-crossed and undermined by transnational actors with varying prospects of power, orientations, identities, and networks (Gane, 2001, p. 84).
The Cosmopolitan Perspective
• An alternative to exclusively economic and security concerns
• Suggests an alternative to internationalism, globalization as well as nationalism
• A key element is the value of global justice• Recognition of the perspective of the other• Concern with overlapping allegiances• Related to the capacity for self-transformation in the
cultural and political resources of a society• Self-problematization and pluralization • Normative implications of globalization
Criticisms – Zygmunt Bauman
• Adopted a more critical stance than Giddens or Beck.
• Argued globalization gives rise to new forms of class polarization and uncertainty.
• Believed globalism engendered new forms of social exclusion and formed a new hierarchy of social mobility.
• Felt the winners are new elites who have the freedom to move. The losers are those who remain bound to their locality.
Major Types
• Cultural Theory
• Economic Theory
• Political Theory
Cultural Theory - Variations
• In homogeneity, seen either as the transnational expansion of common codes and practices.
– Example - cultural imperialism.
• In heterogeneity, global and local cultural inputs interact.
Cultural Theory - Pieterse• Cultural differentialism – cultures unaffected by
globalization & closed.• Cultural convergence - increasing sameness in the
direction of dominant groups.– Example – McDonalization, influenced by Weber.
• Cultural hybridization - mixing of cultures, producing new and unique cultures. A key concept is glocalization.– Hybridization: emphasizes increasing diversity associated
with the unique mixtures of the global and the local (Ritzer, 2008, p. 462).
– Glocalization: the interpenetration of the global and the local resulting in unique outcomes in different geographic areas (Ritzer, 2008, p. 461).
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The idea of McDonaldization is associated with the work of George Ritzer
This does not mean that the world is dominated by McDonalds restaurants
It suggests that economic activity is becoming standardized and homogenized and organized for efficiency along the lines of fast food outlets
By the ‘McDonaldization of society’ Ritzer means that other sectors, including hospitals and universities are being organized along similar lines
McDonaldization
The Four Pillars of McDonaldization (Ritzer, 2000)
• Efficiency
• Calculability
• Predictability
• Control (via technology)
The McDonaldization of Society
Read a short excerpt from Ritzer’s book http://myweb.stedwards.edu/mikef/dimenz.htm
McDonaldization
• ...McDonaldization,...is the process by which the principles of the fast-food restaurant are coming to dominate more and more sectors of American society as well as of the rest of the world. (George Ritzer)
McDonaldization
• ...McDonaldization,...is the process by which the principles of the fast-food restaurant are coming to dominate more and more sectors of American society as well as of the rest of the world. (George Ritzer)
• The McDonaldization of culture refers to the blending of elements of cultures due to the effects globalization and technology
©Pine Forge Press, an imprint of Sage
Publications, 2004
McDonaldization of Society
• McDonaldization: The process by which the characteristics and principles of the fast food restaurant come to dominate other areas of social life.– Streamlined processes– Uniform goods or services – Speeded up transactions
• George Ritzer used idea as metaphor for harmful effects of bureaucratization on society.
• Likely to continue because:– Impelled by economic interests– Efficiency has become culturally desirable– Parallels other changes in society
Economic Theory - Variations
• Generally see globalization as the spread of neoliberalism, capitalism, and the market economy.
• Some heterogeneity does exist, such as the commodification and the existence of flexible specialization. Interaction of the global with local markets leads to the creation of unique glocal markets.
Economic Theory – Transnational Capitalism: Leslie Sklair • Distinguished two systems of globalization
– Capitalist – is the one that is now predominant
– Socialist – is not yet in existence
• Focused on transnational practices that are able to cut across boundaries with the implication that territorial boundaries are of declining importance in capitalist globalization.
• Argued transnational capitalism is providing the basis for the emergence of socialist globalization.
Economic Theory – Empire: Michael Hardt & Antonio Negri• Empire: a postmodern reality in which dominance
exists but no single nation (or any other entity) is at its center (Ritzer, 2008, p. 466).
• Has no center and is based on juridical power. • It is everywhere; it is omnipresent.• Doesn’t exist yet, we’re in the midst of a
transition from capitalist imperialism to the dominance of empire.
• Seeks to suspend history so it can exist for eternity, to use biopower to control human nature and population.
Political Theory - Variations
• Homogenization perspective focus on the worldwide spread of models of the nation-state and the emergence of similar forms of governance throughout the globe.
– Benjamin Barber’s McWorld.
• Barber’s Jihad - localized, ethnic, and reactionary political forces that involve an intensification of nationalism and that lead to greater political heterogeneity.
Political Theory - Examples• Liberal theory - from John Locke & Adam Smith.
– Liberal theory: belief in the importance of the free market and the need to allow it to operate free of any impediments, especially those imposed by the nation-state and other political entities (Ritzer, 2008, p. 468).
• Realist theory- states aggressively pursuing their own interests.
• James Rosenau focused on fragmegration– Fragmegration: the idea that the world is both
fragmenting and integrating at the same time (Ritzer, 2008, p. 469).
– World is localizing, decentralizing, and fragmenting while it is simultaneously globalizing, centralizing, and integrating.
– Example: the federal government.
Human Nature & Society
• Much academic attention has been on globalization.
• Every nation and every person’s life in this world are transformed by globalization.
• Globalization has worked to the advantage of the wealthy nations. The gap between the rich and poor has actually increased.
Scientific Scrutiny
• Albert (2007) defined four strands of research that have developed on globalization theory:
1. understanding of globalization as inherently varied globalization,
2. global governance research,
3. global history, and
4. global/world society research.
• Albert argued necessary to build on these four strands and merge them with the traditional sociological concepts.
Substantive Area
• In general, can help all.
• Cultural theory can help me, Bryan, & Jen.
• Economic and political theory may be relevant to Johnnie and David’s areas.
Ritzer’s Continuums
MacroscopicMicroscopic
SubjectiveObjective
Globalization Theory
Globalization Theory
Burrell & Morgan’s ParadigmRadical Change
Order
Su
bje
ctiv
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bje
ctiv
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Functionalist
Radical Structuralism
Interpretive
Radical Humanism
McWorld & Jihad by Barber
Empire by Hardt & Negri
Cultural Theory
Cultural Theory
Globalization Theory
Globalization Theory
Fragmegration by Rosenau
Transnational Capitalism by Sklair
References• Albert, M., & ALBERT. (2007). " Globalization theory": Yesterday's
fad or more lively than ever? International Political Sociology, 1(2), 165.
• Burrell, G., & Morgan, G. (1994). Sociological paradigms and organisational analysis. Brookfield, VT: Arena.
• Gane, N. (2001). Chasing the 'runaway world': The politics of recent globalization theory. Acta Sociologica, 44(1), 81.
• Kiely, R. (2005). Globalization and poverty, and the poverty of globalization theory. Current Sociology, 53(6), 895.
• Martell, L. (2007). The third wave in globalization theory. International Studies Review, 9(2), 173.
• Ritzer, G. (2008). Modern sociological theory (7th ed.). Boston: McGraw Hill.
• Yeung, H. W. (2002). The limits to globalization theory: A geographic perspective on global economic change. Economic Geography, 78(3), 285.
Globalization and McDonaldization
• George Ritzer (2004), defines McDonaldization as the process by which the principles of the fast food restaurant are coming to dominate more and more sectors of American society as well as the rest of the world (p.1).
• The principles of this system, Ritzer (2004), are Efficiency, Calculability, Predictability, and Control through Nonhuman Technology (p.6 – 15).
• In essence, it’s fast and reliable. McDonalds is a global icon that is used but can also be replaced with Starbucks or for our purposes
Globalization and McDonaldization
• Ritzer (2004), stated that McDonaldization is “one of many Globalization processes” where he defines Globalization as a “diffusion of practices, expansion of relations across continents, organization of social life on a global scale, and growth of a shared global consciousness” (p.160).
Glocalization and Grobalization
• . Ritzer (2004) utilized the globalization theorist, Roland Robertson’s term, Glocalization, the interpenetration of the global and the local, resulting in unique outcomes in different geographic areas, and Ritzer offers his own coined term, Grobalization, the imperialistic ambitions of nations, corporations, organizations, and the like and their desire, indeed need, to impose themselves on various geographic areas (p. 163 - 165.)
Glocalization and Grobalization
• Ritzer, further, separates them into 4 distinct types of these Globalizations:
1. Glocalization of Something such as Local Crafts or Craftsperson
2. Glocalization of Nothing such as Tourist Trinkets or Souvenir Shop Clerk
3. Grobalization of Something such as Museum or Touring Art Exhibit
4. Grobalization of Nothing such as McDonald’s restaurant and Big Mac
Drivers of change:
• Globalisation and the deregulation of interconnected, global financial markets
• Technological innovation leading to the democratisation of Information
• Decline of heavy industries and the rise of the service sector
PR 1450Introduction to Globalization
Lecture 13
Americanization
Chris Rumford
Introduction
In the first week of the course I said that the idea that globalization and Americanization are synonymous is one of the myths often associated with globalization
Nevertheless, the idea that globalization leads to the homogenization of culture is a powerful one …
… and many people see Americanization as the best example of this homogenization
Put simply, the argument runs that American culture (Hollywood movies, McDonald's, Coca Cola, Disney) exerts a very powerful influence across the world
Americanization
Americanization can be defined as;
‘propagation of American ideas, customs, social patterns, industry and capital around the world’ (Williams, quoted in Ritzer, 2003, 36)
Fear of Americanization
In the post-WWII period concerns about Americanization were particularly strong in France
When Coca-Cola first applied for a bottling licence in 1948 the French Communist Party argued that Coca-Cola should be kept out of France because the company acted as a US spy network
Others argued that it represented a threat to French civilization, or that coke advertising brainwashed the masses (Cohen and Kennedy, 2000: 239)
Starbucks arrives in France
Read the article, ‘Starbucks invades Parisian cafe culture’ http://news.bbc.co.uk/1/hi/world/europe/3401637.stm
Now read what happened when Starbucks opened in Vienna:
‘Viennese in a froth over Starbucks’
http://news.bbc.co.uk/1/hi/business/1698961.stm
• In what way were the responses of the French and Austrians similar?
• Does Starbucks threaten European ‘café culture’?
The influence of American culture
So, it must be true that American culture exerts a massive influence across the world
Perhaps, but it’s only part of the story
In many respects the US is out of step with global norms and values:
– US sports are home-grown not global (baseball, American football)
– gun culture and gun ownership– non-abolition of the death penalty– 20 % of US citizens own a passport
Roland Robertson on Americanization
As Robertson reminds us (2003: 261), it would be perverse to argue that the Guggenheim museum in Bilbao should fall into the same category of Americanization as Sylvester Stallone movies
‘The world is certainly not being Americanized with respect to its religiosity, … rituals of greeting, expressions of the erotic (where the USA still stands for its puritanism), loudness of verbal interaction, and so on’ (Robertson, 2003: 262)
Globalization is not Americanization
Read ‘Globalization is not Americanization’ by Joseph Nye
He argues that ‘Contrary to conventional wisdom, globalization is not “Americanizing” the world www.taipeitimes.com/News/editorials/archives/2004/10/22/2003207970
In what ways does Nye think that globalization can transform America?
Global America?: The Cultural Consequences of Globalization
This important book takes a critical look at the relationship between America and globalization
Read my review of this book (and Ritzer’s book The Globalization of Nothing) in my article, ‘Dude, where's my country? from global America to global nothingness’
www.chrisrumford.org.uk/from_global_america.html
Who is the greatest ever American?
Who do you think was voted the ‘greatest American’ in a recent BBC poll?
Read the article, ‘Your greatest American’http://news.bbc.co.uk/1/hi/programmes/wtwta/2997144.stm
The winner was not:• Elvis Presley• Tiger Woods • Madonna• President Kennedy• Martin Luther King• Oprah Winfrey
1. Homer Simpson 47.17% 2. Abraham Lincoln
9.67% 3. Martin Luther King Jnr
8.54% 4. Mr T
7.83% 5. Thomas Jefferson
5.68% 6. George Washington
5.12% 7. Bob Dylan
4.71% 8. Benjamin Franklin
4.10% 9. Franklin D Roosevelt
3.65% 10. Bill Clinton
3.53% (BBC poll: 37,102 votes cast)
The winner is …
In week 4 we looked briefly at George Ritzer’’s McDonaldization thesis … which does not simply mean that the world is dominated by McDonald’s restaurants
Ritzer suggests that economic activity is becoming standardized and homogenized and organized for efficiency along the lines of fast food outlets
By the ‘McDonaldization of society’ Ritzer means that other sectors, including hospitals and universities are being organized along similar lines
McDonaldization
McDonaldization consists of 4 processes of rational organization:
– efficiency– predictability– calculability– replacement of human with non-human technology
(Ritzer, 2003, 34)
For Ritzer, McDonald’s restaurants represent the ‘paradigm case’ of a much wider phenomenon
McDonaldization of society
McDonaldization and Americanization
According to Ritzer (2003, 35) Americanization involves the following:
• worldwide diffusion of US industrial model post-WWII• worldwide diffusion of US consumption model in 1990s• global marketing of US media (TV, Hollywood)• global marketing of US commodities (Coca Cola, clothes)• US diplomatic support of democratization• training of foreign elites in US universities• use of international labour market and natural resources by
US
McDonaldization of America?
Ritzer says that, ‘it seems odd, to say the least, to think of the Americanization of America. However, we can clearly think in terms of the McDonaldization of America’ (Ritzer, 2003: 41)
The McDonaldization of America involves ‘driving out cultural and regional traditions and replacing them with a single, homogenous system’ (Ritzer, 2003: 41)
The McDonaldization of Society
Read a short excerpt from Ritzer’s book
http://myweb.stedwards.edu/mikef/dimenz.htm
Europe versus America?
In recent years there has been much talk of the major differences between America and Europe
The US-led invasion of Iraq in 2003 divided Europe
In addition to the UK, Spain, Portugal, Poland, Hungary, the Czech Republic, Italy and Denmark also pledged support for the US
This caused France and Germany to propose the idea of a ‘core Europe’ which could, by embracing European values, provide an alternative model for acting in the world
Old Europe versus New Europe
In the short-term however, it led to the idea that Europe was divided between ‘old’ and ‘new’ Europe
‘Old’ Europe was associated with France and Germany and opposition to the war
‘New’ Europe was more pro-American and pro-invasion
US Secretary of State, Donald Rumsfeld said, ‘if you look at vast numbers of other countries in Europe, they’re not with France and Germany … they’re with the US’
Are Americans from Mars and Europeans from Venus?
European values:
– secularization– trust in the state– social solidarity– welfare state– desire for multilateral
world order based international law
– human rights
(Habermas and Derrida, 2003)
American values:
– free enterprise– laissez faire ideology– limited role of government– social inequality (American
dream)– role of military
(Pieterse, 2003)
Living in different worlds
According to Beck (2007: 47), ‘Europeans and North Americans are living in different worlds. The way it looks to the Americans, the Europeans are suffering from a form of hysteria in relation to the environment, [climate change] while, to many Europeans, US Americans are paralysed by an exaggerated fear of terrorism’
American exceptionalism?The USA alone represents approximately a third of the world military spending (Heisbourg, quoted in Pieterse, 2003: 76)
The USA ranks first in the number of incarcerations among nations … and stands alone among wealthy countries in its extensive use of the death sentence (Pieterse, 2003: 76)
The USA transfers around 0.1% of GNP to developing countries annually (UN target is 0.7%) (Pieterse, 2003: 86) … of which a third goes to Israel, and a fifth to Egypt
The US and global governance
According to Pieterse (2003: 87-90):
– USA treats the UN as a rival for world leadership
– The UN is perceived as un-American in that it follows a different conception of world order
– ‘global governance’ is a non-starter in conservative American circles
Concluding comments
The relationship between Americanization and globalization is far from straightforward
The US drives globalization in many ways (e.g. Washington consensus, cultural exports)
But the US is also out of step in other respects (unilateralism, human rights)
The same processes of globalization that act on the rest of the world also act on the US
References
Beck, U. 2007: ‘Reinventing Europe – a cosmopolitan vision’ in C. Rumford (ed) Cosmopolitanism and Europe (Liverpool University Press)
Cohen, R. and Kennedy, P. 2000: Global Sociology (Palgrave)Habermas, J. andDerrida, J. 2003: ‘February 15, or, what binds European together’ in D. Levy, M. Pensky and J. Torpey (eds), Old Europe, New Europe, Core Europe: Transatlantic Relations after the Iraq War (Verso)
Pieterse, J. 2003: ‘Hyperpower exceptionalism: globalization the American way’ in Beck, Sznaider and Winter (eds) Global America?: The Cultural Consequences of Globalization (Liverpool University Press)
(cont.)
Ritzer, G. 1996: The McDonaldization of Society. (Pine Forge Press)
Ritzer, G. and Stillman, T. 2003: ‘Assessing McDonaldization, Americanization and globalization’ in Beck, Sznaider and Winter (eds) Global America?: The Cultural Consequences of Globalization (Liverpool University Press)
Robertson, R. 2003: ‘Rethinking Americanization’ in Beck, Sznaider and Winter (eds) Global America?: The Cultural Consequences of Globalization (Liverpool University Press)
References (cont.)
• We’re hoping from this presentation you will:– Learn a bit about the history of McDonald’s.– Understand just how much international
expansion McDonald’s is partaking in.– Criticism/Opposition to McDonald’s– SWOT Analysis– Few small legal cases involving McDonald’s– McDonald’s in India and China
• Infrastructure• Politics
• Began in 1940• Located in 122 Countries• 51 million people are served a day at
30,000 different locations• Independent local business people own and
operate more than 70% of McDonald’s globally• In 2004, Morgan Spurlock came out with a
documentary titled Super Size Me that looked at the fast food corporation as a contributor to obesity
• In about 30 markets outside the U.S., McDonald’s restaurants are operated by developmental licensees who own the business and pay McDonald’s royalties based on a percentage of sales.
• Began by two brothers:– Dick McDonald
– Mac McDonald
• Started off as a hot dog stand in CA [1937]
• Hot Dog stand moves to Rt.66 and becomes a Hamburger Joint.– Offers 25 menu items
– Becomes car hop
– Highly profitable teen hang out
1st McDonald’s Hamburger Cost $.15
• Brothers realize Burgers were most profitable
• Close down restaurant and reopen as a “Speedy Service System”– Offer only burgers, shakes, and fries
• McDonald’s is franchised to several locations[1953]
– First McDonald’s to feature the Golden Arches
• Ray Kroc discovers McDonald’s [1954]– Creates “McDonald’s System’s Inc” to start
franchising [1955] – Renamed to “McDonald’s Corporation” [1960]
A McDonald’s in Downey, CA is the oldest operating
McDonald’s today[opened in 1953]
• In 1967 the first McDonald’s outside of the US opens up– Richmond, British Columbia
• Big Mac and Apple Pie introduced [1968]• 1971 McDonalds really starts going global
» Asian: Tokyo Ginza District, Japan» European: Netherland, Munich, Germany
• 1974 – McDonald’s Starts the Ronald McDonald House Charities as a non-profit organization to improve the health and well being of children. In 1985 the first RMHC opened internationally in the Netherlands.
McDonald’s in Germany
offered Beer as a part of their
menu
• 1967 - Canada & Puerto Rico (first restaurants outside the U.S.)• 1971 - Tokyo, Japan, Amsterdam, Netherlands & Sydney, Australia • 1979 - Rio de Janeiro, Brazil• 1990 - Moscow, Russia & China
– The Chinese characters "Mai Dang Lao" are used to phonetically approximate the word "McDonald's“.
• 1992 - Casablanca, Morocco & Czech Republic• 1993 - The first McDonald's at sea opens aboard the Silja Europa,
the world's largest ferry sailing between Stockholm and Helsinki.• 1994 - Restaurants open in Bahrain, Bulgaria, Egypt, Kuwait, Latvia, Oman,
New Caledonia, Trinidad and United Arab Emirates.• 1996 - First restaurant opens in India.
– 50-50 joint venture partnership between McDonald’s Corporation (USA) and two Indian businessmen.
– Two separate operations in Northern & Western India.– Partners and their management teams trained extensively in Indonesia & the
U.S.
• India: Sandwich sauces, shakes and soft-serve products do not contain eggs in order to offer more variety to vegetarian customers.
• Uruguay: McHuevo (hamburger with a poached egg on top)
• Norway: McLaks (grilled salmon sandwich with dill sauce)
• Germany: Beer• Thailand: Samurai Pork Burger (sausage patty in teriyaki
sauce)• Taiwan: Rice Burger
• U.S. fast food market showed signs of saturation by early 1980’s after 3 decades of rapid growth.
• Foreign revenues and profit have grown 22% annually since early 1980’s.
• By end of 2000, the foreign restaurants generated $21B (53%) of the corporation’s $40B in revenues.
• Foreign markets are sources of valuable new ideas.
• Dutch– Prefabricated modular restaurants
(temporary & easily moved)
– Widely used for big outdoor events
• Sweden– Enhanced meat freezer now used throughout entire firm
• Singapore– Small, limited menu satellite restaurants (low overhead)
– Now in hospitals and sports arenas in the U.S.
• Expansion rate slowed in the last few years due to declining operating margins and focus on improving existing restaurants and menu offerings.
• International expansion was led by late CEO, Jim Cantalupo, who passed away of a heart attack in April 2004, age 60.
• By the late 1990‘s, McDonald’s aggressive expansion resulted in cannibalization of its own sales because stores were built too close to each other.
• In 2003,the focus changed from adding new restaurants to building sales at existing restaurants.– Struggling European and South Korean restaurants
• U.K. - public concerns over unhealthy menu items• Germany & South Korea - adverse economic conditions
– Between 2003 and 2004, underperforming restaurants were closed in the U.S., Japan, Latin America and Jamaica.
– SARS concerns had a negative impact on sales in 2003 in many Asian countries.
Jim Cantalupo
• McDonald's has most certainly had a profound effect on China.
• When the first McDonald's opened in Beijing more than a dozen years ago, 40,000 people lined up to observe a Big Mac and get their picture taken with the infamous Ronald McDonald.
• McDonald's is growing faster in China than in the United States.
• McDonald’s owns & operates more than 600 stores across 105 cities in China.
• More than 100 more McDonald's stores will be added annually to Chinese cities within the coming years.
• While offering the basic burger and fries, McDonald’s in China also offers:– Szechuan-style spicy chicken wings– Seafood Soup– Rice– Oriental Sauces– Taro and Red Bean Dessert
Red Bean Dessert
• In 1992, McDonald’s opened its first restaurant in Beijing and the restaurant enjoyed good sales.
• 2 years into the 20-year lease, the city government told McDonald’s to move the restaurant.
• The location would be used for another complex planned by a developer from Hong Kong.
• McDonald’s tried to enforce its contract by taking the government to court, but it lost the case.
• In the West, contract law governs business transactions.• In China, personal power and relationships/connections
determine how business is conducted.
• Guanxi literally means relationships• Concept is deeply rooted in Chinese culture (based on
2000-year-old Confucian ideology).• Guanxi is crucial for building long-term relationships and
doing business in China.• McDonald’s did not have the same connections as the
Chinese developer.• By not accepting the government’s
decision gracefully and taking it to court, McDonald’s damaged its reputation with the city government
Chinese Symbol for Guanxi
In December 2005, China got it’s first
drive thru in the heart of the central
business district of Dongguan
Guangdong Province, thirty
years after the first McDonald’s US drive thru was established
• In 1997 China passes first franchise law. Prior to this, all McDonald’s restaurants were corporately owned and operated.
• Demand for western style conveniences is increasing as China’s middle class grows.– Drive-through fast food windows
•While there are some 150-200 million middle-class people in India that can afford McDonald’s there is also a vast majority of the Indian population that is still too poor to afford it
•Limited menu, fresh food, fast service and affordable prices have been the pillars behind McDonald’s success in India. Intense competition and demands for a wider menu, drive-through and sit-down meals - encouraged the fast food giant to customize product variety without hindering the efficacy of its supply chain
McDonald’s in India offers home delivery. Also if you go to a McDonald’s restaurant and order food, you take a seat and they bring it to your table.
• For thousands of years, India's Hindu culture has revered the cow and does not eat the meat of the scared cow. In addition there are some 140 million Muslims in India, who do not eat pork.
• To respect and adapt to Indian culture, McDonald's created an Indian version of burgers which are made from mutton and chicken. All foods are segregated vegetarian and non-vegetarian, due to the fact that many Hindus are vegetarians.
• Vegetarian Menu– Veg McCurry – McAloo Tikki– McVeggie– Pizza McPuff– Crispy Chinese– Paneer Salsa Wrap
• Non-Vegetarian Menu– Chicken Maharaja Mac – McChicken– Filet-O-Fish– Chicken Mexican Wrap– Chicken McGrill– Chicken McCurry Pan
Quoted from: http://www.thunderbird.edu/pdf/about_us/case_s
eries/a07050015.pdf
“McDonald’s strategy of positioning itself as a family restaurant with an emphasis on local menus and local values seems to be working well in India. But to what extent McDonald’s can
continue its growth in India remains uncertain. McDonald’s is more than just another American fast food chain. It carries a
symbolic load of Americanness—American variant of capitalism and its overwhelming domination over the global economy. It is also a symbol of American cultural imperialism. For this reason, McDonald’s operations in India, like other parts of the world, will
continue to face opposition from religious fundamentalists, environmentalists, protectionists, animal rights activists, and anti-
globalization protestors. “
• New menu items specifically for vegetarians are introduced.
• It is made aware that the food is produced locally to show investment in Indian Infrastructure.
• McDonald’s developed and maintains community parks to prevent public resentment.
• Unique supply chain created:• Operates best when chain is balanced• Necessary to maintain food freshness
McDonald’s transferred its food processing centers to India to increase efficiency
• In Mumbai, there is an event called McDonald’s Spotlight. This is an annual interschool performing arts competition. This competition is open to all secondary school students.
• Since 2002, McDonald’s has participated in World Children’s Day. On this day, McDonald’s raises money for any charity of their choice. [Usually educational programs]
Sociologist George Ritzer, author of “The McDonaldization of Society”, states that McDonaldization is a transformation of rationalization, moving away from traditional to rational modes of thought, and scientific management.
• Ritzer has highlighted 4 major concepts of McDonaldization:– Efficiency - the optimal method for accomplishing a task – Calculability - objective should be quantifiable (i.e. sales)
rather than subjective (i.e. taste)
– Predictability - standardized and uniform services– Control - standardized and uniform employees
• These concepts have led to the stability and expansion of McDonald’s in the overseas market, especially in East Asia, where more and more McDonald’s franchises are opening constantly, leading to the belief that maybe one day every restaurant will be taken over by McDonald’s itself.
McDonald’s franchises in various countries also offer a variety of meals to better help customers in choosing food that is best accustomed to people’s beliefs. For example, various faiths don’t permit people eating pork or
beef. The substituting of an existing meal with an alternative food can lead to the creation of new menu items, therefore, keeping the volume of customers high at all times as long as the expectations of customers are met with the outcome of higher revenues.
• Declining market share
• Weak product development
• Disgruntled franchisees
• Quality and taste of products
• Slowed revenue and income growth
• McJobs Program:
– McDonald’s is one of the top 25 companies that has focused in hiring people with disabilities, giving them a chance to make a living like everyone else, leading to the creation of the McJobs Program.
– Looking to employ disabled people is what McDonald’s focuses on because, according to John Yeh, “employment of persons with disabilities is a win-win situation for employers, persons with disabilities, and service providers.”
– Considered the best employer for Asians McDonald’s worldwide willingly hires people constantly in
order to supplement the growing need of employees for its growing franchise in over 101 countries.
• The American fast-food market has become increasingly competitive as rivals such as Burger King, Wendy's and Taco Bell fight to maintain their market share.
• Strength of competition
• More health-conscious consumers
• Changing demographics
• Fluctuation of foreign exchange rates; Economies
• Focus on already existing operations before continuing expansion in order to increase their profit margin.
• Continue focusing on expanding in India and China because they are both developing countries with increasing economies and high populations.
• Add more menu choice and variety to promote healthier lifestyles.
• Today, the company operates more than 30,000 restaurants in approximately 120
countries on five continents
• Since its founding in 1955, McDonald’s has sold well over 100 billion hamburgers
• McDonald’s prepares more than 6.8 million pounds of French fries every day
• Advertisting Age named McDonald’s marketer of the year for
2004
• Ranked 5th for Social Responsibility by Fortune magazine
• All franchisees are independent, full-time operators
• Approximately 70% of McDonald’s restaurant businesses
world-wide are owned and operated by franchisees
• Often blamed for Obesity
• Blamed for excessive packaging waste
• Anti-Globalization protests
• Seen as American symbol of economical resource dominance
• Exploitative advertising
• Suffering and exploitation of livestock
• High calorie foods
wikipedia.com
• “In 1994, McDonald's successfully forced Elizabeth McCaughey of the San Francisco Bay Area to change the trading name of her coffeeshop McCoffee, which had operated under that name for 17 years.
• In 1994, McDonald's sued a restaurant in Kingston, Jamaica, because of trademark infringement, although it had opened in 1971, before McDonald's entered the Jamaican market.
• In 1996, McDonald's lost a legal battle at the Danish Supreme Court to force Allan Pedersen, a mincemeat sandwich vendor, to drop his shop name McAllan.
• In 1996, McDonald’s forced Scottish sandwich shop owner Mary Blair of Fenny Stratford, Buckinghamshire to drop McMunchies as her trading name.
• In 2001, McDonald's lost a 9-year legal action against Frank Yuen of McChina Wok Away, Chinese takeway outlets in various part of the UK.
• In South Africa, however, McDonald's had to battle against the country's trademark laws, which stated that a registered trademark had to be used within a certain period of time. This resulted in a local company announcing plans to launch its own fast-food chain using the McDonald's name, although the South African High Court eventually ruled in McDonald's favor. “
• In 2005 McDonald’s had some opposition when they decided to name one of their burgers in Africa the “McAfrika”– Believed to have a negative connotation– Improper to the starving people of Africa
“"It's inappropriate and distasteful to launch a
hamburger called “McAfrika' when large portions of southern
Africa are on the verge of starvation"
• To extend the shelf life of carrots that come with a happy meal, McDonald’s was dipping their carrots in hydrogen peroxide and mixing it with acetic acids
• It is said by some that this is not necessarily unhealthy, but still, would you want to be eating hydrogen peroxide?
• In 2001 McDonald’s was sued by three vegetarians, including two Hindus, claiming that McDonald’s used beef fat in the oil to make their fries despite McDonald’s claim that it was using 100% vegetable oil.
• In 2002, McDonald’s conceded by offering $10 million in compensation to the plaintiffs and offered an apology for misleading the public about the ingredients used for their fries and hash browns.
• According to Fast Food Nation by Eric Schlosser (2001), nearly one in eight workers in the US has at some time been employed by McDonald's. The book also states that McDonald’s is the largest private operator of playgrounds in the U.S., as well as the single largest purchaser of beef, pork, and potatoes.
• www.mcdonalds.com• www.mcdonaldsindia.com• http://en.wikipedia.org/wiki/Mcdonalds• http://www.cbsnews.com/stories/2002/06/05/national/main511109.shtml• http://www.mcspotlight.org/media/press/mcds/aftenposten180405.html• http://www.mcspotlight.org/media/press/mcds/dailymail150304.html• http://www.ithaca.edu/ithacan/articles/0311/13/opinion/1dont_blame_.htm • http://www.ntac.hawaii.edu/products/Vol4%20Emp.Briefs/EB-Vol4-Iss07-
Employer • http://en.wikipedia.org/wiki/McDonaldization• http://www.mcdonaldsindia.com/aboutus/supplychain/index.html• http://www.rajluhar.com/raj/finalproject.htm• http://www.franchisetochina.com/f13.htm• www.licenseenews.com• “McDonald’s Everywhere” Management Focus Article• Hill, Charles (2005). Global Today. McGraw Hill College, NY. p.90-92
Globalization
Democracy andpolitics
Media and communication
Technologies
Culture
Economics
Measuring Globalization and its Consequences
Axel Dreher
Globalisation and the Labour Market, Department for Business Enterprise and Regulatory Reform, December 13, 2007
Structure
• Measuring Globalization: the KOF index– Concept, measurement, results
• Globalization and inequality– Hypotheses– Data and Method– Results
• The impact of globalization on policy and performance
• Policy implications
Measurement of “Globalization”
• Trade Openness• FDI• Capital Account Restrictions• Barriers to Trade
Only Economic Globalization
Drawbacks of previous attempts to measure globalization
– Most studies focus on economic dimension only
Exception: A.T. Kearny/ Foreign Policy Magazine
– Ad hoc determinants of weights
– Trade/ Capital restrictions missing
– Lack of time dimension/ comparability
Definition of Globalization
“Globalization” includes social, political as well as economic factors. It may be defined as the
intensification of cross-national economic, political, cultural, social and technological interactions that
lead to the establishment of trans-national structures and the integration of economic,
political and social processes on a global scale.
(Dreher, Gaston, Martens 2008)
Definition of Globalization– economic globalization, characterized as
long distance flows of goods, capital and services as well as information and perceptions that accompany market exchanges
– social globalization, expressed as the spread of ideas, information, images, and people
– political globalization, characterized by a diffusion of government policies
KOF-Index
– Broad focus
– Much wider sample
– Weights determined by objective statistical method
– Trade/ Capital restrictions included
– Comparability over time
Calculation of the KOF-Index
– Variables transformed on 1-100 scale, where higher values represent more globalization
– Weights determined by PCA (panel normalization)
– Missing values linearly interpolated
– Overall Index reported as missing if more than 1/3 of its data (weight) is missing
– Results in data for 122 countries, 1970-2004
2007 Index of GlobalizationA. Economic Globalization [36%]
i) Actual Flows (50%)Trade (percent of GDP) (16%)Foreign Direct Investment, flows (percent of GDP) (21%)Foreign Direct Investment, stocks (percent of GDP) (23%)Portfolio Investment (percent of GDP) (19%)Income Payments to Foreign Nationals (percent of GDP) (22%)
ii) Restrictions (50%)Hidden Import Barriers (24%)Mean Tariff Rate (28%)Taxes on International Trade (percent of current revenue) (28%)Capital Account Restrictions (20%)
2007 Index of GlobalizationB. Social Globalization [38%]
i) Data on Personal Contact (29%)Outgoing Telephone Traffic (14%)Transfers (percent of GDP) (8%)International Tourism (27%)Foreign Population (percent of total population) (25%)International letters (per capita) (27%)
ii) Data on Information Flows (35%)Internet Hosts (per 1000 people) (20%)Internet Users (per 1000 people) (24%)Cable Television (per 1000 people) (20%)Trade in Newspapers (percent of GDP) (14%)Radios (per 1000 people) (23%)
iii) Data on Cultural Proximity (37%)Number of McDonald's Restaurants (per capita) (40%)Number of Ikea (per capita) (40%)Trade in books (percent of GDP) (20%)
2007 Index of GlobalizationC. Political Globalization [26%]
Embassies in Country (35%)Membership in International Organizations (36%)Participation in U.N. Security Council Missions (29%)
2007 Economic index of Globalization1. Luxembourg 98.49 21. Spain 82.36 90. Madagascar 45.902. Singapore 95.14 22. Switzerland 82.02 91. Fiji 45.823. Ireland 94.88 23. New Zealand 81.21 92. Zimbabwe 44.964. Belgium 92.33 24. Italy 79.17 93. Egypt, Arab Rep. 44.535. Estonia 92.05 25. Latvia 78.65 94. Cote d'Ivoire 44.006. Netherlands 90.18 26. Panama 78.38 95. Algeria 43.927. Austria 88.65 27. Australia 77.89 96. Kenya 43.538. Sweden 88.52 28. Lithuania 77.29 97. Pakistan 42.309. Portugal 86.81 29. Cyprus 77.28 98. Cameroon 42.0510. United Kingdom 86.12 30. Denmark 77.04 99. Morocco 41.5711. Bahrain 85.21 31. Slovenia 76.08 100. Haiti 41.5112. Finland 84.62 32. Trinidad and Tobago 75.58 101. Mauritius 40.3613. Czech Republic 84.46 33. Jamaica 75.02 102. Benin 40.2214. Hungary 84.34 34. Croatia 74.82 103. Senegal 39.9315. Chile 83.97 35. Malaysia 74.70 104. Rwanda 37.7116. France 83.95 36. Greece 74.09 105. India 36.1717. Malta 83.41 37. Poland 73.64 106. Burundi 31.9218. Canada 83.09 38. Botswana 73.43 107. Niger 30.8019. Israel 83.07 39. United States 73.00 108. Bangladesh 29.5220. Iceland 82.54 40. Germany 72.58 109. Iran, Islamic Rep. 25.34
2007 Social index of Globalization1. Austria 93.10 21. Slovak Republic 79.17 103. Albania 31.942. Singapore 92.49 22. Portugal 77.86 104. Guinea-Bissau 31.523. Belgium 90.66 23. United States 77.82 105. Rwanda 31.234. Netherlands 89.98 24. Ireland 77.65 106. Syrian Arab Republic 30.075. Denmark 88.92 25. Hungary 77.65 107. Cameroon 29.366. Sweden 88.52 26. Spain 77.59 108. Nigeria 29.207. Switzerland 88.43 27. Malta 76.22 109. Madagascar 29.018. United Kingdom 87.88 28. Poland 74.92 110. Burundi 28.969. United Arab Emirates 86.91 29. Estonia 73.75 111. Chad 28.9410. Canada 86.64 30. Italy 73.16 112. Central African Republic 28.4611. Czech Republic 85.52 31. New Zealand 73.13 113. Nepal 28.2012. Iceland 84.98 32. Bahamas, The 71.92 114. Sierra Leone 26.7413. Norway 84.64 33. Slovenia 71.78 115. Algeria 26.5214. France 84.22 34. Saudi Arabia 71.33 116. Iran, Islamic Rep. 25.0015. Finland 83.91 35. Cyprus 70.39 117. Congo, Dem. Rep. 24.9216. Germany 83.56 36. Malaysia 70.36 118. Niger 24.1917. Australia 82.78 37. Greece 70.04 119. Mali 23.9118. Kuwait 79.75 38. Latvia 69.51 120. Haiti 21.8319. Luxembourg 79.29 39. Russian Federation 66.23 121. Bangladesh 18.6320. Israel 79.28 40. Croatia 65.15 122. Myanmar 10.24
2007 Political index of Globalization1. France 98.06 21. Finland 86.51 103. Panama 28.502. United States 96.11 22. Brazil 86.41 104. Nicaragua 28.153. Russian Federation 96.04 23. Korea, Rep. 86.27 105. Latvia 26.434. United Kingdom 95.76 24. Switzerland 86.13 106. Bahrain 26.285. Canada 94.85 25. Nigeria 85.79 107. Oman 23.416. Germany 94.61 26. Portugal 85.50 108. Trinidad and Tobago 22.507. Sweden 93.82 27. Malaysia 85.39 109. Iceland 21.908. Italy 93.55 28. Pakistan 85.12 110. Haiti 20.719. Austria 93.51 29. Romania 83.57 111. Congo, Rep. 20.7110. Belgium 93.37 30. Greece 83.32 112. Guyana 20.1111. China 92.06 31. Czech Republic 82.90 113. Malta 18.2612. Egypt, Arab Rep. 91.81 32. Australia 82.35 114. Myanmar 18.0613. India 90.24 33. South Africa 82.12 115. Papua New Guinea 17.8614. Spain 89.99 34. Hungary 81.88 116. Botswana 17.1115. Poland 89.41 35. Jordan 79.37 117. Central African Republic 16.0816. Denmark 87.47 36. Morocco 77.88 118. Belize 14.6817. Argentina 87.47 37. Indonesia 77.48 119. Rwanda 14.6018. Japan 87.37 38. Norway 77.19 120. Barbados 13.9619. Turkey 86.72 39. Ukraine 76.97 121. Burundi 12.5020. Netherlands 86.51 40. Kenya 75.90 122. Bahamas, The 11.44
2007 KOF index of Globalization1. Belgium 91.96 21. Poland 78.22 103. Benin 41.732. Austria 91.60 22. Norway 77.75 104. Papua New Guinea 41.553. Sweden 89.89 23. Malaysia 75.81 105. Cameroon 41.324. United Kingdom 89.29 24. Greece 74.94 106. Guinea-Bissau 40.685. Netherlands 89.15 25. Luxembourg 74.18 107. Zimbabwe 40.066. France 87.71 26. New Zealand 73.46 108. Chad 39.567. Canada 87.49 27. Slovak Republic 72.58 109. Syrian Arab Republic 39.098. Switzerland 85.53 28. Estonia 72.11 110. Congo, Rep. 38.789. Finland 84.84 29. Israel 70.83 111. Madagascar 37.4510. Czech Republic 84.46 30. United Arab Emirates 70.39 112. Bangladesh 36.0111. Denmark 84.27 31. Russian Federation 69.91 113. Congo, Dem. Rep. 35.4912. Ireland 83.09 32. Chile 69.91 114. Nepal 35.2713. Portugal 83.06 33. Croatia 69.30 115. Iran, Islamic Rep. 35.1914. Spain 82.52 34. Slovenia 68.82 116. Niger 34.2815. Germany 82.48 35. Iceland 67.75 117. Sierra Leone 33.2716. Singapore 82.14 36. Bulgaria 65.51 118. Rwanda 29.2517. Hungary 81.15 37. China 65.26 119. Haiti 28.6118. Australia 80.91 38. Korea, Rep. 64.82 120. Myanmar 27.2919. United States 80.83 39. Jordan 64.74 121. Central African Republic 26.7920. Italy 80.61 40. Japan 64.22 122. Burundi 25.75
2007 KOF index, world average
3040
5060
1970 1975 1980 1985 1990 1995 2000 2005
KO
F In
dex
of G
loba
lizat
ion
2007
year
4045
5055
6065
1970 1975 1980 1985 1990 1995 2000 2005
Eco
nom
ic G
loba
lizat
ion
(200
7)
year
2030
4050
60
1970 1975 1980 1985 1990 1995 2000 2005
Soc
ial G
loba
lizat
ion
(200
7)
year
3040
5060
1970 1975 1980 1985 1990 1995 2000 2005
Pol
itica
l Glo
baliz
atio
n (2
007)
year
Index of Globalization by regions2
05
08
0
20
50
80
20
50
80
20
50
80
20
50
80
20
50
80
20
50
80
1970 2004 1970 2004 1970 2004
1970 2004 1970 2004 1970 2004
1970 2004
East Asia & Pacific East Europe & Central Asia Latin America & Caribbean
Middle East & North Africa South Asia Sub-Saharan Africa
Western Europe and Industrialized
200
7 K
OF
Ind
ex
of G
loba
lizatio
n
Year
Index of Globalization by income2
05
08
0
20
50
80
20
50
80
20
50
80
20
50
80
1970 2004 1970 2004 1970 2004
1970 2004 1970 2004
High income: OECD High income: nonOECD Low income
Lower middle income Upper middle income
200
7 K
OF
Ind
ex
of G
loba
lizatio
n
Year
Index of Globalization, UK
6070
8090
1970 1975 1980 1985 1990 1995 2000 2005
KO
F In
dex
of G
loba
lizat
ion
2008
year
5060
7080
90
1970 1975 1980 1985 1990 1995 2000 2005
Eco
nom
ic G
loba
lizat
ion
(200
8)year
4050
6070
8090
1970 1975 1980 1985 1990 1995 2000 2005
Soc
ial G
loba
lizat
ion
(200
8)
year
8085
9095
100
1970 1975 1980 1985 1990 1995 2000 2005
Pol
itica
l Glo
baliz
atio
n (2
008)
year
Application: Has globalisation increased inequality?
• Dreher and Gaston, Does globalisation increase inequality? Forthcoming, Review of International Economics.
Trade and labour markets
• Rising inequality has coincided with the “second wave” of globalisation
– Trade liberalisation has progressed; concerns about imports from LDCs have been prominent. Stolper-Samuelson?
– FDI increases demand for skilled labour in developed and less-developed economies
– A few authors have found significant labour market effects attributable to increasing import penetration
• Rodrik (1997) argues that if liberalising trade is important, it follows that trade must surely also be important for labour market earnings and the distribution of income
McDonaldization of the global economy?
• Kuznets (1955) argued that industrialisation should witness an eventual declines in inequality. The “inverted-U” hypothesis
• Political and social integration are also important for income inequality– Atkinson (1997): Social norms are very important! – Moreover, trade liberalising policies often bundled
with privatisation and deregulation measures as well as changes to social policies (Lindert and Williamson, 1991)
– Globalisation is sometimes equated with “Americanisation”
– Political globalisation• A race-to-the-bottom (or a race-to-the-top)?
HypothesesPredicted effects of globalisation on inequality
Dimension of globalisation OECD LDC’s All
Economic + +/- ?
Political +/- +/- ?
Social +/? ? ?
Overall +? ? ?
Key: Theory predicts: +/-/? = positive/negative/unknown effect.
Towards an empirical Model– Up to 100 countries; 5 year averages, 1970-2000
–
– Dependent variables: • Industrial Wage Inequality measured by Theil’s T-statistic
(UTIP)
• Household Income Inequality measured by Gini coefficient (Francois and Rojas-Romagosa, 2005)
– Explanatory variables: Lagged endogenous variable; Democracy Index; GDP per capita (and its square); Age-dependency ratio; Population growth; Government consumption
y y G Xit it it it i t it 1 ' '
(log) wage inequality over time
-3.5
-3.4
-3.3
-3.2
-3.1
-3
1975 1980 1985 1990 1995 2000
log
(w
age
ineq
ualit
y)
year
(log) income inequality over time
3.6
3.6
53
.73
.75
1975 1980 1985 1990 1995 2000
log
(G
ini c
oeffi
cien
t)
year
Results for overall index, OLSwage income wage income wage income
all all OECD OECD Non-OECD Non-OECDGlobalisation, index 0.162 0.043 0.256 0.028 0.110 0.047
(2.01**) (3.40)*** (2.57**) (2.11)** (0.96) (2.57)**Democracy, index 0.039 0.006 0.087 0.005 0.021 0.005
(2.66***) (2.48)** (2.74***) (1.24) (1.44) (1.62)GDP per capita -9.83E-05 -1.61E-05 -4.51E-05 -1.12E-05 -2.49E-04 -5.04E-05
(2.53**) (3.40)*** (0.67) (1.60) (3.89***) (4.50)***GDP per capita (squared) 2.18E-09 3.75E-10 1.08E-09 1.53e-10 6.39E-09 1.36e-09
(2.97***) (4.01)*** (1.06) (1.29) (3.26***) (4.37)***Lagged dependent 0.202 0.192 0.505 0.628 0.178 0.079
(2.50**) (2.52)** (3.30***) (5.26)*** (1.98**) (1.05)
Number of countries 100 100 27 26 73 74Number of observations 411 351 129 113 282 238Period dummies (Prob > F) 0.02 0.00 0.18 0.00 0.00 0.00Country dummies (Prob > F) 0.00 0.00 0.00 0.00 0.00 0.00R squared (within) 0.32 0.93 0.55 0.93 0.31 0.89
Results for overall index, GMMwage income wage income wage income
all all OECD OECD Non-OECD Non-OECDGlobalisation, index 0.287 0.056 0.327 0.049 0.197 0.031
(1.79)* (2.61)** (1.06) (2.83)*** (1.15) (0.94)Democracy, index 0.007 0.000 0.051 0.006 0.008 0.000
(0.49) (0.13) (2.36)** (2.67)** (0.74) (0.10)GDP per capita -9.58E-05 -1.68E-05 -1.35E-04 -2.08E-05 -7.34E-05 -5.58E-06
(2.19)** (2.67)*** (2.12)** (6.20)*** (1.55) (0.59)GDP per capita (squared) 2.02E-09 3.10E-10 2.75E-09 3.90E-10 2.85E-09 1.30E-10
(2.00)** (2.35)** (2.45)** (5.90)*** (1.38) (0.37)Lagged dependent 0.807 0.816 0.895 0.715 0.663 0.937
(4.54)*** (5.88)*** (5.50)*** (10.66)*** (3.30)*** (5.16)***Constant -0.986 0.607 -0.691 1.003 -1.298 0.228
(1.77)* (1.10) (0.67) (3.99)*** (2.18)** (0.32)
Number of countries 100 100 27 26 73 74Number of observations 380 342 120 111 260 231Period dummies (Prob > F) 0.00 0.02 0.00 0.00 0.02 0.01Hansen test (prob>chi2) 0.40 0.18 0.26 0.92 0.66 0.53Arellano Bond test (pr>z) 0.18 0.75 0.15 0.61 0.08 0.87
Results for sub-indices, OLSwage income wage income wage income
all all OECD OECD Non-OECD Non-OECDEconomic globalisation, index 0.084 0.018 0.179 0.020 0.058 0.016
(2.05**) (2.57)** (1.93*) (1.46) (1.26) (1.98)**Social globalisation, index -0.004 0.011 0.096 0.007 -0.204 0.010
(0.08) (1.32) (1.95*) (1.15) (1.58) (0.49)Political globalisation, index 0.053 0.012 0.071 0.008 0.041 0.014
(1.66*) (2.69)*** (1.94*) (1.76)* (0.78) (2.11)**Democracy, index 0.037 0.006 0.078 0.003 0.019 0.005
(2.53**) (2.48)** (2.20**) (0.77) (1.32) (1.73)*GDP per capita -8.90E-05 -1.55E-05 -4.54E-05 -8.88E-06 -1.68E-04 -4.84E-05
(2.14**) (3.00)*** (0.70) (1.26) (2.03**) (3.87)***GDP per capita (squared) 2.11E-09 3.80E-10 1.10E-09 1.10E-10 4.66E-09 1.32E-09
(2.63***) (3.58)*** (1.05) (0.90) (2.13**) (3.87)***Lagged dependent 0.206 0.197 0.520 0.650 0.174 0.083
(2.53**) (2.59)** (3.08***) (5.44)*** (1.93*) (1.09)
Number of countries 100 100 27 26 73 74Number of observations 410 349 128 112 282 237Period dummies (Prob > F) 0.02 0.02 0.03 0.00 0.00 0.00Country dummies (Prob > F) 0.00 0.00 0.00 0.00 0.00 0.00R squared (within) 0.32 0.93 0.55 0.93 0.33 0.89
Results for sub-indices, GMMwage income wage income wage income
all all OECD OECD Non-OECD Non-OECDEconomic globalisation, index 0.039 0.007 0.128 -0.007 -0.019 -0.001
(0.49) (0.70) (1.15) (0.40) (0.23) (0.10)Social globalisation, index 0.069 0.015 0.093 0.016 -0.140 0.007
(0.76) (1.04) (1.12) (1.91)* (0.79) (0.23)Political globalisation, index 0.056 0.017 0.006 0.000 0.080 0.019
(1.49) (3.82)*** (0.14) (0.03) (1.64) (2.22)**Democracy, index 0.008 0.000 0.031 0.012 0.013 0.000
(0.56) (0.25) (1.58) (2.15)** (1.04) (0.29)GDP per capita -7.20E-05 -1.28E-05 -1.01E-04 -1.20E-05 -2.23E-05 1.26E-06
(1.49) (1.51) (2.14)** (3.42)*** (0.34) (0.10)GDP per capita (squared) 1.42E-09 2.10E-10 1.98E-09 1.90E-10 2.55E-09 -5.00E-11
(1.38) (1.25) (2.31)** (2.24)** (0.96) (0.12)Lagged dependent 0.737 0.799 0.823 0.562 0.612 0.916
(4.42)*** (5.26)*** (4.43)*** (4.97)*** (3.28)*** (6.97)***Constant -0.890 0.703 -0.795 1.636 -1.053 0.275
(1.70)* (1.21) (0.88) (3.85)*** (1.52) (0.53)
Number of countries 100 100 27 26 73 74Number of observations 379 340 119 110 260 230Period dummies (Prob > F) 0.00 0.00 0.36 0.00 0.04 0.00Sargan test (prob>chi2) 0.70 0.30 0.78 0.81 0.75 0.86Arellano Bond test (pr>z) 0.23 0.59 0.16 0.52 0.10 0.75
Is there a bottom line?– Globalization exacerbated inequality; in
particular:• income inequality in OECD countries
– No robust impact in less developed countries
– Not obvious which dimension of globalization drives the result
The impact of Globalization on policy and outcomes
– Economic growth? (Dreher, 2006, Applied Economics)– Government policies? (Dreher, 2006, EJPE)– Expenditure composition? (Dreher, Sturm, Ursprung,
2007, Public Choice)– Union density (Dreher and Gaston 2007, Kyklos)
The impact of Globalization on policy and outcomes
-10
-50
5
-10 -5 0 5 10
Eco
nom
ic G
row
th
Index of Globalization
-22
Uni
oniz
atio
n-15 15
Index of Globalization
-2-1
01
2G
over
nmen
t soc
ial s
pend
ing
-4 -2 0 2 4Index of Globalization
-4-2
02
46
Tax
es o
n ca
pita
l
-4 -2 0 2 4Index of Globalization
Policy implications?– Globalization not universally good or bad
• increases economic growth, but also inequality• beneficial to the natural environment in the medium term, but
harmful in the longer run• deunionization increases
– Seems to be positive in net terms– But also produces losers– Compensation possible? Transfers more difficult to
implement in practice than in theory• First, the losers have to be identified• Second, they have to be compensated without producing adverse
incentives to the economy as a whole
– Index is first step in helping to address the first of these issues. The second, more pressing one, remains as one of the most challenging research questions for social scientists
GlobalizationLecture 2 - Dimensions
What is it? Global capitalist economy & diminishing political power of nation-state governments (Marxists & Right-wingers)
Social relations- “stretching” (Giddens)
Culture – a sense of “global consciousness” (Robertson)
1) Globalization of Politics- The end of the nation-state?
2) Globalization of Social Relations- The stretching of social relations
3) Globalization of Culture- Homogenization: Cultural imperialism- Culture clashes- Heterogenization
Globalization of PoliticsNation-state has sovereign power: - Treaty of Westphalia (1648)- Draws up defined borders - Each state controls affairs in its own
territory. SOVEREIGNTY- Other states cannot interfere in a
state’s business
Globalization undermines sovereignty of states i.e. undercuts power of a state to control things in its territory
Martin Albrow: the nation-state is rapidly losing power
Nation-state IS losing power
Economically:
1) power of TNCS
2) forces of world market
Politically:
1) International bodies and law
e.g. United Nations, European Union
2) Global protest movements e.g. Greens
Culturally:
1) Cultural influences from all over world
2) Trans-national media – public opinion
Nation-state IS NOT losing power
Hirst & Thompson:
- TNCs do not have total control of national economies
- States still have primary control over taxes & welfare spending
- International bodies like UN made up of, and dependent on, nation-states
- States developing increasing control of borders and migration e.g. passports
Globalization of Social RelationsGiddens: “the disembedding of social
relations”
- social relations transformed from purely local or national to more “global”
- communications technologies; travel technologies
- dispersal of populations across globe: migrations and diasporas
Ulrich Beck:
Trans-national social connections
- public life: trans-national business relationships
- private life: relatives & friends in different countries; inter-marriage between national groups, etc.
Multiple, non-national affiliations and identities
Cosmopolitanism: a person’s identity is decoupled from the nation-state
Undermining the idea of “Society”
John Urry, Ulrich Beck, Roland Robertson
1) Cannot use the idea of “society” any more2) Invented in later 19th century: Durkheim3) Society = bounded unit; a thingSociety = nation-statee.g. “British society”, “German society”, etc 4) Reflects out-dated social conditions5) Need new ideas to reflect global conditions
Undermining the idea of “Society”
Drop idea of “society”
Use other ideas from classical sociology
Max Weber: Sociality (social relations)Georg Simmel: Social networks(Norbert Elias: social chains)
“Global networks” – facilitated through electronic
communications networks
Undermining the idea of “Society”
Ulrich Beck: Cosmopolitan sociology
1) The main focus is not “society” but the “whole world”
2) Examine multiple, intersecting world-spanning processes
3) Avoid West-centric outlooks
John Urry: Sociology Beyond Societies
1) Global flows
2) Social processes like liquids
3) Liquids pouring rapidly across the world- Flows unpredictable and uncontrollable
4) Unconstrained cross-border mobility of people and things
Zygmunt Bauman:
Free & chosen mobility for wealthy
- transnational business-people
- global tourism
Forced mobility for poor:
- migrant workers, refugees
- ever more controls on mobility of poor
Information mobility: world divides into “information rich” and “information poor”
Globalization of CultureEmergence of a “global culture”?
What might this look like?
Positive: whole world shares same ideas and values?
World Cup, Olympic Games
Negative: local cultures destroyed?
Cultural homogenization?
Cultural heterogenization?
Cultural ImperialismWesternisation / Americanisation of
the world
Domination of American consumer brands:
McDonalds, Nike, Coca-Cola, Gap (“McWorld” - Benjamin Barber)
Global cultural homogenisation- Same consumer goods everywhere- Same ways of thinking everywhereThis is bad (left-wing critics e.g. Noam
Chomsky)This is good (right-wing critics e.g.
Francis Fukuyama)
Cultural ImperialismDominance of American mass media
Oligopoly of big media companies:
- Disney, Warner, Sony
Imbalance of cultural flows:
from ‘core’ to ‘periphery’,
not vice versa
Culture ClashesBenjamin Barber – Jihad vs. McWorld
- Local identities, nationalisms, religious traditions
- Develop in opposition to McWorld
- McWorld creates Jihad
Samuel Huntington – Clash of Civilizations
- European-Christian, Russian-Christian, Arabic-Muslim, Chinese, etc.
- All in conflict: symbolically & materially
Cultural heterogenizationRoland Robertson1) People in local cultures reinterpret global culture
products in light of their own values & interests2) Global culture is always limited by local cultures 3) Mixtures of global and local cultures: - process of glocalization- local becomes global; global becomes local
4) Perceived threats to local identity: - strong assertion of local identity
Globalization reinforces local culturesGlobalization produces new “local” cultures
Hybridization & CreolizationAnthropologists: Ulf Hannerz
1) No culture is ever ‘pure’
- Always a mixture of influences
2) Previously (relatively) separate cultures come into contact with each other
3) Globalization = Complex mixtures of cultures
- ‘creole cultures’, ‘hybrids’
Globalization of religion:- other options than the “local” religion- religious syncretism: mixing and matching- New Age religions: bits of Christianity,
Hinduism, Buddhism, Taoism, Celtic paganism & witchcraft, etc.
Globalization of food:- “fusion cuisine” e.g. French-Japanese, Anglo-
Indian
Globalization of music:- “World music”- Buddhist-techno, Spanish rap, Hungarian rock
Relativization of one’s own cultural traditions
Limits of Hybridization Ideas1) Local cultures commercialised:
Sold to Westerners by media and
big business; fashion trends
2) Enforced hybridization
- Western culture imposed on non-West
- Westerners choose non-Western cultures
3) Most people still primarily
enmeshed in local culture?
Global culture has superficial effects?
Points to Consider
Economic Globalization: spread of global capitalism. Effects?
Political Globalization: decline of nation-state’s power. True?
Social Globalization: stretching of social relations across world. Everyone, equally?
Cultural Globalization: homogenization, culture clashes, heterogenization. Which?
Which is most important?
How does each of these effect the others?