- When was the term "globalisation" coined?
- What are the causes of the great leap forward in globalisation?
- What risks are entailed by globalisation?
- Does Germany and the German economy benefit from globalisation?
- Does competition cost jobs?
- Does globalisation change the importance of nation states?
- Does globalisation restrict the scope for action of national politicians?
- What is the contribution of the EU to shaping globalisation?
- What is the role of the World Trade Organization (WTO)?
- Is there a correlation between globalisation and sustainability?
All of us benefit from globalisation, which brings us affordable products from around the globe. On the other hand, globalisation changes our familiar lifestyle and working conditions. Any sort of radical upheaval on the labour market is a source of great concern to many people, who begin to fear for their economic survival.
The introduction of the market economy in the states of the former Eastern Bloc, the economic successes of emerging economies and the worldwide transition from manufacturing societies to knowledge societies bring with them more competition, on the German and on the European market.
These risks often blind us to the fact that a global network of economic relations is crucial for an export-oriented country like Germany. Access to world markets and worldwide sales of German goods and services are a precondition for growth and prosperity.
Global economic relations thus mean not only risks for us, but far more importantly opportunities. Global challenges call for common answers. This is why the G8 Summit in Heiligendamm is important.
When was the term "globalisation" coined?
The term "globalisation" was first coined in the mid-nineteen nineties, and has since become an omnipresent buzz world. The phenomenon, however, dates back much further, indeed to the Ancient World.
Even in those days trading routes criss-crossed the known world. With the discovery of the "new world" and the sea route to Southeast Asia, the volume of trade rocketed, and spread across the entire world.
Semantically, however, it is only now that "globalisation" is truly appropriate. The global village is a reality. The entire world is networked such that it has become one big village.
What are the causes of the great leap forward in globalisation?
The meteoric pace of technological development, especially the Internet.
- Ever lower costs of communication and transport
- The more rapid liberalisation of markets, including capital markets
- The dismantling of customs barriers and other obstacles to trade
- The establishment of regional economic areas
- And, last but not least: the end of the Cold War and the fall of the iron curtain.
What risks are entailed by globalisation?
Globalisation, like most other developments, also has a down side:
- The international division of labour means that simple tasks can be outsourced to other countries. Textiles and toys, for instance, have often travelled half way around the world before they land on the shelves of our stores.
- The long road, sea or air transport routes cause air pollution.
- Critics see a danger that environment protection will be considered a luxury and will be a disadvantage in international competition to attract business.
Many people in Germany believe that they personally suffer as a result of globalisation. They do not understand the process of globalisation and do not feel that they have been given enough information. This is reflected in the number of NGOs (non-governmental organisations or interest groups) and their level of commitment.
Governments are responsible for putting in place international structures to guide globalisation along acceptable paths, ensuring for instance that it is socially equitable.
Does Germany and the German economy benefit from globalisation?
When everything is taken into consideration, Germany is a clear beneficiary of globalisation. In Germany, roughly every third job depends directly or indirectly on exports. This is particularly true in mechanical engineering, the automobile industry and the chemical industry.
Free trade guarantees the long-term survival of these jobs, and generates new ones. Our balance of trade has been in the black for a great many years. In other words, Germany exports more than it imports.
This means that international trade brings more money into the country than Germany pays for its imports. Germany is the undisputed world champion when it comes to exports.
Does competition cost jobs?
Globalisation and free world trade do of course bring with them the risk that unskilled tasks will be performed in other countries where labour costs are lower. This has already led to the transfer of mass manufacturing of low-price products being moved abroad, with the concomitant job losses at home.
But no country can opt out of international competition. National economies adapt. They generate new products and services, new markets and new jobs, and thus new prosperity. Any attempt to barricade the German market would mean economic decline for our country.
Does globalisation change the importance of nation states?
Globalisation, as a worldwide process, stretches over a longer period of time. It has become apparent that essential challenges facing us can only be tackled jointly, and decisions that affect the future of our plant such as climate protection, fair trade, protection against pirate products, and global diseases such as HIV/AIDS and avian influenza can only be taken at global level.
This is then the role of bodies such as he European Union and the United Nations. Nation states can continue to exert an influence on political and economic developments.
Institutions such as the United Nations' World Trade Organization, the World Bank and the International Monetary Fund provide platforms for action for nation states. Other informal groups also meet in this context, with the G8 probably the best known.
International interdependence engenders the need for global cooperation. This is termed global governance.
This term is used to mean the common political shaping of the globalisation process. It aims to counter threats such as poverty, financial crises or any other conflicts by acting together.
Does globalisation restrict the scope for action of national politicians?
Firstly, we must realise that nation states have never in history been totally free to do as they liked. Today more than ever before, national politics must be aligned to international cooperation and must play an active part in shaping the process of globalisation.
Generally valid rules must be developed, which also take account of national interests. The scope for action of national politicians is only really restricted if the challenges of globalisation are not accepted and tackled but ignored, such that politicians forego their opportunity to influence the process.
What is the contribution of the EU to shaping globalisation?
- The Lisbon Strategy
The competitiveness of EU businesses must be further strengthened. This was the background to the development of the Lisbon Strategy in 2000. It aims to promote industry and employment in EU states by ensuring better education, more research, greater innovation and an increase in investment in member states.
- The euro
The common European currency has become the second world reference currency along with the US dollar.
- Common standards
EU guidelines harmonise European living and legal standards. European environmental and social standards are exemplary worldwide. The right to set up and join free trade unions is crucially important in this context.
What is the role of the World Trade Organization (WTO)?
The worldwide removal of obstacles to trade and investment is of primordial importance to smaller economies and developing countries in particular.
Thus, the World Trade Organization has set itself the goal of better integrating developing countries into world trade, improving their access to world markets and thus laying an important foundation for building prosperity in these countries.
Is there a correlation between globalisation and sustainability?
Sustainability means that every generation must solve its own problems, and may not simply pass them on to the next generation. National and international politics must respect this concept.
Globalisation and sustainability are thus two sides of the same coin. Globalisation means making the most of opportunities offered and being successful in business. On the other hand, business and trade are inextricably intertwined with ecological issues, indeed they are dependent on ecological factors. In a sick environment, the economy too is doomed.
This dependence gives us important rules. Global challenges can only be mastered if we respect the principle of sustainability.