Английский язык. Практический курс для решения бизнес-задач Пусенкова Нина
Federal tax revenues relative to the overall economy have reached their lowest level since Dwight Eisenhower was president, while government spending has climbed to the highest point since Bill Clinton declared the era of big government over.
The Congressional Budget Office closed the books on the fiscal year that ended September 30, 2003, by issuing a report that portrayed the federal government as being badly off even as the nation’s economy shows increasing signs of recovery. Bush administration claims that mounting deficits are the result of the economic downturn, and that a recovery would begin to remedy the government’s fiscal imbalance.
The federal budget deficit for fiscal 2003 soared to $374 billion, easily surpassing the previous record of $290 billion in 1992.
The actual 2003 deficit was, however, lower than the $401 billion forecast by CBO in August, and Bolten pointed to other factors that he called «modest good news». Tax receipts, especially corporate taxes, came in stronger than expected this fall, while spending on welfare payments and unemployment benefits were lower than forecast – all signs that the economic recovery is helping the government’s bottom line.
But CBO director Douglas Holtz-Eakin warned there are still far too many questions about the recent jump in tax receipts to conclude the government’s fiscal fortunes have turned.
«We still have the same outlook for the future,» he said, pointing to CBO’s August projections of deficits totaling $1.4 trillion from 2004 to 2013.
As a snapshot of government’s fiscal health, 2003 prompted historic comparisons. A sluggish economy and three successive tax cuts pushed budget receipts to $1.78 trillion, $70 billion below 2002 levels. Expressed as percentage of the economy, the federal tax take contracted to 16.6%, the lowest level since 1959.
Just last year, corporate tax receipts declined by 11.1%, to 1.2% of the nation’s GDP. That is the lowest level since 1983. Since they peaked in 2000, corporate tax payments have plunged nearly 29%.
Individual income taxes fell by 7.5% last year and are off 21% from their 2000 peak. Only Medicare and Social Security taxes have continued to climb since the boom years of the 1990s, and that money is now financing other parts of the government.
«It is revenue collection which dropped off a cliff,» Bolten said.
But federal spending – pumped up by war and rising health care costs – has been on the opposite trajectory. Spending rose by $146 billion over 2002, or 7.3%, to $2.16 trillion. In 2003, spending equaled 20.3% of the economy, the highest level since 1996, when Clinton hailed the end of big government.
And those numbers may actually understate the surge in spending since historically low interest rates have lowered the cost of interest payments on the $3.9 trillion federal debt held by the public, the CBO said. Excluding the fall in interest payments, federal spending rose 8.9% last year.
But the real driver on the spending side was the military, which consumed $389 billion in 2003, a 17.2% increase in a year. That was the fastest growth rate in 20 years, and more than double the average 7% growth in non-defense programs.
With Congress considering an $87 billion spending package for Iraq and Afghanistan, the spending figures are sure to rise. Bolten said he is still expecting the deficit to top $500 billion in 2003, even with a brightening economic picture. Strong economic growth anticipated by 2004 will not produce a surge in tax receipts until the following year, he said.
Critics of the president’s fiscal stewardship are not backing off. Bush’s $1.7 trillion in tax cuts will really begin taking a toll on government finances toward the end of the decade, when forecasters expect the economy to be rolling. By 2010, the vanguard of Baby Boom retirees will have begun driving up Social Security and Medicare expenses by nearly 7% a year.
The 2003 numbers are a «distraction compared to the big story of where this is all heading,» said Kent Conrad, the senior Democrat on the Senate Budget Committee, «a fiscal crisis unlike any we’ve ever seen.»
Source: Washington Post, 20 October 2003 (abridged)
U.S.: Businesses Are Betting On A Happy New Year
Businesses appear to be casting off their summer caution, and that’s good news for 2005. Earlier this year, the oil shock and election uncertainty clouded the outlook, causing companies to delay some of their inventory-building, capital projects, and hiring. Now, companies seem to like what they see, especially the rebound in consumer spending and the lower dollar, which will provide a boost to exports and profits.
Corporate America is gearing up once again. Just look at the rising trends in industrial orders and output, suggesting that companies are responding to the stronger pace of demand. Companies appear to be interested in expanding their operations, not just in replacing obsolete equipment. Growing payrolls are another key sign that businesses are willing to expand. All this is supporting economic growth this quarter, and the momentum should carry over into the new year.
The reason businesses are increasingly willing to shell out more for equipment and payrolls is evident in the details of the Commerce Dept.’s update on Q3 real GDP. Commerce says the economy grew at a 3.9% annual rate over the summer, instead of the 3.7% pace originally reported. And while the overall revision to the past was small, the underlying data show a sharp upward shift in prospects for the future.
Spending in all sectors grew at a 4.9% annual rate, but businesses built up their inventories by less than estimated. With inventories lean, output will have to be boosted to meet rising demand. All this implies further growth in jobs, income, and spending.
This virtuous cycle explains why many companies are starting to look at expansion plans. The Business Roundtable’s CEO Economic Outlook Survey shows that executives expect the economy to grow at a healthy pace in the first half of 2005. 50% of the CEOs expect their companies to increase capex in the next six months.
The upturn in capital spending got its start when companies began to replace aging, short-lived tech equipment. During the first two years after the recession ended, spending on IT gear accounted for 70% of the growth in overall equipment outlays.
In the past year, with industrial operating rates rising and with demand strengthening, businesses boosted their spending for more traditional machinery and equipment. Q3 business outlays for all types of equipment and software increased at a sturdy 17.2% annual rate, faster than the 14.9% pace first reported. Outlays for IT equipment slowed last quarter, but spending on nontech items accelerated. Industrial machinery was up 27.2%; transportation equipment soared 35.4%, the largest quarterly gain in nearly six years.
That trend is continuing this quarter. Machinery orders posted a strong gain in October, while transit equipment saw a small rise. Total orders for capital goods, excluding aircraft, were reduced by 3.6%, but that followed a 5.2% jump in September.
Despite the recent interest-rate hikes, financing this spending won’t be a problem. Corporations have enough cash flow to cover all their capital outlays. True, profits will grow more slowly as costs rise, but that’s compared with the superstrong pace of recent quarters. Q3 profits from current production fell 2.4% from the second quarter, and the growth from the previous year slowed to 8.4%, vs. 19% in the second quarter. But hurricane-related payouts by insurance companies and uninsured losses subtracted nearly $80 billion from the total. Excluding that, profits last quarter would have grown 16% from the year before.
A more critical question mark for capital spending is the yearend expiration of the 50% «bonus depreciation» allowance granted companies in the 2003 tax package.
Companies have to be pleased by the way consumers have bounced back from the initial impact of the oil shock. Commerce now says consumer spending grew at a 5.1% annual rate last quarter. Clearly, higher energy prices have hit households. But important offsets are coming from better job growth, which is boosting incomes, and sizable gains in household wealth, which is lifting borrowing power.
Last quarter’s spending increase is a reminder that consumers’ actions don’t always line up with how they say they feel. The index of consumer confidence has fallen steadily since July. In November it slipped to 90.5 from 92.9 in October. And for the second month in a row, households said they have diminished expectations for the future. But October non-auto retail sales were strong, and the holiday shopping season appears off to a decent start.
The continued upbeat trend in demand, the ongoing rise in capacity utilization, and the excellent financial condition of corporations all support the notion of a positive outlook for capital spending. Capital spending and job growth have always moved in tandem. Thus, the economy is most likely on its way to a happy new year.
Source: Business Week (online), Dec 13, 2004 (abridged)
The Rush to Invest in Russia
It’s official: Russia is a magnet for money. For the first time in its post-Soviet history, Russia in 2005 attracted more private capital than it exported. The capital inflow is a sign of the huge appetite for Russia among foreign investors and lenders, who are now pouring more money than ever into Russian loans, securities, acquisitions, and greenfield investments.
True, last year’s net private capital inflow was just $300 million – less than 0.1% of GDP. China, by comparison, logged inflows equal to 6% of GDP in 2004. Still, Russia’s results were much better than government forecasts, which earlier last year anticipated a net outflow of up to $10 billion.
The unprecedented surplus represents a dramatic turnaround from the days when money used to leak out of Russia like a sieve. Net private-sector outflows averaged around $20 billion a year during the late 1990s, a sign that neither local nor foreign investors could be induced to park their cash in a country infamous for its political and financial instability.
«Impressive turnaround». Even the recovery of the Russian economy after 2000 didn’t immediately stem the hemorrhage. True, by 2003, the annual net outflow had fallen to just $1.9 billion. But then came the notorious Yukos affair. Investors were horrified, and capital flight shot up again, to $8 billion in 2004.
The latest figures are a sign that foreign investors have recovered their nerve. «It’s an impressive turnaround, given fears of a worsening following Yukos. The country and business shrugged that off, and people are investing relatively happily,» says Al Breach, research director at Brunswick UBS.
A key factor driving last year’s surge was the continued strong performance of the Russian economy. GDP grew by 6.4% last year, buoyed by record high oil prices. Rising tax revenues from energy exports also mean that the government’s finances are impressively healthy. Last year the government ran a budget surplus equal to 7.5% of GDP. The improvement in Russia’s public finances prompted international credit rating agencies to upgrade the country to investment grade, which has added to Russia’s investment attractiveness.
Foreign loans. So where is all the money going? The Central Bank’s data show that loans to Russian companies accounted for the bulk of the inflows. These were worth some $39.4 billion, up from $16.2 billion in 2004. Russian banks, too, were active in borrowing abroad, raising some $18 billion, or $5.3 billion more than they invested overseas. In comparison, portfolio investment amounted to just $3.1 billion – still a big improvement from $800 million in 2004.
The growing share of loans could be grounds for caution. Although a healthy sign of bankers’ confidence in Russian borrowers, bank lending generally brings fewer benefits to a recipient country than other forms of investment, and may even be risky if debts get out of hand. What’s more, notes MDM’s economist Peter Westin, the surge in foreign borrowing partly reflects the weaknesses of Russia’s own underdeveloped banking and financial systems.
More worrying than the build up of debt is that much of the new loans are going to state companies rather than to the private sector. Last year Gazprom took out a mammoth $13.1 billion loan from a consortium of Western banks in order to finance its acquisition of Sibneft. Likewise, state oil company Rosneft borrowed $6 billion from state banks, indirectly financed from abroad, to fund its controversial purchase of Yukos’ main production unit.
Strengthening government. That’s why not all Russians are impressed by the healthy balance-of-payments data. Skeptical local newspapers argue that foreign borrowing is being used to finance creeping renationalization of the Russian economy. Russia’s finance ministry has also criticized the growing appetite of state companies for foreign loans. Last year finance minister Alexei Kudrin called for caps on the amount that state companies could borrow abroad.
A more positive indicator of foreign investor sentiment towards Russia is foreign direct investment (FDI). FDI was up by 38% to $16.7 billion. That’s a far cry from the days, prior to 2003, when Russia managed a meager FDI trickle of $4 billion each year.
With so much hard currency now flowing into Russia the government has been able to dramatically improve its financial position. Last year it repaid some $21.3 billion in foreign debt, while the Central Bank’s forex reserves jumped by $61.5 billion, or 51%. This remarkable improvement in the country’s public finances is one reason why Russia watchers see few negative clouds on the immediate horizon. Barring a spectacular upset, such as a dramatic fall in international oil prices, Russia could well prove to be an even bigger magnet for foreign investment this year.
Source: Business Week (online), Jan. 20, 2006 (abridged)
Essential Vocabulary
1. tax revenues – налоговые доходы
2. Congressional Budget Office (CBO) – Бюджетный комитет Конгресса
3. close the books – закрытие бухгалтерских книг к концу периода
4. fiscal year (FY) – фискальный, деловой или финансовый год
5. budget deficit – дефицит бюджета
6. tax receipts – налоговые поступления
7. corporate tax – корпорационный налог
8. sluggish a – застойный, вялый
9. individual income tax – подоходный налог на физических лиц
10. Medicare – государственная программа бесплатной медицинской помощи престарелым
11. Social Security tax – налог на социальную защиту
12. interest payments – процентные платежи
13. federal debt – государственный долг
14. government (public) finances – государственные финансы
15.inventory building – наращивание запасов
16. industrial order – промышленный заказ
17. pace n – скорость, темп
18. obsolescence n – устаревание, износ
obsolete a – устаревший
19.payroll n – общая сумма денег, которые предприятие регулярно выплачивает сотрудникам; ведомость на получение зарплаты
20. momentum n – импульс, движущая сила, толчок; темп
21. Commerce Department – Министерство торговли США
22. update n – обновление, модернизация, изменение в соответствии с новыми данными
update v – обновлять, модернизировать, изменять в соответствии с новыми данными
23. upward (downward) – направленный или движущийся вверх (вниз)
24. capital expenditures (capex) – капитальные расходы (на приобретение или реновацию основного капитала)
25.capital goods – капитальные товары (средства производства, здания, дороги и др. активы, используемые при производстве других товаров)
26. subtraction n – вычитание
subtract v – вычитать
27. expiration n – окончание, истечение срока
expiry n – окончание, истечение срока
expire v – истекать (о сроке), кончаться, терять силу (о законе и т. п.)
28. depreciation n – снижение стоимости, обесценение, снижение курса, девальвация, амортизация материальных активов
depreciate v – обесцениваться, уменьшаться в стоимости, амортизироваться
29. allowance n – налоговая скидка; денежное содержание; допущение, резерв; скидка с цены
30.tax package – комплекс мероприятий в области налоговой политики
31. household n – семья, домашнее хозяйство
32. consumer confidence index – индекс уверенности потребителя
33. capital inflow – приток капитала
34. greenfield a – новое предприятие, дочерняя компания, создаваемые с нуля; освоение новых территорий
35. capital flight – бегство капитала
36. budget surplus – бюджетный профицит
37. investment attractiveness – инвестиционная привлекательность
39. portfolio investor – портфельный инвестор
portfolio investment – портфельная инвестиция
40. recipient country – принимающая страна
41. balance of payments (ВОР) – платежный баланс; сальдо расчетов по торговле товарами и услугами; движения капиталов
42. creeping (re)nationalization – ползучая (ре)национализация
43. cap n – зд. фиксированный максимум, верхний предел
cap v – зд. устанавливать верхний предел
44. foreign direct investments (FDI) – иностранные прямые инвестиции
45. hard currency – твердая валюта; валюта, пользующаяся доверием, конвертируемая валюта
46. foreign exchange (forex) reserves – валютные запасы
Exercise 1. Answer the following questions.
1. What were the US macroeconomic indicators for FY 2003? 2. What was happening to budget receipts in 2003? 3. What were the trends of federal spending? 4. Why is a fiscal crisis anticipated in the US? 5. What were the expectations of the corporate America for 2005? 6. What were the US companies mainly investing in? 7. What was the financial position of corporations in 2004? 8. What were the consumer perceptions and expectations for 2005? 9. What was the situation with capital flows in Russia in 2005? 10. How did Russia’s economy perform in 2005? 11. Where were the capital inflows mainly directed? 12. What are the problems inherent in this trend? 13. How is the role of the government in Russia’s economy evolving? 14. What is the financial position of the Russian government?
Exercise 2*. Find words in the texts that describe the process of increasing/decreasing and make sentences of your own using them.
Exercise 3*. Find terms in the text that match definitions given below and make sentences of your own with each term.
1. the purchase of fixed assets, expenditure on trade investments or acquisitions of other businesses and expenditure on current assets
2. the reduction in the value of an asset through wear and tear; а reduction in the value of a currency in terms of gold or other currencies in a free market
3. the total amount of goods, services and financial transactions between one country and the rest of the world
4. a bankers’ bank at the center of a country’s monetary system
5. a tax levied on the assessable profits of a company
6. financial year
7. investment in the foreign operations of a business
8. the money value of the goods and services produced by the economy in a period of time
9. stocks of raw materials, work in progress and finished goods
10. the provision of money for public expenditure by taxation and borrowing
Exercise 4*. Fill in the blanks using terms given below.
The Curse of $50 a Barrel
With oil prices hovering above $50 a barrel, Russia is raking in……. This year oil exports are……. to earn Russia $90 billion, up from $14.5 billion in 1998. With so much……. pouring in, and oil prices way above historical……., it’s reasonable to think economists would be…… about Russia’s economy. They’re not.
No one is more gloomy than President Vladimir V. Putin’s economic…… Andrei Illarionov, who recently coined the term «Venezuelaization» to describe the fate he fears awaits Russia’s economy. The growing role of the state in Russia’s……. adds to the risk of economic……… Illarionov is not alone in warning that, unless properly managed, Russia’s oil……. could end up doing more harm than good. Economists warn of the «resource curse», the surprising but statistically valid theory that, more often than not, abundance of……. damages a country’s economic…….
One concern is that, like many oil-rich countries before it, Russia may decide to blow its oil……. on profligate government……… risking an unpleasant fiscal and economic…….. when oil prices fall. To guard against that temptation, Russia wisely created a……. last year. But political pressure is growing to use the rapidly……. fund, already worth $28 billion, to……. expenditures. Under the original plan…….. on oil that fetched more than $20 a barrel were funneled into the Fund, but in April the Cabinet decided to……. that…… to $27, releasing an extra $10 billion for the budget this year.
The revised policy toward the Stabilization Fund is just the latest sign that advocates of tight……., led by Finance Minister Alexei Kudrin, are losing ground to Prime Minister Mikhail Fradkov and other champions of more……. policies. In January, Moscow was forced to hike pensions and other social…….. by $7 billion – around 1% of…….. – to sweeten the pill of controversial social-benefit reforms that were designed to replace in-kind benefits with……..
Finance minister Kudrin has publicly slammed recent moves to weaken the Stabilization Fund and loosen……. True, Russia’s…… look so strong and oil prices so firm that the risk from higher spending seems manageable. In 2004, Russia ran a……. equivalent to 4.1% of GDP.
Looser fiscal policy will boost……… which already shows signs of spiking…… In the first quarter of 2005…….. rose 5.3% from the previous quarter, jeopardizing the government’s……. of bringing annual inflation down from 11.7% last year to 8.5% in 2005. Rising costs will……… one other well-known ailment associated with high oil prices, the so-called Dutch Disease, named after Holland’s experience in the 1970s, when a……… currency made it impossible for local…….. to compete. As well as pushing up the…….. of the currency directly, a flood of petrodollars may also undermine manufacturing competitiveness by stoking inflation. In the past year the ruble has risen by 10% against the dollar……. and is forecast to……. even faster in the coming year.
Yet……… problems aren’t even the biggest concerns connected with oil. More serious are the long-term effects of oil riches on a country’s social……. and its political…….. Natural resources generate large……., easy money that fuels corruption and state……… in the economy, as well as often sparking serious political battles among rival……..
Source: Business Week (online), June 20, 2005 (excerpt)
Terms:
GDP, «rents», advisor, interest groups, public finances, value, petrodollars, tax revenues, budget surplus, institutions, threshold, stability, consumer prices, forecast, outlays, accumulating, interference, inflation, manufacturers, in real terms, hard currency, averages, Stabilization Fund, upbeat, oil sector, mismanagement, wealth, natural resources, growth, windfall, spending, crunch, boost, hike, fiscal discipline, populist, cash payments, fiscal policy, upward, target, exacerbate, strengthening, appreciate, macroeconomic
Exercise 5. Translate into English.
Через 10 лет в России будет рай
Если баррель нефти будет стоить $100
К 2016 г. долларовый ВВП России вырастет вшестеро, а индекс РТС – до 8650 пунктов. Такое счастье ждет страну при условии, что нефть будет стоить $100/барр. Помешать этому может только одурманенное нефтедолларами (petrodollars) правительство, предупреждает автор прогноза – экономист Aton Capital Питер Уэстин.
Все больше экономистов склоняются к мысли, что нефть дешеветь уже не будет. Разведанные запасы углеводородов растут медленнее, чем спрос, динамику которого все больше определяют два новых гиганта – Индия и Китай. И хотя промышленность там более энергоемкая (energy intensive), чем в развитых странах, средний китаец потребляет всего 2 барреля нефти в год, а индиец – 1 баррель, или в 25 раз меньше, чем средний американец. Быстрый экономический рост и урбанизация будут только усиливать потребность гигантов в нефти.
Еще весной инвестиционный банк Goldman Sachs предположил, что в 2006 г. баррель Brent может подорожать до $72, а в 2007 г. – до $102. Недавно он поднял долгосрочный прогноз цены нефти с $45/барр. до $60/барр. А Международный валютный фонд при подготовке последнего прогноза развития мировой экономики исходил из гипотезы, что цена на баррель нефти поднимется в 2006 г. с $54,23 до $61,75.
Уэстин решил проверить, как будут обстоять дела в России, если эти ожидания окажутся верными. В докладе «А что если: Россия в 2015 г. при цене нефти $50/барр. и $100/барр.» он спроектировал три сценария развития экономики на ближайшее десятилетие. Если средняя цена нефти вырастет с $60/барр. в 2006 г. до $100/барр. к 2010 г., а затем пять лет кряду не будет дешеветь, страну ждет настоящее процветание. К 2015 г. курс национальной валюты вырастет до 19,9 руб./$, а экспорт почти утроится и достигнет $567 млрд, причем на 70% он будет обеспечен поставками нефти и газа (в 2005 г. – 54%). Доход среднего россиянина увеличится с $273 до $2268 в месяц, а ВВП – с $743 млрд в 2005 г. до $4568 млрд, причем по размеру экономики Россия обгонит Германию и Великобританию, прогнозирует Уэстин. В реальном выражении экономика будет расти на 8,5% в год, что позволит удвоить ВВП к 2012 г. Тогда же мы перегоним Португалию по ВВП на душу населения.
Россия будет в отличной форме и в том случае, если в ближайшее десятилетие нефть будет стоить в среднем $50/барр., уверен Уэстин. ВВП тогда будет расти на «скромные» 5,9% в год, а средний душевой доход за месяц достигнет к 2015 г. $1386. И даже базовый сценарий, рассчитанный на удешевление нефти до $32/барр., обещает рост ВВП на 5% в год и повышение доходов вчетверо, до $1073.
По любому из трех сценариев экономика России останется сырьевой, но «голландская болезнь» не будет ей особенно докучать, надеется Уэстин. Основными двигателями роста станут отрасли, не конкурирующие с импортом, – торговля, строительство, услуги.
Картина может оказаться и не столь радужной – если подведут чиновники. Уэстин поясняет, что в основе всех прогнозов лежит допущение, что правительство будет проводить умеренно реформистскую политику, а не примется тратить деньги направо и налево.
При нефти в $100/барр. сценарий быстрого роста экономики вполне правдоподобен, говорит чиновник Минэкономразвития. Прогнозировать, как страна распорядится свалившимся на нее с неба богатством, невозможно, возражает старший экономист «Уралсиба» Владимир Тихомиров: «Возможно, дорогая нефть приведет только к усилению неравенства, а большинство населения так и не отведает плодов изобилия».
Если нефть будет слишком дорогой, есть опасность, что реформы будут остановлены, предостерегает чиновник Минэкономразвития. К тому же есть риск, что государство не совладает со свалившимся на него богатством и начнет транжирить сверхдоходы. А это подстегнет инфляцию и приведет к всплеску импорта, добавляет экономист «Альфа-банка» Наталия Орлова. По расчетам Уэстина, при цене нефти в $100/барр. в стабфонде к 2016 г. скопится $1,5 трлн, а при $50/барр. – $557 млрд (на 1 августа – $25,3 млрд).
«Уже сейчас объем стабфонда достиг критического уровня, и его дальнейшего безнаказанного роста никто не допустит», – разрушает эти предположения председатель думского комитета по социальной политике «единоросс» Андрей Исаев. «Уже в 2006 г. намечается серьезный поворот к росту расходов бюджета на социальную поддержку населения и инвестиции, а в 2007 г. можно ожидать качественного рывка», – предупреждает он.
Источник: Ведомости, 06.10.05
Lesson 24
Globalization
Read and translate the text and learn terms from the Essential Vocabulary
Globalization
Globalization is the worldwide technological, economic and cultural change brought about by expanding facilities for communications and interdependency between isolate cultures. Dramatically increased international trade and finance have established a medium wherin deeper cultural exchanges have taken place, greatly increasing the impact of global issues at the local scale.
In economic context, the term refers to the effects of trade, particularly trade liberalization (or the «free trade»). More broadly, the term refers to the overall integration, and resulting increase in interdependence among global actors.
It is useful to distinguish economic, political, and cultural aspects of globalization, although all three aspects are closely intertwined. The other key aspect of globalization is changes in technology, particularly in transport and communications, which are creating a global village.
«Globalization» can mean:
Globalism that contrasts with economic nationalism and protectionism.
Complex connectivity, where more and more places are being connected in new ways. Arjun Appadurai identified five types of global connectivity:
– Ethnoscapes: movements of people (tourists, immigrants, refugees, and businessmen).
– Financescapes: global flows of money, often driven by interconnected currency markets, stock exchanges, and commodity markets.
– Ideoscapes: the global spread of ideas and political ideologies.
– Mediascapes: the global distribution of media is.
– Technoscapes: the movement of technologies around the globe.
Cultural globalization means attempts to erode the national cultures of Europe, and subsume them into a global culture whose members will be much easier to manipulate through mass media and controlled governments.
Economic globalization refers to four different flows across boundaries: flows of goods/services, people, capital, and technology. The IMF defines globalization as «the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, freer international capital flows, and more rapid and widespread diffusion of technology».
In the field of management, globalization is a marketing or strategy term that refers to the emergence of international markets for consumer goods characterized by similar customer needs and tastes enabling, for example, selling the same cars or soaps or foods with similar ad campaigns to people in different cultures. This usage is contrasted with internationalization which describes the activities of multinational companies dealing across borders in either financial instruments, commodities, or products that are extensively tailored to local markets.
Many use the term «corporate globalization» or «global corporatization» to highlight the impact of MNCs and the use of legal and financial means to circumvent local laws and standards, in order to leverage the labor and services of unequally-developed regions against each other.
The spread of capitalism from developed to developing nations.
Globalization History
It is a history of increasing trade between nations based on stable institutions that allow firms in different nations to exchange goods with minimal friction.
The term «liberalization» means the combination of laissez-faire economic theory with the removal of barriers to the movement of goods. This led to specialization of nations in exports, and the pressure to end protective tariffs and other barriers to trade. The period of the gold standard and liberalization of the 19th century is often called «The First Era of Globalization». Based on the Pax Britannica and the exchange of goods in currencies pegged to specie, this era grew along with industrialization.
The «First Era of Globalization» has broken down in stages beginning with the World War I, and then collapsed with the crisis of the gold standard in the late 1920s and early 1930s’s. Countries that engaged in that era of globalization prospered and goods, capital and labour flowed remarkably freely between nations.
Globalization in the era since World War II has been driven by Trade Negotiation Rounds, originally under the auspices of GATT, which led to a series of agreements to remove restrictions on «free trade». The Uruguay Round led to a treaty to create the World Trade Organization to mediate trade disputes. Other bilateral trade agreements, including Europe’s Maastricht Treaty and the North American Free Trade Agreement, have also been signed aimed at reducing tariffs and barriers to trade.
Characteristics
Globalization has become identified with a number of trends, most of which have developed since World War II.
Economically:
– Increase in international trade at a faster rate than the growth in the world economy.
– Increase in international flow of capital including FDI;
– Erosion of national sovereignty and national borders through international agreements leading to organizations like the WTO and OPEC.
– Development of global financial systems.
– Increase in the share of the world economy controlled by MNCs.
– Increase of economic practices like outsourcing by multinational corporations
Culturally:
– Greater international cultural exchange.
– Spreading of multiculturalism, and better individual access to cultural diversity.
– Greater international travel and tourism.
– Greater immigration.
– Spread of local foods such as pizza and Indian food to other countries.
Development of a global telecommunications infrastructure and greater transborder data flow.
Increases in standards applied globally; e.g. copyright laws and patents.
Formation or development of a set of universal values.
The push for an international criminal court and international justice movements.
Some argue that even terrorism has undergone globalization, with attacks in foreign countries that have no direct relation with the own country.
Barriers to international trade have been considerably lowered since World War II through international agreements such as GATT. Particular initiatives carried out as a result of GATT and the WTO have included:
Promotion of free trade
Of goods:
– Reduction or elimination of tariffs; construction of free trade zones.
– Reduced transportation costs, especially from development of containerization for ocean shipping.
Of capital:
– reduction or elimination of capital controls.
– Reduction, elimination, or harmonization of subsidies for local businesses
Intellectual property restrictions
Anti-globalization
Various aspects of globalization are seen as harmful by public-interest activists as well as strong state nationalists. Critics claim that the results of globalization have not been what was predicted when the attempt to increase free trade began, and that many institutions involved in the system of globalization have not taken the interests of poorer nations, the working class and the environment into account.
Fair trade theorists claim that unrestricted free trade benefits those with more financial leverage (i.e. the rich) at the expense of the poor.
Many activists see globalization as the promotion of a corporatist agenda, which is intent on constricting the freedoms of individuals in the name of profit.
The Southeast Asian financial crises in 1997, that began in the relatively small economy of Thailand but quickly spread to Malaysia, Indonesia, South Korea and eventually was felt all around the world, demonstrated the new risks and volatility in rapidly changing globalized markets. The IMF’s subsequent ‘bailout’ money came with conditions of political change (i.e. government spending limits) attached and was viewed by critics as undermining national sovereignty in neo-colonialist fashion.
Pro-globalization (Globalism)
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