The Issue of GlobalizationâAn Overview (CRS Report for Congress)
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| Release Date |
May 3, 2001 |
| Report Number |
RL30955 |
| Report Type |
Report |
| Authors |
Gary J. Wells, Foreign Affairs, Defense, and Trade Division |
| Source Agency |
Congressional Research Service |
Summary:
In the 1990s, globalization gained widespread usage as a term with many interpretations.
Globalism
is employed in this report to describe networks of interdependence functioning at multi-continental
distances. Globalization is an increase in globalism and de-globalization a reduction. In providing
an introductory view of these networks, with an emphasis on contemporary economic factors, a goal
of this report is to illustrate how policy consequences, sometimes unintended, may be dispersed via
globalized networks. As networks expand and become more intricate there is an opportunity for
feedback along previously non-existent linkages.
The rapid economic globalization we are witnessing influences, is influenced by and oftentimes
becomes inseparable from multi-continental networks that take many forms including political,
cultural, technological, financial, national security, and environmental. Several factors play a role
in today's rapid formation of networks. They include globalization-friendly technological
advancements, governmental polices, and management techniques. If government does not institute
policies that inhibit/prevent globalization, multi-continental networks will form within the limits of
available technology and management. And there is a compounding effect as enhanced competition
encourages further advancements. Hence, globalization feeds upon itself. Today's web-based
technology is tailor-made for globalization. It builds on an impressive round of politico-economic
globalization that began early in the 19th century and lasted until the beginning of World War I. To
spark this globalization governments adopted polices encouraging international activity, and
enterprising individuals took advantage of emerging transportation and communication technologies
to build sophisticated global networks of trade, communications, and investment. To a large extent
these networks were dismantled between 1914 and the end of World War II. Governmental policies
were responsible for this de-globalization. In addition to the effects of war, nations pursued
protectionist policies in an attempt to avoid cyclical downturns punctuated by the Great Depression.
As this period indicates, governments can shield their citizens from globalization pressures in the
short-run, but the economic costs can be significant. Globalization allows economies to specialize
in producing items for which they have an advantage and in trading for items others produce.
Resulting gains are lost when an economy shields itself from foreign competition. North Korea
stands as an example of an economy sheltered for political reasons.
While globalization gains can be substantial for the general population, some may suffer
potentially severe economic losses. Included are owners and workers in industries pressured by
more efficient foreign firms and governments coping with new realities in a globalized environment.
Some individuals also become distressed as their cultural environment changes. While many see
globalization as an irreversible process, those adversely impacted by globalization put pressure on
their governments to slow or stop it. Resulting policies may protect some of the victims of
globalization, but they may also curb the potential for long-term economic growth.
