International system and global integration

Global integration and globalization can be considered two synonymous terms. In his article “States of discord” Thomas Friedman, 2002, defined globalization as “the integration of everything with everything else”. He added that “a more complete definition is that globalization is the integration of markets, finance, and technology in a way that shrinks the world from a size medium to a size small” (p. 64). Therefore, global integration or globalization describes a complex level of interconnectedness among countries, companies and even individuals and groups across the globe (Friedman, 2005, p. 2). It mainly involves aspects of economic, financial and trade relations, as well as the flow of ideas, technology, people and forms of governing. Moreover, Friedman called globalization “flattening of the world”, where the competition field is being leveled and the barriers of geography and distances are becoming increasingly irrelevant, and access to technology is becoming more readily available (p. 3).

Patrick Mendis in 2005 argued that no single theory perfectly captures the complexities of dynamic processes of globalization. However, he stated that there are three broad forces drive globalization and make the world a rapidly shrinking global village, and hence created and enabled global integration:
1-The rapidly changing Information Revolution driven largely by multinational corporations facilitated by open government economic policies and competitive business strategies
2-The spread of democratic values after the collapse of the former Soviet Union, which is reaching out to individuals in the form of freedom of religion and expression. Mendis then explained how that the footprints of globalization are less distinct in the autocratic and religious states of the ME than the free and open economies of East Asia. (p. 3)
3-Liberal economic and trade policies advocated by the WTO, IMF, and World bank, and benefited an unprecedented number of countries, rich and poor alike, which are seeing their overall economic performance boosted by strong export growth” (Naim, 2007, p. 96).

According to the A.T Kearny/Foreign Policy annual Globalization Index, the level at which any country is described as globally integrated is measured based on four different parameters of which include economic integration, technological connectivity, political engagement and personal contact (The global top 20, 2006, p. 75). For example, in the 1990s economies of several countries like China, India, Russia, Eastern Europe, Latin and Central Asia became integrated into the global economy (Friedman, 2005, p. 4) and their rank in the 2000s’ globalization index subsequently rose (The global top 20, pp. 76-78)

However, the same forces of globalization have downsides, which have shown to impede or slow down global integration. Naim Moises, 2003, listed five forms of trade that have been booming because of globalization, which include drugs, arms, intellectual property, people, and money (p. 28). Criminal networks have been freed from the geographic constraints of the state borders and their illegal markets have expanded. The same governments’ policies such as privatization, decentralization and deregulation, which were aimed at enhancing free trade and capital market, have also made fighting criminal networks more difficult (p. 30). Furthermore, Moises argued that “the fundamental changes that have given the five wars new intensity over the last decade are likely to persist” (p. 34), which can undermine further global integration.

Inequality and wage disparity is another major flaw in the global economy that can threaten further integration. Not only that low wages can undermine the quality of life for workers in developing countries but also it threatens workers in rich countries by having their jobs outsourced resulting in favoring protectionism over integration (Economist, 2007, pp. 1-2). Moreover, deepening global integration is considered threat to national sovereignty and the ability of governments to stay in control of its decision making process concerning economic policies (Ghemawat, 2007, p. 60)

Throughout the international monetary system’s history, states were both impeding and enabling factors behind global integration. When U.S assumed the leadership of the Bretton Woods’ system throughout the 1950s, it succeeded to rebuild European and Japanese economies. By the 1960, and due to the decline in the U.S. economy, the U.S. could no longer manage the system alone, and was obliged to join in collective management. (Spero & Hart, pp. 14-20). The new monetary system which began during the period of interdependence (1971-1989) and enlarged during the era of globalization (1989—present) is too complex to be managed by single dominant country, as the US role during the Bretton Woods System, or collectively managed by few key traditional actors such as the U.S, EU and Japan.

However, unlike the Bretton Woods’ system where dominant states have helped growing world economy, the collective management and global governance systems have witnessed growing regionalism in addition to tension between developed and developing nations, which can impede global integration. As Abdelal & Segal in 2007 pointed out, new barriers in the form of increasing governments’ control and ownership over economic assets have weakened the institutional foundations of globalization in the past few years, therefore, “the idea of unrestrained globalization will wane in force” (p. 2 & 6). Domestic politicization of trade matters in the U.S. and throughout the world has been an important constraint on globalization and trade order

Barriers to trade and agricultural subsidies imposed mainly by rich countries have been a major obstacle impeding global integration. According to Griswold et al (2006), rich countries agricultural trade barriers and subsidies remain “the single greatest obstacle to a comprehensive World Trade Organization agreement on trade liberalization”.

In the era of interdependence, developments in domestic politics conflicted with international trade managements and undermined the GATT agreements shifting the world economy towards protectionism (Spero & Hart, pp. 73-74). Protectionist nations usually restrict free trade to balance market objectives with social ones (Vogel, 2000, p. 1). Moreover, nations tend to restrict free trade when it begins to lose its competitiveness in world economy. In this case, all nations-whether developed, less developed or developing-become under increased protectionist pressures to maintain its competitive edge and protect its domestic products against foreign competitors (Spero & Hart, p. 75)

States can also change the shape of global integration or globalization. According to the 2004 National Intelligence Council’s 2020 Project “Mapping the global future”, new states and emerging economies are likely to give globalization a much more a non Western face by the year 2020, partly due to the current growing influence of China and India over the world economy, and the boom in the information technology. Rising Asia will the use the power of its fastest-growing consumer markets to set the rules for world economy, attracts innovative technology and become hotbed for jobs outsourcing from Western countries. Transnational corporations and NGOs will be major non-state actors in world political economy


Among other factors that can impede global integration is regionalism. As Spero & Hart indicated that the power shift within the industrialized nations, which began to take place in 1957 when six European countries united to form the European Economic Community (EEC), and the European Union (EU) in 1986, has now evolved into an economic integration that included around 380 million consumers by the 2000, creating a significant economic powerhouse balancing that of the U.S. (pp. 6-9). Similar but smaller regional aggregations were forming in Latin America and Asia. They added that the resulting tension between the benefits of globalization and the threat to national sovereignty emerged as a central theme of the current globalization (p. 10)

Institutions and regimes enable global integration. The two main International Financial Institutions (IFIs), the World Bank and the International Monetary Fund (IMF) were created in 1944 as part of the Bretton Woods system to achieve financial stability and security in the international monetary system in the postwar era (Spero & Hart, p. 13). Since its inception in 1995 as part of the Uruguay Round negotiations, the World Trade Organization (WTO) has been globalization’s rule-making and governing regime, with free trade becoming the organizing principle of global trading system (Baker & Mander, 2005, p. 251). The WTO is concerned with creating agreements that regulate global trade, enforces these agreements through its Dispute Trade Settlement System and it promotes future trade negotiations (p. 251). However, opponents of the IFIs like Jeffery Sachs (2004) argued that these institutions prioritizes the interests of rich countries ahead of the interests of the mostly developing nations which utilize the services of these institutions to finance developmental projects essential for their economic growth and stability. Moreover, lack of international coordination of domestic fiscal and monetary policy remained one major factor that is undermining the performance of the IFIs (Spero & Hart, pp. 38 & 39)

To conclude, global integration can be further enabled by more cooperation among states and none-state actors, enhancing free trade and incorporating emerging economies and different cultures into global economy. States, Multinational Corporations and International Financial Institutions play an essential role in bolstering global integration. Growing regionalism can impede global integration in absence of adequate cooperation. Other factors that can impede global integration include protectionism, global terrorism, and conflicts among civilizations. Addressing these issues underline the importance of cooperation, which can be managed through international regimes and institutions.

References

Abdelal, R., & Segal, A. (2007, January). Has globalization passed its peak?. Foreign Affairs, 86(1), pp. 103-114.

Barker, D., Mander, J. (2000, Fall). The WTO and invisible governments. Peace review, 12 (2), pp. 251-255.

Economist (2007, January). Rich man, poor man. Economist, 382 (8512), pp15-16.

Friedman,T., & Kaplan, R. (2002, March/April). States of discord. Foreign Policy, pp. 64-70.

Friedman, T. (2005, April). It's a Flat World, After All. New York Times Magazine, pp. 32-37.

Ghemawat, P. (2007, March). Why the world isn’t flat. Foreign Policy, 159, pp. 54-60.

Griswold, D., Slivinski, S., & Preble, C., (2006, February). 6 Reasons to kill farm subsidies and trade barriers, Reason (9) 36, pp. 42-49).

E. Spero & J. A. Hart (2002). Politics of International Economic Relations, 6th ed. New York:
Wadsworth Publishing Company

Mendis, P. (2005, fall). Americanization of globalization. Public Manager, 34 (3), pp. 3-8.

Naím, M. (2007, Sep/Oct). The free trade paradox. Foreign Policy, 162, pp. 96-95.

Naim, M. (2003, January). The five wars of globalization. Foreign Policy, 134 (28), pp. 28-38.

Report of the National Intelligence Council’s 2020 Project. Read “The Contradictions of
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The Global Top 20. (2005, May). Foreign Policy, 148, pp. 74-81.

Vogel, D. (2000, June). The wrong whipping boy. The American prospect 11(14), pp. 15-17.