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Global business organization Main article: International business With improvements in transportation and communication, international business grew rapidly after the beginning of the 20th century. International business includes all commercial transactions (private sales, investments, logistics, and transportation) that take place between two or more regions, countries and nations beyond their political boundaries. Such international diversification is tied with firm performance and innovation, positively in the case of the former and often negatively in the case of the latter.[37] Usually, private companies undertake such transactions for profit.[38] These business transactions involve economic resources such as capital, natural and human resources used for international production of physical goods and services such as finance, banking, insurance, construction and other productive activities.[39] International business arrangements have led to the formation of multinational enterprises (MNE), companies that have a worldwide approach to markets and production or one with operations in more than one country. A MNE may also be called a multinational corporation (MNC) or transnational company (TNC). Well known MNCs include fast food companies such as McDonald's and Yum Brands, vehicle manufacturers such as General Motors, Ford Motor Company and Toyota, consumer electronics companies like Samsung, LG and Sony, and energy companies such as ExxonMobil, Shell and BP. Most of the largest corporations operate in multiple national markets. Businesses generally argue that survival in the new global marketplace requires companies to source goods, services, labor and materials overseas to continuously upgrade their products and technology in order to survive increased competition.[40] International trade Main article: International trade Gross domestic product in 2011 US dollars per capita, adjusted for inflation and purchasing power parity (log scale) from 1860 to 2011, with population (disk area) for the US (yellow), UK (orange), Japan (red), China (red), and India (blue).[41] Singapore skyline Singapore, the top country in the Enabling Trade Index, embraced globalization and became a highly developed country International trade is the exchange of capital, goods, and services across international borders or territories.[42] In most countries, such trade represents a significant share of gross domestic product (GDP). Industrialization, advanced transportation, multinational corporations, offshoring and outsourcing all have a major impact on world trade. The growth of international trade is a fundamental component of globalization. An absolute trade advantage exists when countries can produce a commodity with less costs per unit produced than could its trading partner. By the same reasoning, it should import commodities in which it has an absolute disadvantage.[43] While there are possible gains from trade with absolute advantage, comparative advantage – that is, the ability to offer goods and services at a lower marginal and opportunity cost – extends the range of possible mutually beneficial exchanges. In a globalized business environment, companies argue that the comparative advantages offered by international trade have become essential to remaining competitive. Trade agreements, economic blocks and special trade zones Establishment of free trade areas has become an essential feature of modern governments to handle preferential trading arrangements with foreign and multinational entities.[44] A Special Economic Zone (SEZ) is a geographical region that has economic and other laws that are more free-market-oriented than a country's typical or national laws. "Nationwide" laws may be suspended inside these special zones. The category 'SEZ' covers many areas, including Free Trade Zones (FTZ), Export Processing Zones (EPZ), Free Zones (FZ), Industrial parks or Industrial Estates (IE), Free Ports, Urban Enterprise Zones and others. Usually the goal of a structure is to increase foreign direct investment by foreign investors, typically an international business or a multinational corporation (MNC). These are designated areas in which companies are taxed very lightly or not at all in order to encourage economic activity. Free ports have historically been endowed with favorable customs regulations, e.g., the free port of Trieste. Very often free ports constitute a part of free economic zones. A FTZ is an area within which goods may be landed, handled, manufactured or reconfigured, and reexported without the intervention of the customs authorities. Only when the goods are moved to consumers within the country in which the zone is located do they become subject to the prevailing customs duties. Free trade zones are organized around major seaports, international airports, and national frontiers – areas with many geographic advantages for trade.[45] It is a region where a group of countries has agreed to reduce or eliminate trade barriers.[46] A Billboard in Jakarta welcoming ASEAN Summit 2011 delegates. A free trade area is a trade bloc whose member countries have signed a free-trade agreement, which eliminates tariffs, import quotas, and preferences on most (if not all) goods and services traded between them. If people are also free to move between the countries, in addition to a free-trade area, it would also be considered an open border. The European Union, for example, a confederation of 27 member states, provides both a free trade area and an open border. Qualifying Industrial Zones (QIZ) are industrial parks that house manufacturing operations in Jordan and Egypt. They are a special free trade zones established in collaboration with neighboring Israel to take advantage of the free trade agreements between the United States and Israel. Under the trade agreements with Jordan as laid down by the United States, goods produced in QIZ-notified areas can directly access US markets without tariff or quota restrictions, subject to certain conditions. To qualify, goods produced in these zones must contain a small portion of Israeli input. In addition, a minimum 35% value to the goods must be added to the finished product. The brainchild of Jordanian businessman Omar Salah, the first QIZ was authorized by the United States Congress in 1997. The Asia-Pacific has been described as "the most integrated trading region on the planet" because its intra-regional trade accounts probably for as much as 50-60% of the region's total imports and exports.[47] It has also extra-regional trade: consumer goods exports such as televisions, radios, bicycles, and textiles into the United States, Europe, and Japan fueled the economic expansion.[48] The ASEAN Free Trade Area[49] is a trade bloc agreement by the Association of Southeast Asian Nations supporting local manufacturing in all ASEAN countries. The AFTA agreement was signed on 28 January 1992 in Singapore. When the AFTA agreement was originally signed, ASEAN had six members, namely, Brunei, Indonesia, Malaysia, Philippines, Singapore and Thailand. Vietnam joined in 1995, Laos and Myanmar in 1997 and Cambodia in 1999. Imported crude oil as a percent of U.S. consumption. In 2011, the United States imported $332 billion worth of crude oil, up 32% from 2010.[50] Tax havens The ratio of German assets in tax havens in relation to the total German GDP.[51] The "Big 7" shown are Hong Kong, Ireland, Lebanon, Liberia, Panama, Singapore, and Switzerland. Main article: Tax haven A tax haven is a state, country or territory where certain taxes are levied at a low rate or not at all, which are used by businesses for tax avoidance and tax evasion.[52] Individuals and/or corporate entities can find it attractive to establish shell subsidiaries or move themselves to areas with reduced or nil taxation levels. This creates a situation of tax competition among governments. Different jurisdictions tend to be havens for different types of taxes and for different categories of people and companies.[53] States that are sovereign or self-governing under international law have theoretically unlimited powers to enact tax laws affecting their territories, unless limited by previous international treaties. The central feature of a tax haven is that its laws and other measures can be used to evade or avoid the tax laws or regulations of other jurisdictions.[54] In its December 2008 report on the use of tax havens by American corporations,[55] the US Government Accountability Office was unable to find a satisfactory definition of a tax haven but regarded the following characteristics as indicative of it: nil or nominal taxes; lack of effective exchange of tax information with foreign tax authorities; lack of transparency in the operation of legislative, legal or administrative provisions; no requirement for a substantive local presence; and self-promotion as an offshore financial center. A 2012 report from the Tax Justice Network estimated that between USD $21 trillion and $32 trillion is sheltered from taxes in unreported tax havens worldwide. If such wealth earns 3% annually and such capital gains were taxed at 30%, it would generate between $190 billion and $280 billion in tax revenues, more than any other tax shelter.[56] If such hidden offshore assets are considered, many countries with governments nominally in debt are shown to be net creditor nations.[57] However, the tax policy director of the Chartered Institute of Taxation expressed skepticism over the accuracy of the figures.[58] Daniel J. Mitchell of the US-based Cato Institute says that the report also assumes, when considering notional lost tax revenue, that 100% money deposited offshore is evading payment of tax.[59] Tax havens have been criticized because they often result in the accumulation of idle cash[60] that is expensive and inefficient for companies to repatriate.[61] The tax shelter benefits result in a tax incidence disadvantaging the poor.[62] Many tax havens are thought to have connections to "fraud, money laundering and terrorism."[63] While investigations of illegal tax haven abuse have been ongoing, there have been few convictions.[64][65] Lobbying pertaining to tax havens and associated transfer pricing has also been criticized.[66] Accountants' opinions on the propriety of tax havens have been evolving,[67] as have the opinions of their corporate users,[68] governments,[69][70] and politicians,[71][72] although their use by Fortune 500 companies[73] and others remains widespread.[74] Reform proposals centering on the Big Four accountancy firms have been advanced.[75] Some governments appear to be using computer spyware to scrutinize some corporations' finances.[76] International tourism Main article: Tourism Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".[77] There are many forms of tourism such as agritourism, birth tourism, culinary tourism, cultural tourism, eco-tourism, extreme tourism, geotourism, heritage tourism, LGBT tourism, medical tourism, nautical tourism, pop-culture tourism, religious tourism, slum tourism, war tourism, and wildlife tourism. Globalization has made tourism a popular global leisure activity. The World Health Organization (WHO) estimates that up to 500,000 people are in flight at any one time.[78] Modern aviation has made it possible to travel long distances quickly. As a result of the late-2000s recession, international travel demand suffered a strong slowdown from the second half of 2008 through the end of 2009. After a 5% increase in the first half of 2008, growth in international tourist arrivals moved into negative territory in the second half of 2008, and ended up only 2% for the year, compared to a 7% increase in 2007.[79] This negative trend intensified during 2009, exacerbated in some countries due to the outbreak of the H1N1 influenza virus, resulting in a worldwide decline of 4.2% in 2009 to 880 million international tourists arrivals, and a 5.7% decline in international tourism receipts.[80] One notable exception to more free travel is travel from the United States to bordering countries Canada and Mexico, which had been semi-open borders. Now, by US law, travel to these countries requires a passport.[81] In 2010, international tourism reached US$919B, growing 6.5% over 2009, corresponding to an increase in real terms of 4.7%.[82] In 2010, there were over 940 million international tourist arrivals worldwide.[83] International sports Three men wearing eye shades laying on the floor, a red ball is to the left of the image The Swedish goalball team at the 2004 Summer Paralympics Main articles: Olympic Games and List of world championships Modern international sports events can be big business for as well as influencing the political, economical, and other cultural aspects of countries around the world. Especially with politics and sports, sports can affect countries, their identities, and in consequence, the world. The ancient Olympic Games were a series of competitions held between representatives of several city-states and kingdoms from Ancient Greece, which featured mainly athletic but also combat and chariot racing events. During the Olympic games all struggles against the participating city-states were postponed until the games were finished.[84] The origin of these Olympics is shrouded in mystery and legend.[85] During the 19th century Olympic Games became a popular global event. While some economists are skeptical about the economic benefits of hosting the Olympic Games, emphasizing that such "mega-events" often have large costs, hosting (or even bidding for) the Olympics appears to increase the host country's exports, as the host or candidate country sends a signal about trade openness when bidding to host the Games.[86] Moreover, research suggests that hosting the Summer Olympics has a strong positive effect on the philanthropic contributions of corporations headquartered in the host city, which seems to benefit the local nonprofit sector. This positive effect begins in the years leading up to the Games and might persist for several years afterwards, although not permanently. This finding suggests that hosting the Olympics might create opportunities for cities to influence local corporations in ways that benefit the local nonprofit sector and civil society.[87] The Games have also had significant negative effects on host communities; for example, the Centre on Housing Rights and Evictions reports that the Olympics displaced more than two million people over two decades, often disproportionately affecting disadvantaged groups.[88] Globalization has continually increased international competition in sports. The FIFA World Cup, for example, is the world's most widely viewed sporting event; an estimated 700 million people watched the final match of the 2010 FIFA World Cup held in South Africa.[89] According to a 2011 A.T. Kearney study of sports teams, leagues and federations, the global sports industry is worth between €350 billion and €450 billion (US$480-$620 billion).[90] This includes infrastructure construction, sporting goods, licensed products and live sports events. Illicit international trade Main articles: Black market and Transnational organized crime The black market in rhinoceros horn reduced the world's rhino population by more than 90 percent over the past 40 years.[91] "Black markets" and organized crime often operate on a transnational basis, with global sales totaling almost US$2 trillion annually.[92] Drug trade In 2010 the United Nations Office on Drugs and Crime (UNODC) reported that the global drug trade generated more than US$320 billion a year in revenues.[93] Worldwide, the UN estimates there are more than 50 million regular users of heroin, cocaine and synthetic drugs.[94] The international trade of endangered species was second only to drug trafficking among smuggling "industries".[95] Traditional Chinese medicine often incorporates ingredients from all parts of plants, the leaf, stem, flower, root, and also ingredients from animals and minerals. The use of parts of endangered species (such as seahorses, rhinoceros horns, saiga antelope horns, and tiger bones and claws) resulted in a black market of poachers who hunt restricted animals.[96][97] Human smuggling and trafficking Main article: Human trafficking Warning of Prostitution and Human trafficking in South Korea for G.I. by United States Forces Korea. Human trafficking is the trade in humans, most commonly for the purpose of sexual slavery, forced labor or for the extraction of organs or tissues,[98][99] including surrogacy and ova removal.[100] Trafficking is a lucrative industry and one of the fastest growing, representing an estimated US$32 billion per year in international trade, compared to the estimated annual US$650 billion for all illegal international trade circa 2010.[101] Human trafficking is a global issue that is shaped by economic hardships, cultures, laws, and immigration policies.[102] In 2004, the total annual revenue for trafficking in persons was estimated to be between US$5 billion and $9 billion.[103] In 2005, Patrick Belser of ILO estimated a global annual profit of US$31.6 billion.[104] In 2008, the United Nations estimated nearly 2.5 million people from 127 different countries are being trafficked into 137 countries around the world.[105] Human trafficking differs from people smuggling. In the latter, people voluntarily request or hire an individual, known as a smuggler, to covertly transport them from one location to another. This generally involves transportation from one country to another, where legal entry would be denied at the international border. There may be no deception involved in the (illegal) agreement. After entry into the country and arrival at their ultimate destination, the smuggled person is usually free to find their own way. According to the International Centre for Migration Policy Development (ICMPD), human smuggling is a crime against the State due to violation of immigration laws and does not require violations of the rights of the smuggled migrants to be considered a crime. Human trafficking, on the other hand, is a crime against a person because of violation of the victim's rights through coercion and exploitation.[106] Economic globalization Main article: Economic globalization Shanghai becomes a symbol of the recent economic boom of China. In 2011, China had 960,000 millionaires.[107] Economic globalization is the increasing economic interdependence of national economies across the world through a rapid increase in cross-border movement of goods, service, technology and capital.[108] Whereas the globalization of business is centered around the diminution of international trade regulations as well as tariffs, taxes, and other impediments that suppresses global trade, economic globalization is the process of increasing economic integration between countries, leading to the emergence of a global marketplace or a single world market.[109] Depending on the paradigm, economic globalization can be viewed as either a positive or a negative phenomenon. Economic globalization comprises the globalization of production, markets, competition, technology, and corporations and industries.[108] Current globalization trends can be largely accounted for by developed economies integrating with less developed economies by means of foreign direct investment, the reduction of trade barriers as well as other economic reforms and, in many cases, immigration. In 1944, 44 nations attended the Bretton Woods Conference with a purpose of stabilizing world currencies and establishing credit for international trade in the post World War II era. While the international economic order envisioned by the conference gave way to the neo-liberal economic order prevalent today, the conference established many of the organizations essential to advancement towards a close-knit global economy and global financial system, such as the World Bank, the International Monetary Fund, and the International Trade Organization. As an example, Chinese economic reform began to open China to globalization in the 1980s. Scholars find that China has attained a degree of openness that is unprecedented among large and populous nations, with competition from foreign goods in almost every sector of the economy. Foreign investment helped to greatly increase product quality and knowledge and standards, especially in heavy industry. China's experience supports the assertion that globalization greatly increases wealth for poor countries.[110] As of 2005–2007, the Port of Shanghai holds the title as the World's busiest port.[111][112][113][114] As another example, economic liberalization in India and ongoing economic reforms began in 1991. As of 2009, about 300 million people – equivalent to the entire population of the United States – have escaped extreme poverty.[115] In India, business process outsourcing has been described as the "primary engine of the country's development over the next few decades, contributing broadly to GDP growth, employment growth, and poverty alleviation".[116][117] Red: U.S. corporate profits after tax. Blue: U.S. nonresidential business investment, both as fractions of GDP, 1989–2012. Wealth concentration of corporate profits in global tax havens due to tax avoidance spurred by imposition of austerity measures can stall investment, inhibiting further growth.[118] Global financial system Main article: Global financial system By the early 21st century, a worldwide framework of legal agreements, institutions, and both formal and informal economic actors came together to facilitate international flows of financial capital for purposes of investment and trade financing. This global financial system emerged during the first modern wave of economic globalization, marked by the establishment of central banks, multilateral treaties, and intergovernmental organizations aimed at improving the transparency, regulation, and effectiveness of international markets.[119] The world economy became increasingly financially integrated throughout the 20th century as nations liberalized capital accounts and deregulated financial sectors. With greater exposure to volatile capital flows, a series of financial crises in Europe, Asia, and Latin America had contagious effects on other countries. By the early 21st century, financial institutions had become increasingly large with a more sophisticated and interconnected range of investment activities. Thus, when the United States experienced a financial crisis early in that century, it quickly propagated among other nations. It became known as the global financial crisis and is recognized as the catalyst for the worldwide Great Recession. Austerity Main article: Austerity Governments sometimes impose austerity policies to reduce budget deficits during adverse economic conditions. These can include spending cuts, tax increases, or a mixture of the two.[120][121][122] Austerity policies demonstrate governments' liquidity to their creditors and credit rating agencies by bringing fiscal income closer to expenditure. The economic effects of austerity are unclear due to its wide and non-specific definition, the limited historic sample of natural experiments and potential for conflation with the effects of other events that tend to precede austerity, such as recessions and financial crises. In macroeconomics, reducing government spending generally increases unemployment. This increases safety net spending and reduces tax revenues, to some extent. Government spending contributes to gross domestic product (GDP), so the debt-to-GDP ratio which signifies liquidity may not immediately improve. Short-term deficit spending, particularly, contributes to GDP growth when consumers and businesses are unwilling or unable to spend.[123] Under the theory of expansionary fiscal contraction (EFC), a major reduction in government spending can change future expectations about taxes and government spending, encouraging private consumption and resulting in overall economic expansion.[124] Since 2011, the International Monetary Fund has issued cautionary guidance against austerity measures imposed without regard to underlying economic fundamentals[125][126][127] and many commentators have suggested that austerity measures have indeed been misguided and harmful to the economies where they have been imposed.[128][129][130] Capital flight Main articles: Capital flight and Liquidity crisis See also: Sudden stop (economics), Tax exporting, Capital strike, and Illicit financial flows Capital flight occurs when assets or money rapidly flow out of a country because of that country's recent increase in taxes, tariffs, labor costs, or other unfavorable financial conditions such as government debt defaulting, which disturb investors. This leads to a sometimes very rapid disappearance of wealth and is usually accompanied by a sharp drop in the exchange rate of the affected country, leading in turn to depreciation in a variable currency exchange rate regime or a forced devaluation under fixed exchange rates. This can be particularly damaging when the capital belongs to the people of the affected country, because not only are the citizens now burdened by the loss of faith in the economy and devaluation of their currency, but probably also their assets have lost much of their nominal value. This leads to dramatic decreases in the purchasing power of the country's assets and makes it increasingly expensive to import goods. The Argentine economic crisis of 2001 caused in a currency devaluation and capital flight which resulted in a sharp drop in imports. Capital flight can cause liquidity crises in the affected countries from which capital is flowing, the countries in which investors are trying to liquidate their assets, and other countries involved in international commerce such as shipping and finance. A 2008 paper published by Global Financial Integrity estimated capital flight or illicit financial flows out of developing countries to be at a rate of "some US$850 billion to $1 trillion a year."[131] Market participants in need of cash find it hard to locate potential trading partners to sell their assets. This may result as a consequence of limited market participation or because of a decrease in cash held by financial market participants. Thus, asset holders may be forced to sell their assets at a price below the long term fundamental price. Borrowers typically face higher loan costs and collateral requirements, compared to periods of ample liquidity, and unsecured debt is nearly impossible to obtain. Typically, during a liquidity crisis, the interbank lending market does not function smoothly either. Capital flight affects advanced economies, as well. A 2009 article in The Times reported that hundreds of wealthy financiers and entrepreneurs had recently fled the United Kingdom in response to recent tax increases, relocating in low tax destinations such as Jersey, Guernsey, the Isle of Man, and the British Virgin Islands.[132] In May 2012 the scale of Greek capital flight in the wake of the first "undecided" legislative election was estimated at €4 billion a week[133] and later that month the Spanish Central Bank revealed €97 billion in capital flight from the Spanish economy for the first quarter of 2012.[134] Measuring globalization Indices Main article: Globalization Index Measurement of economic globalization focuses on variables such as trade, Foreign Direct Investment (FDI), portfolio investment, and income. However, newer indices attempt to measure globalization in more general terms, including variables related to political, social, cultural, and even environmental aspects of globalization.[135] One index of globalization is the KOF Index, which measures the three main dimensions of globalization: economic, social, and political.[136] Another is the A.T. Kearney / Foreign Policy Magazine Globalization Index.[137] 2013 KOF Index of Globalization Rank Country 1 Belgium 2 Ireland 3 Netherlands 4 Austria 5 Singapore 6 Denmark 7 Sweden 8 Portugal 9 Hungary 10 Switzerland 2006 A.T. Kearney / Foreign Policy Magazine Globalization Index Rank Country 1 Singapore 2 Switzerland 3 United States 4 Ireland 5 Denmark 6 Canada 7 Netherlands 8 Australia 9 Austria 10 Sweden Free trade policies Main article: Global Enabling Trade Report The Enabling Trade Index measures the factors, policies and services that facilitate the trade in goods across borders and to destinations. It is made up of four sub-indexes: market access; border administration; transport and communications infrastructure; and business environment. The top 20 countries (as of the 2010 report) are:[138] Singapore 6.06 Hong Kong 5.70 Denmark 5.41 Sweden 5.41 Switzerland 5.37 New Zealand 5.33 Norway 5.32 Canada 5.29 Luxembourg 5.28 Netherlands 5.26 Iceland 5.26 Finland 5.25 Germany 5.20 Austria 5.17 Australia 5.13 United Arab Emirates 5.12 United Kingdom 5.06 Chile 5.06 United States 5.03 France 5.02 Sociocultural globalization Shakira, a Colombian multilingual singer-songwriter, playing outside her home country. Culture Main article: Cultural globalization Cultural globalization has increased cross-cultural contacts but may be accompanied by a decrease in the uniqueness of once-isolated communities. For example, sushi is available in Germany as well as Japan but Euro-Disney outdraws the city of Paris, potentially reducing demand for "authentic" French pastry.[139][140][141] Globalization's contribution to the alienation of individuals from their traditions may be modest compared to the impact of modernity itself, as alleged by existentialists such as Jean-Paul Sartre and Albert Camus. Globalization has expanded recreational opportunities by spreading pop culture, particularly via the Internet and satellite television. Religious movements were among the earliest cultural elements to globalize, being spread by force, migration, evangelists, imperialists and traders. Christianity, Islam, Buddhism and more recently sects such as Mormonism, which have taken root and influenced endemic cultures in places far from their origins.[142] Japanese McDonald's A McDonald's in Osaka, Japan illustrates the McDonaldization of global society Conversi claimed in 2010 that globalization was predominantly driven by the outward flow of culture and economic activity from the United States and was better understood as Americanization,[143][144] or Westernization. For example, the two most successful global food and beverage outlets are American companies, McDonald's and Starbucks, are often cited as examples of globalization, with over 32,000[145] and 18,000 locations operating worldwide, respectively as of 2008.[146] The term globalization implies transformation. Cultural practices including traditional music can be lost or turned into a fusion of traditions. Globalization can trigger a state of emergency for the preservation of musical heritage. Archivists must attempt to collect, record or transcribe repertoires before melodies are assimilated or modified. Local musicians struggle for authenticity and to preserve local musical traditions. Globalization can lead performers to discard traditional instruments. Fusion genres can become interesting fields of analysis.[147] Globalization gave support to the World Music phenomenon by allowing locally-recorded music to reach Western audiences searching for new ideas and sounds. For example, Western musicians have adopted many innovations that originated in other cultures.[148] The term "World Music" was originally intended for ethnic-specific music. Now, globalization is expanding its scope such that the term often includes hybrid sub-genres such as World fusion, Global fusion, Ethnic fusion[149] and Worldbeat[150][151] A Coca-Cola stall outside the Grand Gateway 66 shopping mall in Xujiahui, Shanghai Music flowed outward from the West as well. Anglo-American pop music spread across the world through MTV. Dependency Theory explained that the world was an integrated, international system. Musically, this translated into the loss of local musical identity.[152] Bourdieu claimed that the perception of consumption can be seen as self-identification and the formation of identity. Musically, this translates into each being having his own musical identity based on likes and tastes. These likes and tastes are greatly influenced by culture as this is the most basic cause for a person's wants and behavior. The concept of one's own culture is now in a period of change due to globalization. Also, globalization has increased the interdependency of political, personal, cultural and economic factors.[153] A 2005 UNESCO report[154] showed that cultural exchange is becoming more frequent from Eastern Asia but Western countries are still the main exporters of cultural goods. In 2002, China was the third largest exporter of cultural goods, after the UK and US. Between 1994 and 2002, both North America's and the European Union's shares of cultural exports declined while Asia's cultural exports grew to surpass North America. Related factors are the fact that Asia's population and area are several times that of North America. Americanization related to a period of high political American clout and of significant growth of America's shops, markets and object being brought into other countries. So, globalization, a diverse phenomenon, relates to a multilateral political world and to the increase of cultural objects and markets between countries. The Indian experience particularly reveals the plurality of the impact of cultural globalization.[155] Multilingualism and the emergence of lingua francas Main articles: Multilingualism, Lingua franca, and List of lingua francas Multilingual speakers outnumber monolingual speakers in the world's population.[156] Today most people in the world are multilingual.[157] Language contact occurs when two or more languages or varieties interact. Language contact occurs in a variety of phenomena, including language convergence, borrowing, and relexification. The most common products are pidgins, creoles, code-switching, and mixed languages. Multilingualism is becoming a social phenomenon governed by the needs of globalization and cultural openness.[158] Thanks to the ease of access to information facilitated by the Internet, individuals' exposure to multiple languages is becoming more and more frequent, triggering, therefore, the need to acquire more and more languages. A lingua franca is a language systematically used to make communication possible between people not sharing a mother tongue, in particular when it is a third language, distinct from both mother tongues.[159] Today, the most popular second language is English. Some 3.5 billion people have some acquaintance of the language.[160] English is the dominant language on the Internet.[161] About 35% of the world's mail, telexes, and cables are in English; approximately 40% of the world's radio programs are in English.[162] While multilingualism is common among individuals, globally the number of spoken languages is decreasing. The top 20 languages spoken by more than 50 million speakers each are spoken by some 50% of the world's population, whereas many of the other languages are spoken in small communities, most with less than 10,000 speakers.[163] Historically, these less widespread languages were afforded protection through geographical isolation. Today, speakers of regional and minority languages are increasingly unable to compete with those who speak dominant languages such that these languages are now considered endangered languages. The total number of languages in the world is not precisely known and estimates vary depending on many factors. The current estimate is that there are between 6000 and 7000[164] languages spoken and between 50–90% of those will have become extinct by the year 2100.[163] Politics Main article: Global politics The United Nations Headquarters in New York City. In general, globalization may ultimately reduce the importance of nation states. Supranational institutions such as the European Union, the WTO, the G8 or the International Criminal Court replace or extend national functions to facilitate international agreement.[165] Some observers attribute the relative decline in US power to globalization, particularly due to the country's high trade deficit. This led to a global power shift towards Asian states, particularly China, which unleashed market forces and achieved tremendous growth rates. As of 2011, the Chinese economy was on track to overtake the United States by 2025.[166] Increasingly, Non-Governmental Organizations influence public policy across national boundaries, including humanitarian aid and developmental efforts.[167] Philanthropic organizations with global missions are also coming to the forefront of humanitarian efforts; charities such as the Bill and Melinda Gates Foundation, Accion International, the Acumen Fund (now Acumen) and the Echoing Green have combined the business model with philanthropy, giving rise to business organizations such as the Global Philanthropy Group and new associations of philanthropists such as the Global Philanthropy Forum. The Bill and Melinda Gates Foundation projects include a current multi-billion dollar commitment to funding immunizations in some of the world's more impoverished but rapidly growing countries.[168] and hundreds of millions of dollars in the next few years to programs aimed at encouraging saving by the world's poor.[169] The Hudson Institute estimates total private philanthropic flows to developing countries at US$59 billion in 2010.[170] As a response to globalization, some countries have embraced isolationist policies. For example, the North Korean government makes it very difficult for foreigners to enter the country and strictly monitors their activities when they do. Aid workers are subject to considerable scrutiny and excluded from places and regions the government does not wish them to enter. Citizens cannot freely leave the country.[171][172] Media and public opinion Main articles: Media (communication) and Public opinion A 2005 study by Peer Fiss and Paul Hirsch found a large increase in articles negative towards globalization in the years prior. In 1998, negative articles outpaced positive articles by two to one.[173] In 2008 Greg Ip claimed this rise in opposition to globalization can be explained, at least in part, by economic self-interest.[174] The number of newspaper articles showing negative framing rose from about 10% of the total in 1991 to 55% of the total in 1999. This increase occurred during a period when the total number of articles concerning globalization nearly doubled.[173] A number of international polls have shown that residents of developing countries tend to view globalization more favorably.[175] The BBC found a growing feeling in developing countries that globalization was proceeding too rapidly. Only in a few countries, including Mexico, the countries of Central America, Indonesia, Brazil and Kenya, did a majority feel that globalization is increasing too slowly.[176] Philip Gordon stated that "[as of 2004] a clear majority of Europeans believe that globalization can enrich their lives, while believing the European Union can help them take advantage of globalization's benefits while shielding them from its negative effects."[177] The main opposition consisted of socialists, environmental groups, and nationalists. Residents of the EU did not appear to feel threatened by globalization in 2004. The EU job market was more stable and workers were less likely to accept wage/benefit cuts. Social spending was much higher than in the US.[178] In a Danish poll in 2007, 76% responded that globalisation is a good thing.[179] Fiss, et al., surveyed U.S. opinion in 1993. Their survey showed that, in 1993, more than 40% of respondents were unfamiliar with the concept of globalization. When the survey was repeated in 1998, 89% of the respondents had a polarized view of globalization as being either good or bad. At the same time, discourse on globalization, which began in the financial community before shifting to a heated debate between proponents and disenchanted students and workers. Polarization increased dramatically after the establishment of the WTO in 1995; this event and subsequent protests led to a large-scale anti-globalization movement.[173] Initially, college educated workers were likely to support globalization. Less educated workers, who were more likely to compete with immigrants and workers in developing countries, tended to be opponents. The situation changed after the financial crisis of 2007. According to a 1997 poll 58% of college graduates said globalization had been good for the U.S. By 2008 only 33% thought it was good. Respondents with high school education also became more opposed.[174] According to Takenaka Heizo and Chida Ryokichi, as of 1998 there was a perception in Japan that the economy was "Small and Frail". However Japan was resource poor and used exports to pay for its raw materials. Anxiety over their position caused terms such as internationalization and globalization to enter everyday language. However, Japanese tradition was to be as self-sufficient as possible, particularly in agriculture.[180] The situation may have changed after the 2007 financial crisis. A 2008 BBC World Public Poll as the crisis began suggested that opposition to globalization in developed countries was increasing. The BBC poll asked whether globalization was growing too rapidly. Agreement was strongest in France, Spain, Japan, South Korea, and Germany. The trend in these countries appears to be stronger than in the United States. The poll also correlated the tendency to view globalization as proceeding too rapidly with a perception of growing economic insecurity and social inequality.[176] Many in developing countries see globalization as a positive force that lifts them out of poverty.[181] Those opposing globalization typically combine environmental concerns with nationalism. Opponents consider governments as agents of neo-colonialism that are subservient to multinational corporations.[182] Much of this criticism comes from the middle class; the Brookings Institute suggested this was because the middle class perceived upwardly mobile low-income groups as threatening to their economic security.[183] Although many critics blame globalization for a decline of the middle class in industrialized countries, the middle class is growing rapidly in developing countries.[184] Coupled with growing urbanization, this leads to increasing disparities in wealth between urban and rural areas.[185] In 2002, in India, 70% of the population lived in rural areas and depended directly on natural resources for their livelihood.[182] As a result, mass movements in the countryside at times express objections to the process.[186] The nonprofit Reporters Without Borders publishes a Press Freedom Index, an annual ranking of countries based upon the organization's assessment of the countries' press freedom records in the previous year. It reflects the degree of freedom that journalists, news organizations, and netizens enjoy in each country, and the efforts made by the authorities to respect and ensure respect for this freedom. Internet Global Internet usage: Percent of population connected in 2012[187] Main article: Global Internet usage See also: List of countries by number of Internet users Both a product of globalization as well as a catalyst, the Internet connects computer users around the world. From 2000 to 2009, the number of Internet users globally rose from 394 million to 1.858 billion.[188] By 2010, 22 percent of the world's population had access to computers with 1 billion Google searches every day, 300 million Internet users reading blogs, and 2 billion videos viewed daily on YouTube.[189] According to research firm IDC, the size of total worldwide e-commerce, when global business-to-business and -consumer transactions are added together, will equate to US$16 trillion in 2013. IDate, another research firm, estimates the global market for digital products and services at US$4.4 trillion in 2013. A report by Oxford Economics adds those two together to estimate the total size of the digital economy at $20.4 trillion, equivalent to roughly 13.8% of global sales.[190] While much has been written of the economic advantages of Internet-enabled commerce, there is also evidence that some aspects of the internet such as maps and location-aware services may serve to reinforce economic inequality and the digital divide.[191] Electronic commerce may be partly responsible for consolidation and the decline of mom-and-pop, brick and mortar businesses resulting in increases in income inequality.[192][193][194] An online community is a virtual community that exists online and whose members enable its existence through taking part in membership ritual. Significant socio-technical change may have resulted from the proliferation of such Internet-based social networks.[195] Population Growth Main articles: World population and Human overpopulation The world population has experienced continuous growth since the end of the Great Famine and the Black Death in 1350, when it stood at around 370 million.[196] The highest rates of growth – global population increases above 1.8% per year – were seen briefly during the 1950s, and for a longer period during the 1960s and 1970s. The growth rate peaked at 2.2% in 1963, and had declined to 1.1% by 2011. Total annual births were highest in the late 1980s at about 138 million,[197] and are now expected to remain essentially constant at their 2011 level of 134 million, while deaths number 56 million per year, and are expected to increase to 80 million per year by 2040.[198] Current projections show a continued increase in population (but a steady decline in the population growth rate), with the global population expected to reach 7.5 and 10.5 billion by 2050.[199][200] The head of the International Food Policy Research Institute, stated in 2008 that the gradual change in diet among newly prosperous populations is the most important factor underpinning the rise in global food prices.[201] From 1950 to 1984, as the Green Revolution transformed agriculture around the world, grain production increased by over 250%.[202] World population has grown by about 4 billion since the beginning of the Green Revolution and without it, there would be greater famine and malnutrition than the UN presently documents (approximately 850 million people suffering from chronic malnutrition in 2005).[203][204] With human consumption of seafood having doubled in the last 30 years, seriously depleting multiple seafood fisheries and destroying the marine ecosystem as a result, awareness is prompting steps to be taken to create a more sustainable seafood supply.[205] World energy consumption by fuel projected through 2035. It is becoming increasingly difficult to maintain food security in a world beset by a confluence of "peak" phenomena, namely peak oil, peak water, peak phosphorus, peak grain and peak fish. Growing populations, falling energy sources and food shortages will create a "perfect storm" by 2030, according to UK chief government scientist John Beddington, who noted that food reserves were at a 50-year low and the world would require 50% more energy, food and water by 2030.[206][207] The world will have to produce 70% more food by 2050 to feed a projected extra 2.3 billion people and as incomes rise, according to the United Nations' Food and Agriculture Organisation (FAO).[208] Social scientists have warned of the possibility that global civilization is due for a period of contraction and economic re-localization due to a decline in fossil fuels and resulting crises in transportation and food production.[209][210][211] Helga Vierich has predicted a restoration of sustainable local economic activities based on hunting and gathering, shifting horticulture, and pastoralism.[212] Urbanization Main articles: Urbanization and Megacities Growth in population during the period of rapid industrialization and globalization in the 20th century was accompanied by increased urbanization on a global basis. By 2011, the majority of the world's population lived in industrialized urban areas featuring nearby factories and business offices rather than in traditional rural areas where agricultural activities predominate.[213] Certain cities began to emerge as global cities generally considered to be important centers of global economic activities. Megacities, cities having a population in excess of 10 million, grew in number from 3 in 1973 to 24 by 2013, with estimates of up to 27 by 2025.[214] Health Main articles: Global health and Globalization and disease Global health is the health of populations in a global context that transcends the perspectives and concerns of individual nations.[215] Health problems that transcend national borders or have a global political and economic impact are emphasized.[216] It has been defined as 'the area of study, research and practice that places a priority on improving health and achieving equity in health for all people worldwide'.[217] Thus, global health is about worldwide improvement of health, reduction of disparities, and protection against global threats that disregard national borders.[218] The application of these principles to the domain of mental health is called Global Mental Health.[219] SARS checkpoint at Taiwan Taoyuan International Airport's International Arrivals in Terminal 1 The major international agency for health is the World Health Organization (WHO). Other important agencies with impact on global health activities include UNICEF, World Food Programme (WFP), United Nations University International Institute for Global Health and the World Bank. A major initiative for improved global health is the United Nations Millennium Declaration and the globally endorsed Millennium Development Goals.[220] International travel has helped to spread some of the deadliest infectious diseases.[221] Modern modes of transportation allow more people and products to travel around the world at a faster pace, but they also open the airways to the transcontinental movement of infectious disease vectors.[222] One example of this occurring is AIDS/HIV.[223] Due to immigration, approximately 500,000 people in the United States are believed to be infected with Chagas disease.[224] In 2006, the tuberculosis (TB) rate among foreign-born persons in the United States was 9.5 times that of U.S.-born persons.[225] Starting in Asia, the Black Death killed at least one-third of Europe's population in the 14th century.[226] Even worse devastation was inflicted on the American supercontinent by European arrivals. 90% of the populations of the civilizations of the "New World" such as the Aztec, Maya, and Inca were killed by small pox brought by European colonization. Global natural environment Main articles: Natural environment, Natural resource, and Natural capital See also: Human ecology and Coupled human–environment system The natural environment encompasses all living and non-living things occurring naturally on Earth or some region thereof. It is an environment that encompasses the interaction of all living species.[227] The natural environment is contrasted with the built environment, which comprises the areas and components that are strongly influenced by humans. It is difficult to find absolutely natural environments; it is common that the naturalness varies in a continuum, from ideally 100% natural in one extreme to 0% natural in the other. More precisely, we can consider the different aspects or components of an environment and see that their degree of naturalness is not uniform[228] but, instead, there exists a coupled human–environment system. Plot based on the NASA GISS Surface Temperature Analysis (GISTEMP) data set. Human challenges to the natural environment, such as climate change, cross-boundary water and air pollution, over-fishing of the ocean, and the spread of invasive species require at least transnational and, often, global solutions. Since factories in developing countries increased global output and experienced less environmental regulation, globally there have been substantial increases in pollution and its impact on water resources.[229] State of the World 2006 report said India's and China's high economic growth was not sustainable. The report states, The world's ecological capacity is simply insufficient to satisfy the ambitions of China, India, Japan, Europe and the United States as well as the aspirations of the rest of the world in a sustainable way.[230] In a 2006 news story, BBC reported, "...if China and India were to consume as much resources per capita as United States or Japan in 2030 together they would require a full planet Earth to meet their needs.[230] In the longterm these effects can lead to increased conflict over dwindling resources[231] and in the worst case a Malthusian catastrophe. International foreign investment in developing countries could lead to a "race to the bottom" as countries lower their environmental and resource protection laws to attract foreign capital.[8][232] The reverse of this theory is true, however, when developed countries maintain positive environmental practices, imparting them to countries they are investing in and creating a "race to the top" phenomenon.[8] Burning forest in Brazil. The removal of forest to make way for cattle ranching was the leading cause of deforestation in the Brazilian Amazon from the mid-1960s. Soybeans have become one of the most important contributors to deforestation in the Brazilian Amazon.[233] The time between distances is shrinking between continents and countries due to globalization, causing developing and developed countries to find new ways to solve problems on a global rather than regional scale. Agencies like the United Nations now must be the global regulators of pollution, whereas before, regional governance was enough.[234] Action has been taken by the United Nations to monitor and reduce atmospheric pollutants through the Kyoto Protocol, the UN Clean Air Initiative, and studies of air pollution and public policy.[235] Global traffic, production, and consumption are causing increased global levels of air pollutants. The northern hemisphere has been the leading producer of carbon monoxide and sulfur oxides.[236] Changes in natural capital are beginning to erode the economic logic of one major aspect of economic globalization: an international division of labor and production based on global supply chains.[237] Planetary boundaries for several key environmental resources have been reached and others are near their limits. Over time, peak oil and climate change may result in "peak globalization," measured in terms of decreasing ton-miles of freight transported, particularly across oceans and continents. The economic logic of the comparative advantage of global supply chains could be overcome by both increasing transportation costs and interruptions and delays in the transit of freight.[237] China and India substantially increased their fossil fuel consumption as their economies switched from subsistence farming to industry and urbanization.[238][239] Chinese oil consumption grew by 8% yearly between 2002 and 2006, doubling from 1996–2006.[240] In 2007, China surpassed the United States as the top emitter of CO 2.[241] Only 1 percent of the country's 560 million city inhabitants (2007) breathe air deemed safe by the European Union. In effect, this means that developed countries may "outsource" some of the pollution associated with consumption in countries where pollution-intensive industries have been moved. Societies utilize forest resources in order to reach a sustainable level of economic development. Historically, forests in earlier developing nations experience "forest transitions", a period of deforestation and reforestation as a surrounding society becomes more developed, industrialized and shift their primary resource extraction to other nations via imports. For nations at the periphery of the globalized system however, there are no others to shift their extraction onto, and forest degradation continues unabated. Forest transitions can have an effect on the hydrology, climate change, and biodiversity of an area by impacting water quality and the accumulation of greenhouse gases through the re-growth of new forest into second and third growth forests.[242][243] A major source of deforestation is the logging industry, driven by China and Japan.[244] Without more recycling, zinc could be used up by 2037, both indium and hafnium could run out by 2017, and terbium could be gone by 2012.[245] Other "peak" phenomena, such as peak oil, peak coal, peak gas, peak water, and peak wheat, also affect the availability and sustainability of natural capital. In 2003, 29% of open sea fisheries were in a state of collapse.[246] The journal Science published a four-year study in November 2006, which predicted that, at prevailing trends, the world would run out of wild-caught seafood in 2048.[247] Conversely, globalization created a global market for farm-raised fish and seafood, which as of 2009 was providing 38% of global output, potentially reducing fishing pressure.[248] The global trade in goods depends upon reliable, inexpensive transportation of freight along complex and long-distance supply chains.[237] Global warming and peak oil undermine globalization by their effects on both transportation costs and the reliable movement of freight. Countering the current geographic pattern of comparative advantage with higher transportation costs, climate change and peak oil would thus result in peak globalization, after which the volume of exports will decline as measured by ton-miles of freight.[249] Global workforce Main articles: Global workforce and New international division of labour Global workforce refers to the international labor pool of workers, including those employed by multinational companies and connected through a global system of networking and production, immigrant workers, transient migrant workers, telecommuting workers, and those in contingent work and other precarious employment. As of 2012, the global labor pool consisted of approximately 3 billion workers, around 200 million unemployed.[250] The global workforce, or international labor, reflects a new international division of labor that has been emerging since the late 1970s in the wake of other forces of globalization. The global economic factors driving the rise of multinational corporations – namely, cross-border movement of goods, services, technology and capital – are changing ways of thinking about labor and the structure of today's workforce. With roots in the social processes surrounding the shift to standardization and industrialization, post-industrial society in the Western world has been accompanied by industrialization in other parts of the world, particularly in Asia. As industrialization takes hold worldwide and more cultures move away from traditional practices in respect to work and labor, the ways in which employers think about and utilize labor are changing. The global workforce is competitive and has been described as "a war for talent."[251] This competitiveness is due, in part, to communications technologies that assist companies to attain multinational status. Communication technologies also allow companies to find workers without limiting their search locally, a process known as global labor arbitrage. An example of this war for talent is the phenomenon of foreign executives appointed into headquarter positions of local organisations.[252][253] However, production workers and service workers in advanced economies have been unable to compete directly with much lower-cost workers in developing countries.[254] Low-wage countries gained the low-value-added element of work formerly done in rich countries, while higher-value work remained; for instance, the total number of people employed in manufacturing in the US declined, but value added per worker increased.[255] There are many examples of this movement of labor into developing economies. Two examples can be found in China and South Africa. Chinese success cost jobs in other developing countries as well as in the West.[256] From 2000 to 2007, the U.S. lost a total of 3.2 million manufacturing jobs.[257] As of 26 April 2005 "In regional giant South Africa, some 300,000 textile workers have lost their jobs in the past two years due to the influx of Chinese goods".[258] In Europe, in 2012, the unemployment rate hit a record high at 11.8% with 18.8 million people out of jobs with youth unemployment at a new high, according to Eurostat.[259] The rate of unemployed youth in Spain increased to over 56%, and in Greece to 62.5% in early 2013.[260] Research shows that young people in Europe, themselves, are also worried for their future.[261] Noble Prize winning economist Michale Spence writes, “The massive changes in the global economy since World War II have had overwhelmingly positive effects. Hundreds of millions of people in the developing world have escaped poverty, and more will in the future. The global economy will continue to grow – probably at least threefold over the next 30 years. One person's gain is not necessarily another's loss; global growth is not even close to a zero-sum game. But globalization hurts some subgroups within some countries, including the advanced economies.”[262] International migration Main articles: Human migration, Foreign worker, and List of countries by net migration rate Many countries have some form of guest worker program with policies similar to those found in the U.S. that permit U.S. employers to sponsor non-U.S. citizens as laborers for approximately three years, to be deported afterwards if they have not yet obtained a green card. As of 2009, over 1,000,000 guest workers reside in the US; the largest program, the H-1B visa, has 650,000 workers in the U.S.[263] and the second-largest, the L-1 visa, has 350,000.[264] Many other United States visas exist for guest workers as well, including the H-2A visa, which allows farmers to bring in an unlimited number of agricultural guest workers. The United States ran a Mexican guest-worker program in the period 1942–1964, known as the Bracero Program. About 85% of Dubai's population consists of migrant workers, a majority of whom are from India.[265] An article in The New Republic criticized such guest worker programs by equating the visiting workers to second-class citizens, who would never be able to gain citizenship and would have less residential rights than Americans.[266] Migration of educated and skilled workers is called brain drain. For example, the U.S. welcomes many nurses to come work in the country.[267] The brain drain from Europe to the United States means that some 400,000 European science and technology graduates now live in the U.S. and most have no intention to return to Europe.[268] Nearly 14 million imm |
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