CRITICAL REVIEW

Critical Review

Critical Review

The driving factor behind globalization has been the rise of a global economy. The increase in volume of international trade has been impressive, although some scholars have argued that the level of global economic integration reached in modern times has not surpassed the level of economic integration at the turn of the twentieth century. Although a global economy developed in the 1870s when the submarine telegraph allowed people to integrate major financial centers and markets around the world, only after the ICT (information and communication technology) revolution of the 1970s has a much more integrated global economy developed.

Those scholars who acknowledge the impressive global integration at the turn of the twentieth century but claim that the current wave of globalization is distinctive argue that the current economic globalization is distinguished by the quality—if not the quantity—of transformation. The ICT revolution responsible for the rise of postfordism—the model of industrial production following the model of fordism (a method of industrial management based on producing inexpensive, standardized commodities in high volume by assembly line and winning employee loyalty with good wages but being intolerant of unionism and employee participation)—changed the basic structure of production. This has facilitated the rise of more horizontal corporations, with flattened hierarchies and more worker initiative. The rise of economic globalization is based squarely on the rise of ICTs because ICTs have reduced distance and allowed a decentralized arrangement of just-in-time production models.

The global economy has come from the world economy—a system in which nationally organized circuits of production and exchange formed the backbone of economic activity. The new global economy—which involves a massive decentralization of production processes and a simultaneous centralization of command and control processes—has defined the new circuits of accumulation (specific constellations of social relations that facilitate the extraction of private profit). One of the main reasons for increased global economic integration is the falling cost of communication and transportation. New modes of communication and transportation have helped to establish new modes of production and distribution networks. Now production is organized around networks that are flexible and highly efficient.

Nearly $20 billion of capital flows around the world every day. Cross-border mergers and acquisitionsdriven foreign direct investment (FDI)—investment made to acquire an interest in an enterprise operating in an economy other than that of the investor—have surpassed $1 trillion. Over the past five decades the real world gross domestic product (GDP) has risen at an annual rate of more than 4 percent. During this era of remarkable economic growth, world trade in goods and services has expanded at nearly double the pace of world real GDP. As a result the volume of world trade in goods and services (the sum of both exports and imports) rose from barely one-tenth of world GDP in 1950 to about one-third of world GDP in 2000. But much of the growth in trade has been within the bounds of regional integration agreements, so some experts have argued that globalization can be more properly seen as ...