Globalization - American-led globalization: 1990–2001




The Clinton administration perceived that globalization had the potential to harmonize behavior, customs, and politics and usher in prosperity, development, and democracy. As the world's only superpower, the United States would lead the way toward openness, free access, and political stability. Also, President William Jefferson Clinton's enthusiasm for globalization was not shared by all Americans; many wondered if globalization was both inevitable and desirable. As the new millennium began, the business community seemed united in support of globalization, but among ordinary people there were concerns about jobs, food safety, harm to the environment, sovereignty, cultural homogenization, and the like. Americans were as unsure about the costs and benefits of this second era of globalization as they had been during the first one before World War I.

The Clinton administration veered from postwar history and adopted the universalist, integrative, and democratic posture of globalization. Economics replaced security on the U.S. policy agenda; globalization was the focus. The administration tied free markets to democracy. After the Mexican peso crisis of 1994, the president placed economic diplomacy at the center of foreign policy, supporting the consolidation of market democracy throughout the world, an ideology that put him in stride with global business but at odds with many in his own party who were tied to the traditional big government, workerprotection liberalism of the past.

The outpouring of analyses of globalization grew during the mid-1990s. Scholars, journalists, and politicians focused on the concept and process, but above all, on its influence. The widespread use of the Internet (304 million people in 2000) brought the issue into homes throughout the world. When added to the Clinton administration's oftentimes single-minded purpose of expanding American trade and investments over-seas, the establishment of NAFTA and the WTO, and the soaring rebound of the U.S. economy from a recession early in the 1990s, globalization had a certain cachet among Americans of all political stripes and economic status.

Americans were not the only ones anxious over globalization. In western Europe and many developing countries, globalization was a dirty word, associated in the public mind with American sneakers, blue jeans, burgers, and videos. The French were most skeptical. In one poll, 65 percent said globalization increased the gap between rich and poor; 56 percent thought it threatened national identity. The French Ministry of Culture sought to rally Europeans and to restrict access for Hollywood films and American television programs.

Around the world, defenders of traditional values sought to block the spread of American-style pop culture, but globalization proved a worthy foe. Iranian religious fundamentalists raided homes to confiscate videos and satellite dishes, and in neighboring Afghanistan the Taliban closed movie theaters, burned films, and denied schooling to women. Try as they might, the fundamentalists could not eradicate this powerfully projected alien culture. Their efforts merely benefited smugglers and the flow of contraband. Many discreetly hid satellite dishes to access Western television. The failure of Islamic fundamentalists to stamp out Western influences, like the inability of state-controlled societies in Eastern Europe to block the appeal of Western democracy and consumerism, demonstrated the power of mass communications in the era of satellites and videocassettes. It also underscored the global appeal of American values to the young, the well-educated, and the affluent, an amorphous yet tangible element of U.S. power in the world.

Yet the argument that globalization led to American cultural dominance ignored the appeal of the competition. At the time anti-globalization demonstrators were protesting in Seattle against the WTO in December 1999, children throughout America were gripped by the Japanese fad game Pokemon. Film industries in India and Hong Kong presented competition to Hollywood, and MTV discovered the need to vary its formula in the world's various regional markets—providing, for example, Chinese music in China and Hindi pop in India. True cultural globalization, not just Americanization, was in effect.

Among the world's cosmopolitan elite—business leaders, government officials, academics, and media types—the requirements of globalization produced a convergence. English became the predominant language of commerce and transnational communications, and business and government leaders wore Western business suits, flew in the same airplanes, stayed in the same hotels, read the same newspapers (the Wall Street Journal and the Financial Times ), and communicated with cellular phones and e-mail. The acceptance of American-style globalization reflected the success of U.S. business, the need to play by the rules of the world's largest open market, U.S. leadership in technological innovation and the information revolution, and the attraction of America's universal values. It also reflected the victories over fascism, militarism, and communism during the twentieth century that allowed the Anglo-American powers to establish the United Nations system, design the institutions of international economic and financial collaboration, and press for acceptance of common standards and the rule of law that were so crucial to globalization.

The post–Cold War era of economic globalization, however, also represented a synergistic dimension in which changes in technology, business strategy, and government policies combined to produce effects far more profound than the sum of incremental steps. The changes hinged on the integration of capital markets, the growing irrelevance of national borders, and the technological leveraging of knowledge and talent worldwide. As the Internet was empowering ordinary people with information, governance of the global system became more segmented in functional supranational institutions run by specialized elites. The International Monetary Fund (IMF), the World Bank, the WTO, and the Bank for International Settlements set the rules and handed out sanctions.

Integration and mobility were keys. Production, capital flows, and workers were increasingly integrated into a global marketplace dictated by transnational corporations. In 1970 there were 7,000 transnational corporations; in 2000 the numbers were some 63,000 parents and 690,000 foreign affiliates as well as a large number of interfirm arrangements. Gross product affiliated with the production of transnationals increased faster than global GDP and global exports. The foreign affiliates of transnational corporations employed six million persons and had foreign sales of $2 trillion. Their reach in every aspect of the world economy—from production to distribution—grew exponentially. In the last half of the twentieth century, international trade accelerated. The world economy grew sixfold in that time, climbing from $6.7 trillion in constant prices to $41.6 trillion in 1998, while global exports of goods rose seventeenfold, from $311 billion to $5.4 trillion. Much of the growth occurred among units of transnational corporations and involved services, which represented one-fifth of total world trade at the end of the century. From 1970 to 2000, the volume of foreign direct investment rose almost fifteenfold; in the latter year it was twice that of 1990. By then, dozens of nations had enacted special laws to attract foreign capital.

Financial globalization, reflecting the integration of equity and bond markets, was another powerful factor driving world economic integration and growth. As in late-nineteenth-century Britain, the upper and middle classes increasingly invested their savings overseas. The assets of U.S.-based international and global mutual funds climbed from $16 billion in 1986 to $321 billion in late 1996. Forty-four million American households held mutual funds, compared to 4.6 million in 1980. Moreover, the velocity of foreign exchange transactions spiraled. In 1973 average daily turnover in foreign exchange markets was $15 billion compared to $60 billion in 1983, $880 billion in 1993; and an estimated $1.5 trillion in 1998. Moreover, in a world of electronically integrated financial markets, money flowed into and out of countries in response to changing market conditions. In 1996 foreign investors put $100 billion into Asia; the next year they withdrew $100 billion.

Technology abetted globalization. World production of technology multiplied six times between 1975 and 1986; international trade in technology soared nine times. Improvements in communications and transportation abetted the process. In 1956, eighty-nine telephone conversations took place simultaneously through the transatlantic telephone cable. By the end of the millennium, about one million conversations occurred simultaneously by satellite and fiber optics. Add in e-mail and faxes and the ease, speed, and volume of communications have been magnified. Between 1955 and 1998, ship tonnage rose sixfold; the unit cost of carrying freight by sea fell 70 percent between 1920 and 1990. The volume of air freight soared from 730 million to 99 billion ton-kilometers. As with shipping, costs fell sharply. Between 1930 and 1990 the average revenue per mile for air transportation dropped from 68 cents to 11 cents (in constant dollars).

Cheaper airfares also enhanced individual mobility. Between 1950 and 1998 international tourist arrivals rose twenty-five-fold—from 25 million to 635 million. By 2000, two million people crossed a border somewhere in the world every single day. Some of them were political refugees; others simply seeking economic opportunities. At the end of the twentieth century, some 150 million people lived outside the country of their birth. This amounted to 2.5 percent of the world's population, or one in every forty people. Many of them remitted earnings to families and relatives in native countries. From 1970 to 1998, the number of immigrants living in America tripled from 9.6 million to 26.3 million. It is estimated that immigrants from Central America remitted $8 billion a year to their home countries during the last years of the twentieth century. Many of the foreign students who entered the United States for graduate education remain, contributing to the brain drain from developing lands but augmenting the supply of highly trained professionals in America. In 1990 one-third of Silicon Valley's scientists and engineers were foreign born.

Many of the less educated who remained in their homelands, moving from countryside to city, have joined the global economy. Labor became part of a global assembly line; transnationals working for the Nike Company and other multinational firms assembled products from components manufactured in factories throughout the world, while management, administration, and research and development were done at the headquarters. Service jobs in law firms, insurance, and data entry focused on electronic production, which meant that jobs flowed in and out of countries at great speed. Globalization had, simply, changed the world and its business, including the projection of national power and diplomacy.

Along with the globalization of brands like Nike, McDonald's, Coca-Cola, and Marlboro, the process also benefited sports teams. Michael Jordan's star qualities, as well as the global reach of satellite television, established a worldwide following for the Chicago Bulls. Soccer's Manchester United and baseball's New York Yankees also appealed to extensive audiences. An influx of eastern European players strengthened the international appeal of the National Hockey League. The National Basketball Association's open-door policy to talent attracted forty-five foreign players from twenty-nine countries, and as a result the NBA broadcast in 210 countries and forty-two languages. Major League Baseball, which began opening its season in foreign locations, inaugurated the 2001 season with 854 players, 25 percent of them born outside the United States. As a result of Ichiro Suzuki's success with the Seattle Mariners, the team's home games were televised live in Japan. Thousands of Japanese baseball fans even flew to Seattle to attend home games of a club owned by Nintendo president Hiroshi Yamauchi.

Along with rapid growth and increasing integration of markets, however, the age of globalization produced greater volatility. The Mexican peso crisis of 1994 and the Asian economic crisis of 1997–1998 underscored the vulnerability of the market-driven globalization system and how quickly strife could spread in a world linked by high-velocity communication, financial, and transportation networks. The Asian economic crisis also showed globalization's impact in the political arena. It aroused concerns about the merits of Western-style, free-market globalization to an extent that street protests, stimulated by the economic downturn, forced Indonesia's dictator of thirty-two years from power while politicians jockeyed for control in Thailand, the Philippines, South Korea, and Malaysia.

Over the preceding decade Wall Street, Washington, and international financial institutions had encouraged emerging economies to deregulate capital markets and open to foreign banks and financial institutions, but countries in Latin America and Asia paid for the deregulatory bonanza. By opening their markets, they made themselves susceptible to pressures from abroad and the international economy, and also lost independence over their fiscal policies. Abrupt changes in one country, region, or the world economy reverberated throughout these poorer nations, causing crises. Yet the bankers and U.S. financial officials blamed the catastrophic consequences on crony capitalism, the lack of transparency and inadequate disclosure of financial data, the absence of independent regulatory authorities, and the inadequacy of accounting standards. They stressed the benefits of liberalization under the process of globalization.

Opposition to the pro-globalization agenda emerged among a disparate alliance of activists concerned about the environment, labor standards, and national sovereignty. In 1992 the first Bush administration had refused to accept the entire Rio de Janeiro Treaty that protected biodiversity of plant and animal species. An argument also erupted over the existence of global warming, which many scientists and environmental groups blamed on the emission of carbon-based gases into the atmosphere. A total of 150 nations, including the United States, signed the Kyoto accord of 1997 that pledged to reduce such global emissions to 5.2 percent below the 1990 level. America would cut its release of carbon-based gases by 7 percent. But President Bill Clinton faced staunch opposition from powerful business interests such as the Business Roundtable, the Chamber of Commerce, and the National Association of Manufacturers who thought the agreement flawed. The Senate voted 95 to 0 to oppose the protocol if developing countries like China and India were not also required to cut their emissions. As a result, the administration never sent the agreement to Capitol Hill for ratification. The debate over global warming continued into the 2000 election when Democratic candidate Al Gore insisted that America join the Kyoto pact nations and GOP candidate George W. Bush countered that additional studies were needed to better understand the problem. It was clear that, just as with the economy, globalization of environmental concerns might require international intervention. Environmental concerns indicated that there was not a consensus on globalization.

Many people, especially in the labor and environmental movements and within academia, shunned this new globalization system, and argued that globalization undermined stability and prosperity and was leading to the disintegration of national economies and cultures. According to this view, workers had become pawns in transnational corporate agendas, the environment had been deregulated by the free-market rules of the WTO, and financial markets had been so decontrolled that the joint efforts of a handful of individuals could destabilize entire nations (as in Indonesia in 1997). The anti-globalization protesters took to the streets to voice their objections. The WTO ministerial meetings convened in Seattle in December 1999 to plan a new set of world trade negotiations called the Millennium Round, but huge demonstrations shut down the meetings. Seattle turned out not to be an isolated event; there were later demonstrations at gatherings sponsored by the United Nations, the IMF and World Bank, and Davo's World Economic Forum.

There were also optimists who saw the free market and meteoric advances in technology as a great boon or as an irreversible phenomenon that could not be halted. They announced that the world had entered a period of unity (unlike the divisive forty-five-year Cold War) that rewarded flexibility, high technology, and individualism.

Public opinion polls showed Americans divided on such issues as globalization and free trade. In general, those in the middle class and below voiced protectionist sentiments or questioned the fairness of NAFTA and the WTO. Among those warning of the perils of globalization were Pope John Paul II, UN Secretary General Kofi Annan, and former South African president Nelson Mandela.

As the twenty-first century opened, the globalization revolution continued to roll forward. While the global spread of information, the integration of markets, and the erasure of borders had the potential to promote global peace, prosperity, and the convergence of basic values, there was a dark dimension often ignored by corporate boosters. For one, globalization benefited organized criminals as well as corporations. The turnover of the criminal economy was estimated at about $1 trillion annually. Narcotics accounted for about half, but a trade in people was also lucrative. Gangs moved from four to five million people annually and earned some $7 billion in profits. In the health area, globalization presented a number of challenges. Public health officials worried that increased human mobility enhanced opportunities for microbes. The risks ranged from trade in illegal products and contaminated foodstuffs, divergent safety standards, indiscriminate spread of medical technologies and experimentation, and the sale of prescription drugs without approval of national authorities. With some two million people crossing borders daily, industrialized nations faced threats from emerging infectious diseases, exposure to dangerous substances, and violence such as chemical and bioterrorist attack. Furthermore, the spread of information on the Internet empowered individual terrorists like the Unabomber to exact their own revenge on global society.

Globalization was a phenomenon of the twentieth century, although it was often hidden from view. Its effects on diplomacy were enormous. In the age of instantaneous communication, rapid transport, and volatile markets, it was apparent that complexities of international relationships had moved far beyond the expertise of professional diplomats and foreign ministries. Diplomats and governments no longer served as gatekeepers. In the networked world, individuals, nongovernmental organizations, and officials communicated rapidly and regularly. But while technological innovation and information had networked millions of individuals into a system without central control, it is worth emphasizing that governments helped fund the networking revolution. The U.S. government had supported basic research in high-speed computers, telecommunications, networking, and aviation, all essential to the interconnected world of globalization. Moreover, Washington's commitment to market opening, deregulation, and liberalization of trade and finance provided the policy impetus that led to a variety of international agreements and arrangements promoting an open world order. Thus have diplomacy and techno-economic globalization been linked since the post–Civil War era.

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