Today’s Global Market and Globalization

25 Aug

The global market is now experiencing a turbulent journey owing to the collapse of theUnited States’ financial market. The unprecedented disintegration of some of the biggest international banks due to liquidity crisis sent shockwaves across the world. The U.S. Congress is currently discussing about the possibility of bailing out not just collapsing banks but also financially troubled auto-companies, while thousands of Americans are at the risk of losing their homes to foreclosure buyers due to the falling housing prices. Is this the global picture or effect of globalization? With the ongoing global events, do we now see a shift of today’s globalization to another form? If that is the case, then what form would this current economic catastrophe make?

From housing loans to banks to automakers— what’s next? Latest news reveals that theUnited States’ economic slump might cause massive job loss if not averted (Goldman, 2008). Indeed, the global economic crisis that sprouted in theUnited Statesis now the focus of economists across the world. The Bush administration is ready to spend taxpayers’ money not just to bailout big businesses, but also to provide massive unemployment insurance benefits to its citizens (CNN). Does this mean now that the kind of globalization theUnited Stateshas today is different fifty years ago?

The world economy today is entirely different from the global market about a century ago. During the early years of the Industrial Revolution,Great Britainbecame the world economic leader due to its better-quality industrial technology and advanced transportation system like railroads and steamships (Allen, 2006). The industrial revolution was the initial stage of today’s globalization. Through the years, the business world was gradually formed through economic cooperation, through established international laws like patent law, copyright law, and intellectual property right, through other laws that facilitated both domestic and international business transactions like bulk sales law, trust receipt law, bill of lading, and warehouse receipt, among others.

The rise of theUnited States of Americaas the world economic superpower led to the reformation and development of global economic system. TheUnited Statesintroduced its own economic concepts to it territories and colonies. TheUnited Statescivil law system in fact is being copied by a number of countries in the world. Such an American civil law system also helped shape the face of modern globalization since it consists of core economic principles and vehicles like partnership, obligation and contracts, property laws, to name a few. On the other hand,America’s Uniform Commercial Code is now the universal law in terms of economic transactions. The UCC contains important provisions like letters of credit, negotiable instruments, bank deposit, fund transfers, bulk transfers, among others that are commonly used in business transactions. A business cannot transact globally without applying any of these concepts.

It is necessary to tackle these concepts in order to better understand the origins and nature of globalization. This is because there are only a very few academic resources that tackle the connection between legalities and globalization. Globalization now exists and becomes the global economic system not because of businesses and economic cooperation but because there are laws which establish and protect it. Without such establishing and protecting laws like General Agreement on Tariffs and Trade (GATT), North American Free Trade Agreement (NAFTA), ASEAN Free Trade Area (AFTA), among others, globalization will hardly exist in today’s global context (Nader, 1993).

However, there are problems related to globalization. One of which is its vague and ambiguous concept that is open to different interpretation and understanding. With the ongoing global financial crisis that now trouble economic and policy-makers, is there now a need to redefine the context of globalization? Or in other words, did globalization live up to its economic promises?

Defining globalization

Most scholarly articles define globalization as the economic integration and interdependence between and among business and people from different nations across the world (Tan, 2005, 3). However, according to Bourguignon et al (2002), there is

Bourguignon, F., Marin, D., Venables, A.J., Winters,L.A., Giavazzi, F., Coyle, D., Seabright, P., Verdier, T., O’Rourke, K.H., & Fernandez, R. (2002). Making sense of globalization: A guide to the economic issues. CEPR Publications

Tan, S. (2005). Challenging citizenship: Group membership and cultural identity in a global age. Ashgate Publishing, Ltd.

CNN (2008). Bush signs bill extending jobless benefits. CNN.Com. Retrieved on November 21, 2008, from http://money.cnn.com/2008/11/21/news/economy/unemployment_extension/index.htm

Goldman, D. (2008). Job cuts cast dark clouds over economy. CNN.Com. Retrieved on November 21, 2008, from http://money.cnn.com/2008/11/21/news/economy/job_cuts/index.htm

Nader, R. (1993). The Case Against Free Trade, GATT, NAFTA, and the Globalization of Corporate Power.North AtlanticBooks

Allen, R.C. (2006). The British Industrial Revolution in global perspective: How commerce created the industrial revolution and modern economic world. Oxford: OxfordUniversity. Retrieved on November 21, 2008, from http://www.nuffield.ox.ac.uk/users/allen/unpublished/econinvent-3.pdf

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