Globalisation Essay Example | Topics and Well Written Essays - 3000 words

Globalisation - Essay Example At the time, 'USA produced at least half of the world's manufactured goods and held half its reserves' (http://en.wikipedia.org/wiki/Bretton_Woods_sytem ). While the gold standard prevailed, currency exchange rates were more or less fixed, ensuring stability in world trade. Although expounding a liberal free trade and free market philosophy, the USA also is accused of being isolationist. 'America first' is a very powerful slogan. 'The historic insulation of the American economy from the global one stems from the size and physical remoteness of the U.S. market, which relies less on trade than virtually any other in the world. ' even a modest percentage of American GNP constitutes a sizable share of global economic activity. In the early 1950s ' American exports constituted more than a third of industrial exports, yet less than 5 percent of GNP' (http://www.lehigh.edu/'bm05/research/global15.htm ). This kind of hegemony of the US economy began to be eroded in the 1960s and 70s when financial capital in the form of international syndicates of the largest banks of the world undermined the stability of national currencies. There was speculation in currency trading at a time when the currencies of post-war Germany and Japan were becoming stronger vis-a-vis t he American dollar. There was also greater manufacturing successes and enhanced export potential evinced by Japan and the EEC as a trading bloc. Since then trans-national or multinational corporations have also complicated capital and currency movements across the world. A cogent reason for the U.S. planners to advance the concept of a liberal, free market international economic system was that, as the then US Secretary of State Cordell Hull (1933 - 1944) argued the perception that the main cause of two world wars of the 20th century were due to economic protectionism. Nazi Germany's exchange controls in the form of bilateral arrangements and the British Empire's Sterling Area, stood in the way of international free flow of capital and foreign investments. The U.S. indulged in the rhetoric that '' free markets (were associated) with material prosperity, stability, justice, democracy, human rights, international peace and more' (Moon, 1998). However, without government intervention vulnerable groups like unskilled labour find themselves outside the benefits accruing to countries in the wake of such liberalisation (vide The Stolper-Samuelson theory). The 'Heckscher-Ohlin trade theory' also predicts that 'inefficient sectors of the economy will suffer losses. ... As American supremacy ' eroded since the 1970s, greater vulnerabilities have produced dislocations in scattered industries, most prominently in textiles, steel and autos'(op. cit.). As a result of this ''vulnerability to trade competitors and its changing pattern of comparative advantage, American policy has become increasingly narrowly self-interested' (op. cit.). Outsourcing or offshoring are terms used to explain the migration of most of American service and technical jobs