Globalization and the New World Order

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Globalization, 1980s Following the efforts of Presidents Nixon, Ford, and Carter to normalize relations with Communist China, companies established commercial enterprises there, including American fast-food chain restaurants. Here a soldier, standing beside a replica of Colonel Sanders, picks up his order at the bike ride-up window of a Kentucky Fried Chicken restaurant. © Dave Bartruff/CORBIS

With the end of the Cold War, cooperation replaced economic and political rivalry between capitalist and Communist nations in a new era of globalization—the extension of economic, political, and cultural relationships among nations, through commerce, migration, and communication. In 1976 the major industrialized democracies had formed the Group of Seven (G7). Consisting of the United States, the United Kingdom, France, West Germany, Italy, Japan, and Canada, the G7 nations met annually to discuss common problems related to issues of global concern, such as trade, health, energy, the environment, and economic and social development. After the fall of communism, Russia joined the organization, which became known as G8. This group of countries represented only 14 percent of the globe’s population but produced 60 percent of the world’s economic output. Four of the G8 members—the United States, the United Kingdom, Russia, and France—controlled more than 95 percent of the nuclear weapons in the world.

The United States took an active lead in promoting the World Trade Organization (WTO). The WTO emerged from the General Agreement on Tariffs and Trade, a multilateral agreement fashioned after World War II to encourage tariff reductions and free trade. Created in 1995, the WTO consists of more than 150 nations and seeks “to ensure that trade flows as smoothly, predictably and freely as possible.” The policies of the WTO generally benefit wealthier nations, such as the United States. From 1978 to 2000, the value of U.S. exports and imports jumped from 17 percent to 25 percent of the gross national product.

Globalization was accompanied by the extraordinary growth of multinational (or transnational) corporations—companies that operate production facilities or deliver services in more than one country. Between 1970 and 2000, the number of such firms soared from 7,000 to well over 60,000. By 2000 the 500 largest corporations in the world generated more than $11 trillion in revenues, owned more than $33 trillion in assets, and employed 35.5 million people. American companies left their cultural and social imprint on the rest of the world. Walmart greeted shoppers in more than 1,200 stores outside the United States, and McDonald’s changed global eating habits with its more than 1,000 fast-food restaurants worldwide. Traveling abroad, American tourists marveled at local inhabitants in Europe, Asia, and Africa wearing T-shirts and baseball caps with the logos of American companies. As American firms penetrated other countries with their products, foreign companies changed the economic landscape of the United States. For instance, by the twenty-first century Japanese automobiles, led by Toyota and Honda, captured a major share of the American market, surpassing Ford and General Motors, once the hallmark of the country’s superior manufacturing and salesmanship.

Globalization also affected popular culture. In the 1990s, reality shows, many of which originated in Europe, became a staple of American television. British imports included the hugely popular American Idol. At the same time, American programs were shown as reruns all over the world. As cable channels proliferated, American viewers of Hispanic or Asian origin could watch programs in their native languages. The Cable News Network (CNN), the British Broadcasting Corporation (BBC), and Al Jazeera, an Arabic-language television channel, competed for viewers with specially designed international broadcasts.

Globalization also had some negative consequences. Organized labor in particular suffered a severe blow. By 2004 union membership in the United States had dropped to 12.5 percent of the industrial workforce. Fewer and fewer consumer goods bore the label “Made in America,” as multinational companies shifted manufacturing jobs to low-wage workers in third world countries in Central America, East Asia, and Southeast Asia. Many of these foreign workers earned more than the prevailing wages in their countries, but by Western standards their pay was extremely low. There were few or no regulations governing working conditions or the use of child labor, and many foreign factories resembled the sweatshops of early-twentieth-century America. Not surprisingly, workers in the United States could not compete in this market. Furthermore, China, which by 2007 had become a prime source for American manufacturing, failed to regulate the quality of its products closely. Chinese-made toys, including the popular Thomas the Train, showed up in U.S. stores with excessive lead paint and had to be returned before endangering millions of children.

Globalization also posed a danger to the world’s environment. As poorer nations sought to take advantage of the West’s appetite for low-cost consumer goods, they industrialized rapidly and chaotically, with little concern for the excessive pollution that accompanied their efforts. The landscapes of some countries were transformed beyond recognition. The desire for wood products and the expansion of large-scale farming eliminated one-third of Brazil’s rain forests. The health of indigenous people suffered wherever globalization-related manufacturing appeared. In Taiwan and China, chemical by-products of factories and farms turned rivers into polluted sources of drinking water and killed the rivers’ fish and plants.

The older, industrialized nations added their share to the environmental damage. Besides using nuclear power, Americans consumed electricity and gas produced overwhelmingly from coal and petroleum. Gas-guzzling automobiles, and particularly sport-utility vehicles (SUVs) beginning in the 1990s, further harmed the environment. The burning of fossil fuels by cars and factories released greenhouse gases, which has raised the temperature of the atmosphere and the oceans and contributed to the phenomenon known as global warming. Most scientists believe that global warming has led to the melting of the polar ice caps and threatens the existence of human and animal survival on the planet. However, after the industrialized nations of the world signed the Kyoto Protocol in 1998 to curtail greenhouse-gas emissions, the U.S. Senate refused to ratify it. Critics of the agreement maintained that it did not address the newly emerging industrial countries that polluted heavily and thus was unfair to the United States.

Globalization also highlighted health problems such as the AIDS epidemic. By the outset of the twenty-first century, approximately 33.2 million people worldwide suffered from the disease, though the number of new cases diagnosed annually had dropped to 2.5 million from more than 5 million a few years earlier. Africa remained the continent with the largest number of AIDS patients and the center of the epidemic. Initially concentrated in gay men, intravenous drug users, and sex workers, AIDS constituted a continual though diminished threat. Increased education and the development of more effective pharmaceuticals to treat the illness reduced cases and prolonged the lives of those affected by the disease. Though treatments were more widely available in prosperous countries like the United States, agencies such as the United Nations and the World Health Organization, together with nongovernmental groups such as Partners in Health, were instrumental in offering relief in developing countries.

Globalization did not mean the end of regional cooperation. To boost their economic might, western European nations formed the European Union (EU) in 1993, and by 2007 twenty-seven countries had joined the EU. The EU allowed people to move freely by abolishing passport control and customs checks for residents traveling from one member state to another. The organization encouraged free trade and investment. In 1999 the EU introduced a common currency, the euro, which has been adopted by thirteen nations. In 2007 the EU had representation in the G8, contained a population of 500 million, and accounted for approximately 31 percent of the world’s output of goods and services.

To strengthen its trading position, the United States formed its own regional economic partnership in North America. In 1993, together with the governments of Mexico and Canada, the U.S. Congress ratified the North American Free Trade Agreement (NAFTA), and it went into effect the following year. The agreement removed tariffs and other obstacles to commerce and investment among the three countries to encourage trade. NAFTA produced noteworthy gains: Between 1994 and 2004, trade among NAFTA nations increased nearly 130 percent. Although income disparity remains large between Mexico and the United States, Mexico has seen a significant drop in poverty rates and a rise in real income. At the same time, NAFTA has harmed workers in the United States. From 1994 to 2007, net manufacturing jobs dropped by 3,654,000, as U.S. companies outsourced their production to plants in Mexico, taking advantage of the low wage and benefits structure.