The Cause of Globalization

18688 Words Jan 26th, 2013 75 Pages
Garrett / CAUSES OF GLOBALIZATION
COMPARATIVE POLITICAL STUDIES / August-September 2000

The most important causes of globalization differ among the three major components of international market integration: trade, multinational production, and international finance. The information technology revolution has made it very difficult for governments to control cross-border capital movements, even if they have political incentives to do so. Governments can still restrict the multinationalization of production, but they have increasingly chosen to liberalize because of the macroeconomic benefits. Although the one-time Ricardian gains from freer trade are clear, whether trade is good for growth in the medium term is less certain. In the case of
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What are the causal relationships among these three trends?
The second perspective, technological determinism, contends that the shrinkage of time and space has been so dramatic and so pervasive that there is essentially nothing that can be done to stop it. According to this view, technological changes have propelled international economic activity, and governments have been largely irrelevant. Thus, policy liberalization should be understood as governments’ acknowledging the futility of trying to resist globalization, rather than acting as a prime mover behind market integration.
Management gurus such as Ohmae (1995) have propounded this view, and political scientists such as Rosecrance (1999) and Strange (1998) use it as the starting point of their analyses.
The case for a technologically determined view of globalization is far stronger with respect to international finance than to multinational production or trade. In the era of 24-hour global trading in a seemingly limitless array of financial instruments, governments can only hope marginally to influence control cross-border liquid capital movements. In contrast, though
2. See Drezner (1998) and Guillen (in press) for recent reviews of some of these issues.

Garrett / CAUSES OF
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