Europe in the era of globalisation

WITOLD KWAŚNICKI

Institute of Economic Sciences

Faculty of Law, Administration and Economics

Wroclaw University

http://prawo.uni.wroc.pl/~kwasnicki

An outline of a lecture Five key debates about globalisation.From europeanisation to globalisation. How should we measure globalisation? The EU and the World Trade Organisation. European Union and the USA – a short comparative study.Toward The Global Free Trade Association: A New Trade Agenda.Europe and the causes of globalisation, 1790 to 2000.Globalisation and convergence of national economies.

The literature of globalisation

(Mauro F. Guillén, 2001)

WHAT IS GLOBALISATION? Intuitively, globalisation is a process fuelled by, and resulting in, increasing cross-border flows of goods, services, money, people, information, and culture.Globalisation entails a "compression” of space and time, a shrinking of the world. Globalisation means increasing interdependence of national economies in trade, finance, and macroeconomic policy.Globalisation refers both to the compression of the world and the intensification of consciousness of the world as a whole.Globalisation as the diffusion of practices, values and technology that have an influence on people’s lives worldwide.Globalisation as a process leading to greater interdependence and mutual awareness (reflexivity) among economic, political, and social units in the world, and among actors in general.

Five key debates about globalisation

Is It Really Happening? Does It Produce Convergence?Does It Undermine the Authority of Nation-States?Is Globality Different from Modernity? Is a Global Culture in the Making?

From europeanisation to globalisation

the European Union seeks to become a power wanting to change the course of world affairs in such a way as to benefit not just the rich countries but also the poorest.

Foreign Direct Investment and the European Union (in billions of dollars)

Year European Union

Foreign Direct

Investment

Intra-European

Union Investmen

t

Percentage ofEuropean Foreign

Direct Investment inEurope

  

1985 40 18 45.0%

1986 59 21 35.6%

1987 81 22 27.1%

1988 104 55 52.9%

1989 122 78 63.9%

1990 121 81 66.9%

1991 109 69 63.6%

1992 98 58 59.2%

1993 112 79 65.8%

1994 143 82 57.3%

1995 158 83 52.5%

1996 142 85 59.8%

1997 183 111 60.6%

How should we measure globalisation?

the volume of trade,trends in total trade,the ratio of trade to output.

Globalisation Index

A.T. Kearney andForeign Policy Magazine

13 key indicators of global integration the full sample of 62 countries

World Trade OrganisationEstablished: 1 January 1995 (but with its predecessor the

General Agreement on Tariffs and Trade (GATT) dating back to the 1940s).

Membership: 144 countries at the start of 2002, accounting for over 90% of all trade in the world.

Rounds: Countries tend to negotiate over several years on new agreements for a group of subjects. These series of negotiations are called ‘rounds’. Examples are the Uruguay Round 1986-94 and the round that started in 2001 called The Doha development agenda.

Functions:Administering WTO trade agreementsForum for trade policy discussions and negotiationsHandling and resolving trade disputesMonitoring national trade policiesTechnical assistance and training for developing countriesCooperation with other international organisations.

Unweighted World average tariff (35 countries, %)

(Michael A. Clemens, Jeffrey G. Williams, 2001)

Average unweighted tariff rates by region

(World Bank)

The EU and the World Trade Organisation the world’s leading exporter of goods: over 973 billion euro in 2001, almost a fifth of the world total;the world’s leading exporter of services: 291 billion in euro 2000, 23.9% of the world total;the world’s leading source of foreign direct investment (362 billion euro in 2000) and the second largest home for foreign investment (176.2 billion euro in 2000) after the United States (304.9 billion euro)the main export market for some 130 countries around the globe;a relatively open economy: international trade accounted for over 14% of its gross domestic product in 2000, compared with 12% for the United States and 11% for Japan.

The EU and the World Trade Organisation

EU trade policy works on two complementary levels:the multilateral level refers to the system of trading rules agreed by all WTO member countries world-wide;the bilateral and regional level means trade between the EU and individual trading partners or with groups of countries that form a single trading bloc in a particular region of the world.

The EU and the World Trade OrganisationThe aims of the EU’s work in the WTO effort are:

to open up markets in goods, services and investment in accordance with clear rules and following a timetable that enables all countries to implement them;to make the WTO more open, accountable and effective by engaging in discussion with other groups and organisations;to bring developing countries fully into the WTO’s decision-taking processes, helping them to integrate with the world economy.

EU trade: the big players

  Trade partner Imports into

the EU(million

EUR)

Exports from

the EU(million

EUR)

Percentage of

total trade(imp+ exp)

  EU global trade 1022693 935283 100

1.

United States 196956 230947 21.9

2.

Japan 85009 44697 6.6

3.

Switzerland 58186 70169 6.5

4.

China 69676 25289 4.9

5.

Norway 45543 25374 3.6

6.

Russia 44980 19763 3.3

7.

ACP Group 26333 28551 2.8

The EU and the USA – share of the world trade

  Goods Services

United States of America 20.8 % 21.2 %

EU 18.8 % 23.8 %

Candidate countries 4.1 % 3.8 %

Japan 8.8 % 8.2 %

Asia: ASEM excluding Japan 11.2 % 11.2%

Rest of the world 17.8 % 23.7 %

Latin America excluding Mexico

4.0 % 3.2 %

Canada and Mexico 9.3 % 4.9 %

The EU and the USA

  Europan Union

USA

Share in the World production

30.9% 30.5%

Inhabitants 380 mln 290 mln

Average growth ratein the last 20 years

 2.3%

 3.3%

The EU and the USA – share of the world production

Free trade agreementsNorth American Free Trade Agreement (NAFTA; USA, Canada and Mexico since 1994)European Union (now 15 countries, since 1992)

Free Trade Area of Americas (FTAA; since 2005, 34 countries)Association of Southeast Asian Nations (ASEAN) and China (since 2010, seven countries, 1.7 mld inhabitants)

The Global Free Trade Association

The GFTA must be a voluntary and inclusive association, with membership based solely on a country's demonstrated commitment to a liberal trading order.

The Global Free Trade AssociationEach prospective member country must have demonstrated its ability and willingness to meet specific criteria of openness to trade, such as those employed in The Heritage Foundation/Wall Street Journal Index of Economic Freedom, which annually evaluates over 160 countries on 10 specific factors.Four of these Index factors, taken together, constitute a sound measure of the openness of a country's markets:

1. Trade policy, 2. Capital flows and foreign investment, 3. Property rights, and 4. Regulation.

(The Heritage Foundation, 2001)

Globalisation and growth

Globalisation and growth

(Charles W. Calomiris, 2002)

Globalisation and growth

(World Bank)

Europe and the causes of globalisation, 1790 to 2000

the most impressive episode of international economic integration which the world has seen to date was not the second half of the 20th century, but the years between 1870 and the Great War. capital markets became much more integrated in the late 19th century, reaching extremely high levels of integration in 1913; they disintegrated during the interwar period, and are only now recovering the levels of integration experienced in 1913

Europe and the causes of globalisation, 1790 to 2000

(Kevin H. O’Rourke, 2002)

Globalisation and convergence

(Federal Reserve Bank Of Dallas)

Long-term convergence among OECD countries

(World Bank)

The World’s ‘Convergence Club’ ca. 1850

(Steve Dowrick, J. Bradford DeLong. 2001)

The World’s ‘Convergence Club’ ca. 1900

(Steve Dowrick, J. Bradford DeLong. 2001)

The World’s ‘Convergence Club’ in the interwar period

(Steve Dowrick, J. Bradford DeLong. 2001)

The World’s ‘Convergence Club’ in the recent years

(Steve Dowrick, J. Bradford DeLong. 2001)

Future of globalisation and liberalism

(Witold Kwasnicki. 2000)