Economic Globalization Has the 2008 Financial Meltdown Essay

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Economic Globalization

Has the 2008 financial meltdown in the U.S. And the ongoing economic crisis in Europe have practically ended the era of economic globalization?

Following the financial crisis that marred the U.S. economy along with other global economies as well as the ongoing Eurozone debt crisis, there have been projected concerns that this predicament would end economic globalization. The purpose of this paper is to assess this claim. Going by Immanuel Wallenstein's World Systems Theory, the political economy of Third World economies and developed economies of the West are mutually dependent. Wallenstein's conjecture is that the growth and expansion of Third World economies relies on constant interaction with Western developed economies seeing as the world is characterized by a structural division of labor where the developing nations of the Third World provide cheap labor and raw materials while the developed economies are the holders of capital and controllers of the market. Economic experts have argued that even in the midst of the global financial meltdown in the U.S. along with the ongoing Eurozone economic crisis, economic globalization remains intact. This has become possible through the decision by the governments to rescue companies from the debt crises.

Economic Globalization

While globalization revolves around breakthrough in the fields of science and technology, cross-border division of labor (market liberalization), economic globalization centers on growing economic interdependence between national economies globally through economic integration, cross-border movement of commodities, services, capital, and technology. Economic experts espouse that economic globalization commenced several hundred years ago since the inception of trans-national commercial engagements in Europe, the Americas and parts of Asia. Some of the historic trade arrangements include the Trans-Saharan trade and the Trans-Atlantic Slave Trade. While trans-regional trade engagement began centuries ago, it escalated towards the end of the 20th century under the auspices of trans-national trade regimes such as the World Trade Agreement (WTO) and General Agreement on Trade and Tariffs (GATT) (Shangquan, 2000). These trans-national trade regimes have since negotiated commercial engagements between nations on the international scene urging them to ease trade barriers and open up economic ties amongst themselves.

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This has become a pervasive trend as the developed nations of Europe and the Americas reach out to the less developed countries of the Third World through Foreign Direct Investment. The current landscape of economic globalization therefore comprises international capital markets, commodity markets and labor markets.

Gao Shanguan, a prominent Chinese economist argues that economic globalization has since taken an irreversible pattern in the wake of global economic integration as manifested in cross-border trade. Shanguan claims that global economies are inter-dependent. Citing Immanuel Wallenstein's World Systems Theory, he argues that the political economy of Third World economies and developed economies of the West are mutually dependent. Wallenstein's conjecture is that the growth and expansion of Third World economies relies on constant interaction with Western developed economies seeing as the world is characterized by a structural division of labor where the developing nations of the Third World provide cheap labor and raw materials while the developed economies are the holders of capital and controllers of the market. This trend persists since the Industrial Revolution when European imperial powers imposed colonial authority in the Third World. Shanguan therefore believes that the developing economies of the Third World cannot survive in the absence of Western neo-colonialism; likewise, the developed nations of the West cannot enjoy their prestigious economic status without exploiting the impoverished countries. Amid this pervasive interdependence, global markets remain inherently intertwined taking on the form of 'cross-border division of labor.' This cross-border division of labor works its way into every aspect of global economic affairs (Shangquan, 2000).

The 2008 financial meltdown in the U.S.

The U.S. hosing / real estate industry registered a remarkable growth in the years leading up to 2006 (Williams, 2011). During this period, housing / mortgage prices reached a record high......

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