The document examines globalization from the perspective of transformationalism. It discusses three main views: globalists, who see globalization as universally beneficial; sceptics, who are more cautious; and transformationalists, who take an intermediate view. Transformationalists believe globalization's effects are complex and non-linear, and can redistribute power in unequal ways. The document analyzes the economic, socio-cultural, and political impacts of globalization using the transformationalist lens.

1. A Critical Analysis of the Transformationalist view of Globalisation
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This paper will examine, and critically analyse globalisation today, from the perspective of a Trans-
formationalist view point. In order to understand a particular school of thought regarding globalisa-
tion, it is important to firstly examine what the term means, where it emerged from and why it is a
relevant topic today. The paper is then divided into three examinations of globalisation in different
contexts, with regard to the Transformationalist view; firstly, the impacts of globalisation on the
economy, then on socio-cultural issues and finally on politics.
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Currently, there is no universally accepted definition of globalisation, making any subsequent de-
bates difficult or confusing. Different groups tend to define it in a manner that suits their own be-
liefs.
The United Nations (UN), in alliance with the World Trade Organisation (WTO), The European
Commission (EC), The International Monetary Fund (IMF) and the Organisation for Economic Co-
operation and Development (OECD) together define globalisation as:
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“an increasing internationalisation of markets for goods and services, the means of produc-
tion, financial systems, competition, corporations, technology and industries. Amongst other
things this gives rise to increased mobility of capital, faster propagation of technological
innovations and an increasing interdependency and uniformity of national markets” (United
Nations. (2002). Manual on statistics of international trade in services (Vol. 86). In-
ternational Monetary Fund p.170).
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As one would expect from a collaborative effort from five of the world’s most influential institu-
tions, who focus strongly on globalisation, their chosen definition of the term is one that seems only
to emphasise the economic aspect of globalisation.
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However, if one examines Joseph Stiglitz definition of globalisation he mentions some differing
aspects to the UN et al;
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“(Globalisation) is the closer integration of the countries and peoples of the world...brought
about by the enormous reduction of costs of transportation and communication, and the
breaking down of artificial barriers to the flows of goods, services, capital, knowledge, and
people across borders” (Stiglitz, J. (1998). E., 2002. Globalization and Its Discontents.
London: Allen Lane).
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Stiglitz mentions some aspects of globalisation that the UN et al fail to include; namely people, and
knowledge. This definition is focused on the economic implications of globalisation; however it
includes a more social connotation.
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Hirst and Thompson are sceptical about the ideas presented by the UN et al and Stiglitz. They argue
that national economies are, in fact not dissolving and that the idea of globalisation is not a revolu-
tion, but has been evident throughout history; “The 50 years between 1950 and 2000 are not re-
markable compared with the period 1850-1914” (Hirst, P., & Thompson, G. (2002). The future of
globalisation. Cooperation and Conflict, 37(3), 247-265). They argue that flows of trade, merchan-
dise capital and labour were comparable to, if not greater than those of today (Hirst & Thompson,
2002).
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2. These three theories have similarities; however each idea represents a different view point of the
term Globalisation. The UN, WTO, EC, IMG and OECD (global institutions) believe that all
economies, big or small, gain increases in economic welfare, by removing barriers of trade. Follow-
ers of the view on globalisation are known as “Globalists”. They believe this is a new phenomenon
and that we are witnessing the development of a new world order. They tend to hold an inherently
capitalist view on the idea of globalisation. (Held, D, A. McGrew, D. Goldblatt & J. Perraton 1999
Global Transformations: Politics, Economics and Culture Cambridge: Polity Press)
Transformationalists tend to have similar beliefs to those of Stiglitz. They agree with Globalists to
an extent, in terms of globalisation being a new subject, and that is it creating a new world order.
However Transformationalists think that the end result of globalisation is not as simple as the glob-
alists believe, due to it being complex and non-linear. It will not necessarily create gains for all
economies as it “also involves the spatial re-organization and re-articulation of economic, political,
military and cultural power” (Held, D, A. McGrew, D. Goldblatt & J. Perraton (1999) Global
Transformations: Politics, Economics and Culture Cambridge: Polity Press, chapter one). They feel
the current debate regarding this topic ought to be about power and its distribution and organisation
and this will determine the success of globalisation.
Sceptics, such as Hirst and Thompson, disagree with the Globalist theory and they are much more
cautious. They believe that globalisation, its architecture and its actual patterns are confined to ef-
fecting only a selection of large OECD states. Instead of global economic interdependence Sceptics
believe what we are actually witnessing is the world breaking up into different economic and politi-
cal blocs. (Hirst, P. & Thompson, G. (1999), Globalization in Question, second edition, Polity
Press, Cambridge).
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The Transformationalist can be viewed as the intermediate between the Globalist and the Sceptic. I
feel that in the current economic climate, and taking into consideration political, social and cultural
developments over the course of the 2000’s, the Transformationalists have the closest view point to
reality. As globalists ignore the economic inequalities of their capitalist theory, and as sceptics fail
to acknowledge the differences between the recent global developments and those of the 1850’s,
Transformationalists cautious standing on the issues is, in my opinion, more rational and imple-
mentable.
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Fundamentally, the aims of globalisation are to facilitate international trade, encourage the integra-
tion of world markets, and allow a more even distribution of wealth. It seems fail safe; remove trade
barriers, encouraging more trade, more trade leads to more growth, more growth leads to increased
employment rates, etc. Institutions such as the OECD, the WTO and the IMF have been formed in
order to ensure that the liberalisation of the world markets is kept somewhat controlled.
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Economic Impact
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There have been numerous economies that have benefited as a result of globalisation, or opening up
their markets; China being one of the most prominent. In 2002, the year China joined the WTO
(source: World Trade Organisation, members), their GDP per capita was 2882 USD. Since 2002,
their GDP per capita has grown rapidly, and in 2011 was 8414 USD (source: OECD stats) indicat-
ing that their removal of barriers to trade and increasing economic integration have been a success.
However, China’s economy was somewhat strategic in just how “globalised” they became.
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Since 2002 China’s exports levels have remained higher that their import levels, contributing exten-
sively to their growth levels. They implemented a strategic policy in terms of foreign direct invest-
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3. ment (FDI); China was careful to except only large FDIs, as opposed to short term capital invest-
ments and since 2002 the level of FDI flowing into China has grown. In 2002 FDI inflows equated
to 49308 USD, and in 2012 were 253400USD (source: OECD stats).
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Although China opened up its economy and reduced trade barriers the Chinese government main-
tained a dominant role in strategic decision making. China is an example of how globalisation can
be effective, when it is managed in a way that is tailored to a specific economy (Das, Dilip K.,
(2012) The Chinese economy, (Volume 45), p. 7 - 38).
During the same time period in which China prospered, the Latin American economy experienced a
contrasting series of events. During the nineties, under the Washington Consensus, Latin America
began implementing globalist style policies such as minimising the role of government, privatisa-
tion of institutions and liberalising markets. Focus was on inflation as opposed to growth and un-
employment. Short term capital flowed in as opposed to FDI, and this currency crisis prone and po-
litically unstable region paid the price. When political instability worries rose, investors began to
withdraw short term investments fast, causing interest rates to rise and unemployment to grow.
Poverty levels have not improved as a result of the Washington Consensus, in fact one could argue
that the forcing of open markets by institutions like the IMF, has actually caused a greater inequality
in economies such as Latin America.
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However Bartolini and Drazen have suggested that the removal of restrictions on capital outflows
can, through what it signifies to other economies lead to an increase in capital inflows. They state
that countries, including Colombia, Mexico and Uruguay have received significant capital inflows
after removing restrictions on capital outflows. (Laban, R. M., & Larraín, F. B. (1997). Can a liber-
alization of capital outflows increase net capital inflows?. Journal of International Money and Fi-
nance, 16(3), 415-431). Taking into consideration the theory presented by Bartolini and Drazen the
GDP growth for Latin America was still low in comparison to China. Latin America’s experienced
growth of 3% in 2012, whilst China’s GDP grew by 7,8% in the same period (source: The World
Bank). (Edwards, S. (2008). Globalisation, Growth and Crises: The View from Latin America. Aus-
tralian Economic Review, 41(2), 123-140).
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Transformationalists would argue that China have managed, so far, to gain economic benefit as a
result of globalisation due to the fact that they maintained their balance of power by retaining the
importance of the nation state. In contrast, the liberalisation of markets in Latin America led to ex-
ploitation of resources by larger economies, due to the minimisation of the role of governments and
a shift in power to international institutions such as the IMF. The different outcomes as a result of
globalisation within the two economies prove the thought process of Tranformationalists; that “The
outcome of processes of globalization is not determined” (Held, D, A. McGrew, D. Goldblatt & J.
Perraton 1999 Global Transformations: Politics, Economics and Culture Cambridge: Polity Press).
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Transformationalists argue against the linear fashion of globalist ideals, stating that it is a much
more complex process and many different factors influence the outcome of globalisation. In exami-
nation of some of the failings of the liberalisation of markets in recent times the empirical evidence
in favour of the Transformationalist views mounts up.
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In the paper “Effects on Financial Globalisation on developing countries: some empirical evidence”
the IMF itself examines how the goals of globalisation have not always had the desired effects. The
main findings of the paper, published by a neoliberal organisation serve to reinforce the thoughts of
Transformationalists. Firstly the IMF states “In spite of an apparently strong theoretical presump-
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4. tion, it is difficult to detect a strong and robust causal relationship between financial integration
and growth”. They found that although data may suggest that being more financially integrated con-
tributed to growth, this may only be an association between the two, as opposed to a causal relation-
ship. Also in the report the IMF does not rule out that
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“these observations do not rule out the possibility that there is reverse causation: countries
that manage to enjoy robust growth may also choose to engage in financial integration even
if financial globalization does not directly contribute to faster growth in a quantitatively
significant way” (Rogoff, K., Wei, S. J., & Kose, M. A. (2003). Effects of financial
globalization on developing countries: some empirical evidence (Vol. 17). Washington, DC:
International Monetary Fund).
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The IMF, an institution that according to Stiglitz tried to push capital-liberalisation around the
world in the 1980’s and 1990’s, is essentially saying that the outcomes of capital market liberalisa-
tion in developing countries may lead to increased growth, but also may not. The report divulges
into the complex Transformationalist idea that globalisation follows no linear pattern, and outcomes
cannot be predicted.
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In response to this paper published by the IMF, Stiglitz responded by writing Capital market liberal-
isation, economic growth and instability”. He explores the reasons why a neo-liberal, globalist or-
ganisation such as the IMF could have been so wrong. He suggests that the US treasury, an organi-
sation who imposed capital market liberalisation on developing economies (for example Latin
America), take note of the IMF publication. Stiglitz asks, if there was people like Rogoff working in
the IMF, why did they continue to impose capital market liberalisation even though evidence
proved it impacted negatively on stability? There is the suggestion that the IMF did not have the
best interests of developing countries in mind, but instead were more interested in the performance
of international financial markets or, that the IMF sets policies based on economic ideology as op-
posed to reality. Both suggestions imply that the IMF is a truly capitalist organisation, operating un-
der a globalist school of thought on globalisation.
Stiglitz questions the integrity of an institution who claim to;
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“promotes international monetary cooperation and exchange rate stability, facilitates the
balanced growth of international trade, and provides resources to help members in balance
of payments difficulties or to assist with poverty reduction” (Source: IMF) when in fact, they
set policies that could never allow this to be achieved. He enforces the idea that neoliberal
theories based on “perfect-competition” and “perfect-markets” beae no resemblance to real
life imperfect situations. (Stiglitz, J. E. (2004). Capital-market liberalization, globalization,
and the IMF. Oxford Review of Economic Policy, 20(1), 57-71).
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Socio Cultural Issues
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In order to grasp a more in depth idea of the implications the Transformationalist view on globalisa-
tion, an understanding of the social aspects is required. We are currently living in a society where
almost 2.5 billion people have access to the internet (Source: internet world stats). With this level of
information sharing, interconnectedness and intercultural knowledge, social integration is deepen-
ing. The internet is a platform for knowledge and idea sharing, and as Stiglitz mentions in his defin-
ition of globalisation, are fundamental to its success, specifically in the view of a transformational-
ist. “Culture evolves with the evolution of knowledge” (Richard L. Brinkman and June E. Brinkman,
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5. 2008), this idea implies that as a consequence of mass information availability, the cultures of the
world are evolving.
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Transformationalists believe that focusing solely on the economic aspect of globalisation, can nega-
tively impact social integration. An interesting example to illustrate this theory is the passing of the
TRIPS agreement by the WTO at the Uruguay Round of multilateral trade negotiations in 1994
(source: WTO). The TRIPS agreement was passed in order to strengthen intellectual property law,
to specifically protect the pharmaceutical industry. However, in passing the agreement, it is argued
that the WTO blocked access to affordable medicines in developing countries who are reliant on
generic versions and whose health-care systems are often overwhelmed by HIV/AIDS and other
infectious diseases. (Fergusson, I. F. (2006, December). The WTO, Intellectual Property Rights, and
the Access to Medicines Controversy. LIBRARY OF CONGRESS WASHINGTON DC CON-
GRESSIONAL RESEARCH SERVICE). Transformationalists argue that the overriding concern to
protect the economy, in this case the pharmaceutical industry, the WTO stepped in the way of an
essential part of the process of globalisation; idea sharing. As well as that, Stiglitz stated that the
WTO essentially “signed the death warrants of thousands of HIV/AIDS sufferers in developing
countries” as they could never be in a position to afford the branded version of the medication.
On the contrary, the WTO has since loosened the terms of the TRIPS agreement, during the Doha
Round in 2001 in order to promote the access of medication in developing countries.
The overall message that Transformationalists took from the TRIPS agreement being signed in
1994, was that the WTO acted in complete disregard for a proportion of the world’s population,
quite a contradictory action for a global institution.
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Political Impact
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The political aspect of globalisation is important, Transformationalists see the power of national
governments as being “reconstituted and restructured”, not waned or increased, as believed by
Globalists and Sceptics.
Traditionally politics have been the responsibility of the nation state and the tasks of maintaining
country specific issues such as economic welfare, security, protection of human rights and the envi-
ronment lay with the government of the country. However, it has been suggested that the global
economy is accelerating faster than global governance. This can lead to the nation state relinquish-
ing power to other entities as a result of globalisation. Examples of this can be seen in the United
States; in article XVI, referring to subsidies in the WTO (source: WTO) and in the decline of na-
tion-state sovereignty as a result of policies such as the privatisation manifest in the War Service
Industry (Brinkman, Richard L. & Brinkman, June E., (2008) Globalization and the Nation-State:
Dead or Alive, Journal of Economic Issues, (Volume 42) 425-433).
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Transformationalits would argue that the nation state plays a vital role in controlling and governing
these global economic forces on a national level, ensuring that they work to the benefit of the citi-
zens of the country. They feel that the diminishing power of nation states, leads to economic institu-
tions ensuring the benefits of corporations as opposed to citizens.
As a result of GATT and the WTO, most countries have now cut down their tariff and non-tariff
barriers. Open market economies have led to he main carriers of economic globalisation being multi
national corporations (MNC). The World Investment Report 2009 states that there is a total 82,053
parent corporations and 807,363 affiliates, meaning that over 800,000 subsidiaries of corporations
worldwide, belong to just 82,000 parent companies (Source: UNCTAD) Transformationalists would
argue that this has allowed for MNCs to hold power over governments and become the main priori-
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6. ty of organisations such as the IMF. For example, in China, the government did not relinquish con-
trols to MNC’s entirely, and they have managed to maintain the growth of their economy, in con-
trast to Latin America who have suffered as a result of waning governmental power.
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To conclude, there is reason to believe that each view point on globalisation has factors to be con-
sidered. In examination of Globalist, Sceptics and Transformationalists views it is difficult to state
one final correct definition of globalisation. The argument against Sceptics, that the idea of globali-
sation is not an entirely new one seems plausible. However it has become evident that the execution
of globalisation in recent times,is very different to that of the 1850’s and the industrial revolution.
Also one cannot contest the globalists that globalisation has had profound economic benefits in
some economies.
It can be said that globalisation is not linear, and the outcomes are complex and unpredictable. Neo-
liberal theories are difficult to apply to the imperfect situations occurring in today’s economy. Idea
and knowledge sharing is an essential factor of deep integration and so global institutions must en-
courage it. Finally governments of nation-states must manage globalisation, tailoring it to benefit
their citizens. The Transformationalist’s rational approach to tailoring globalisation to the specific
needs of a country, without losing the power of the nation state are relevant to the issues occurring
in the world today.
However the differences between the three viewpoints are not as simple as black and white. The
definitions are interchangeable dependents on current affairs, and the lines between the theories of-
ten become blurred. At this point in time, in my opinion, it seems as though Transformationalists
have the most rational and realistic view point.
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7. References:
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Brinkman, Richard L. & Brinkman, June E., (2008) Globalization and the Nation-State: Dead or
Alive, Journal of Economic Issues, (Volume 42) 425-433)
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Das, Dilip K., (2012) The Chinese economy, (Volume 45), p. 7 - 38
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Edwards, S. (2008). Globalisation, Growth and Crises: The View from Latin America. Australian
Economic Review, 41(2), 123-140
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Fergusson, I. F. (2006, December). The WTO, Intellectual Property Rights, and the Access to Medi-
cines Controversy. LIBRARY OF CONGRESS WASHINGTON DC CONGRESSIONAL RE-
SEARCH SERVICE
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Held, D, A. McGrew, D. Goldblatt & J. Perraton (1999) Global Transformations: Politics, Eco-
nomics and Culture Cambridge: Polity Press
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Held, D, A. McGrew, D. Goldblatt & J. Perraton 1999 Global Transformations: Politics, Economics
and Culture Cambridge: Polity Press
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Hirst, P., & Thompson, G. (2002). The future of globalisation. Cooperation and Conflict, 37(3),
247-265
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Hirst, P., & Thompson, G. (1999), Globalization in Question, second edition, Polity Press, Cam-
bridge
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Laban, R. M., & Larraín, F. B. (1997). Can a liberalization of capital outflows increase net capital
inflows?. Journal of International Money and Finance, 16(3), 415-431
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Rogoff, K., Wei, S. J., & Kose, M. A. (2003). Effects of financial globalization on developing coun-
tries: some empirical evidence (Vol. 17). Washington, DC: International Monetary Fund
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Stiglitz, J. (1998). E., 2002. Globalization and Its Discontents. London: Allen Lane
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Stiglitz, J. E. (2004). Capital-market liberalization, globalization, and the IMF. Oxford Review of
Economic Policy, 20(1), 57-71
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United Nations. (2002). Manual on statistics of international trade in services (Vol. 86). In-
ternational Monetary Fund p.170
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Websites:
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Internet World Stats http://www.internetworldstats.com (accessed 31/10/2013)
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OECD http://stats.oecd.org (accessed: 31/10/2013)
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The World Bank http://data.worldbank.org (accessed: 31/10/2013)
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8. UNCTAD http://unctad.org (accessed 31/10/2013)
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World Trade Organisation http://www.wto.org (accessed: 31/10/2013)
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