“The Commanding Heights of The Economy” allows a viewer to have a close look at the changes that occurred in the USA and the whole world at the end of the twentieth century. In his movie The New Rules of the Game, Greg Barker highlights how the world changed after it shifted to free-market capitalism and the globalization process started. Particularly, he describes the dangers of a new global economy, which include its negative impact on the developing countries. The movie suggests that all the world’s countries are linked to an extent and how an adverse economic environment in one state may result in a decline in the economic prosperity of many others.
The word “globalization” is often mentioned throughout the movie. Although it is not specifically defined, it is still possible to formulate an explanation based on what the featured individuals say. In the beginning, the narrator defines “globalization” as the world trade’s largest expansion. One of the featured persons says that globalization ties the world together with flows of various physical and non-physical assets, such as money, ideas, and cultures (Yergin, 2015). Finally, globalization is believed to be the main facilitator of the free-trade economy for all countries.
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Like many other economic concepts, globalization may be viewed from two perspectives. On the one hand, it promotes the free market, whereas, on the other hand, such an economic system has a drawback in the form of uneven and negative impacts on the states that do not have sufficiently strong economies. The free market opened the doors for the flow of capital into almost any of the world’s countries. However, just like investors might send their money in, they can withdraw it as soon as the economic environment deteriorates. Moreover, the outflow of capital does not happen in relation to only one state. Instead, it happens to all of the recipients of investments. Besides, even the economically strong countries face the negative side of globalization when there happened an inflow of immigrants and workers, who start taking jobs from citizens. In the USA, it resulted in the recession of 1992, when around ten million people could not get employed (Yergin, 2015).
Although globalization pertains to almost every economy of the world, different countries either benefit from it or be at a disadvantage. In the movie, Bill Crist states that the only countries that can take complete advantage of globalization are those that have open economies (Yergin, 2015). On the contrary, the losers are those states that did not manage to transform their national economic systems to adjust to the realities of the new time. Such countries cannot use all the opportunities in the form of flows of investment, and, consequently, they will not be engaged in the process of globalization completely. Bill Crist also expressed a precaution that eventually such outsiders of globalization might bring the whole system down (Yergin, 2015).
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When globalization started to spread to more and more countries of the world, it became obvious that the outsiders of the process are likely to lose from staying aside. When national economies are starting to get interdependent, the methods of production, supplies, and labor force of one country also start to depend on the other states. Moreover, the manufactured goods need to be sold, which means that a state gets dependent on foreign markets in terms of exporting products. Therefore, in the globalized world, national economies do not possess the capacity to provide for their own citizens and exist in isolation from the other states. Every separate country simply does not have enough natural resources to satisfy the growing economic needs of the people. To meet the demand, economies have to get the materials from abroad and participate in international trade.
To test the idea that globalization is able to help nations unite and that open markets can help countries increase their wealth, NAFTA, the North American Free Trade Agreement, was created in 1994 (Yergin, 2015). NAFTA was important because it brought together three nations: Canada, Mexico, and the USA. Besides, millions of new workplaces were created in the formerly underdeveloped Mexico, which allowed a great number of people to grow in wealth. The benefits of the new union also included the flow of technologies, investments, and information between the countries. However, Thea Lee underlines that the agreement primarily protected the interests of international corporations and did not meet the needs of ordinary people (Yergin, 2015). Additionally, NAFTA did not empower workers to create unions and protect their rights themselves. Such disadvantages of the agreement resulted in the growth of the power of corporations. Besides, NAFTA pushed open the doors for migrants, and many Americans lost their jobs to Mexicans. Nevertheless, the advantages of NAFTA outweighed its drawbacks because, although corporations grew in power, millions of people got opportunities to make money for their families.
Globalization includes many aspects and tools to unite countries and investing and financial markets are some of them. One of the purposes of creating NAFTA was the desire of Clinton, the US President, to restore people’s trust in financial markets (Yergin, 2015). In fact, the market considerably changed at the end of the twentieth century, because the development of the World Web and other technologies allowed investments to be moved to and from any part of the planet in a very short time (Yergin, 2015). Consequently, any negative changes in any country’s economy threaten investors and their money less than before as they could withdraw them more easily and faster than ever before. As a result, financial markets became one of the fuels of globalization as well as one of the key threats to developing economies.
When globalization started, financial flows headed in various directions. Thailand became the country that widely opened its doors to foreign money. Particularly, the government allowed loans from other countries’ banks that offered lower interests (Yergin, 2015). Therefore, people were borrowing money, while the government-linked their currency to the dollar. Eventually, the financial bubble could hold pressure and explode. By that time, Thailand already owed foreign banks over two hundred billion dollars and could not pay the debts back (Yergin, 2015). Therefore, as an active player in the field of globalization, Thailand initiated the economic crisis on a world scale. Although the crisis was started by Thailand, it was the country’s neighbors that paid the price. Investors got afraid that other Asian countries made the same mistake, and they start taking their money out of the economies. Such withdrawals resulted in a large economic disbalance.
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The situation was a good lesson for other countries in terms of globalization. They learned that the market is too strong power to be tamed (Yergin, 2015). Moreover, it became obvious that the governments of the states underestimated the extent of globalization, and they had to review the links between the countries (Yergin, 2015).
Economists acknowledge that since globalization is inevitable, the principles of how it works and how economic crises occur need a close analysis. In The Commanding Heights of Economy, Lee Hsien Loong, the Prime Minister of Singapore, says that the banks should not be allowed to lend money so easily, and the financial bubbles need to be controlled (Yergin, 2015). Therefore, most of the officials agree on the suggestion that finances are the key propeller of globalization processes, and they require close attention and analysis to prevent dangerous situations on the world scale.
The economic crises that occurred in the 1990s let people see the disadvantages of globalization. In 1999, people gathered in Seatle to protest globalization as the delegates to the World Trade Organization, the body responsible for the rules of the international trade, had a meeting there (Yergin, 2015). The protesters demanded more freedom of trade and a ban on quotas and other limitations that make free trade “non-free.” Additionally, the anti-globalization movement had the aim of narrowing the gap between the rich and the poor that emerged from the capitalist economy.
The Global Divide stands for the inequality between the people of the world. Some believe that the difference between the poor and the rich has always existed in society, although the gap increased with the beginning of globalization processes. Jeffrey Sachs, the professor of economics, underlines that only a small part of the world managed to achieve some growth, while all the others are referred to as developing nations (Yergin, 2015). In the globalized world, the more developed countries can dictate the rules of the game and take advantage of globalization by possessing more finances and controlling parts of other countries’ economies.
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The tragedy of September 11 showed that the efficiency of the market somewhat decreases if the times are not peaceful (Yergin, 2015). However, it also proved that the world economies need to predict the difficulties and have some sort of a shock absorber. Nevertheless, September 11 did not change the direction of globalization. The general idea behind the process remained the same: countries prosper if they open their economies to free markets and if they trade with other states.
In conclusion, since the time countries started to get interdependent and change their economies to the free market ones, globalization proved that it has advantages and disadvantages. In spite of granting more privileges to the more developed countries and international corporations, the flow of capital into the developing states creates jobs and provides people with opportunities to make money for their families. However, some events also convinced many that globalization has to be treated with caution because, if even one of the states of the world faces difficulties, the consequences of that country’s financial troubles may endanger many other nations.