Globalization

Globalization is the process of integration and interdependence of people and countries around the world. Although Canada, like most industrialized nations, is more interconnected globally than ever before, our economy and culture remain, as they always have, overwhelmingly tied to the United States.

19th Century Beginnings

The term globalization likely originated in the 1960s and became a buzzword in the 1990s. The phenomenon itself is much older, dating at least to the 19th century. It is caused primarily by improvements in communication and transportation technology, international trade and investment, and migration.

People and countries respond to globalization differently. It has had a stronger impact on richer countries than on poorer ones, which have a shortage of advanced technology, capital, and goods to trade. Globalization can cause homogenization, as individuals increasingly eat comparable foods, wear similar clothing, and listen to the same music. But it has also been known to create a backlash, as some groups and peoples react to the forces unleashed by globalization with movements that emphasize local or national concerns.

Canada is one of the most globally integrated countries in the world, with a highly advanced system of communications and information technology, a government that is active in international organizations, an economy that is dependent on trade, a population that travels abroad frequently, and a society composed of individuals from a myriad of cultural backgrounds.

Globalization has always competed with other historical forces, including nationalism. As a result, history has witnessed both periods in which the world has become more integrated, and eras in which the trend has been reversed. There was, for instance, a high degree of global economic interdependence from the mid-19th century until 1914. Then the First World War and the Great Depression of the 1930s broke many international economic links, creating a period of de-globalization. The move toward integration resumed after the Second World War and has continued at varying speeds into the 21st century.

Three Areas of Integration

Trade

Economically, globalization has meant higher levels of international trade and investment, as well as increases in the exchange of knowledge and technology, particularly in the industrialized world. The General Agreement on Tariffs and Trade(GATT), originally signed in 1947, provides for lower tariffs to increase cross-border trade. The World Bank and the International Monetary Fund (IMF) have supported this policy, pushing countries to open their doors to foreign goods and capital. Greater economic interdependence has meant that financial difficulties in one country can send shockwaves around the world.

Political Power

A growing number of international organizations and agreements have played an ever-expanding role in government decision-making. Critics argue that globalization has eroded national sovereignty and has caused a transfer of power from states to corporations or to international organizations. Since the late 1970s, there has been a growing acceptance of an ideology, often called "globalism," that favours an open market and limited government interference in capital and trade flows. Corporate interests have driven this agenda, which they have imposed, the critics argue, on the developing world.

Culture

Technological change and migration have helped bring about globalization in the cultural sphere, creating what Canadian communications theorist Marshall McLuhan called "the global village." Music, films, and other forms of entertainment are distributed globally. Major restaurant chains, McDonald's prominent among them, operate outlets around the world. Clothing brands and styles cross oceans and national boundaries easily. This process has met resistance from people and groups (such as the international Slow Food movement that advocates against society's excessive indulgence in fast food and lifestyles) determined to maintain traditional cultures.

Globalization and Canada

Colonial to Continental Links

The Canadian economy has been heavily dependent on external markets and capital since at least the 17th century. In the early years, Canada's economy was colonial. Most investment came from the imperial power (first France, then Britain). Prosperity depended on exports of natural resources (furs and fish in the early days; lumber, wheat, and minerals in later eras) and imports of manufactured goods. The imperial tie was a form of selective globalization. Canada had overseas trade and investment links, but these were primarily within the empire, as the colonial system tended to shut out the rest of the world.

In the 19th century, the Canadian economy began to transform from a colonial to a continental one. In the 1840s, Britain abandoned the mercantilist system that gave preference to imports from the colonies, including Canada. Having lost its special access, Canada had to compete with other counties, including the United States, when selling goods to Britain. In response, Canada sought new markets to the south. The Reciprocity agreement between Canada and the U.S., signed in 1854 and in effect from 1855 to 1866, provided for Free Trade in a large number of natural products and helped to shift Canadian trade to a north-south pattern.

Confederation and Protectionism

In the early years of Confederation, Canadian politicians conceived of Canada as a global nation. Canada sent immigration agents and trade commissioners abroad long before it opened its first diplomatic mission. Both Liberals and Conservatives sought a return to reciprocity, but were rebuffed by the U.S.

Eventually, Prime Minister John A. Macdonald decided to move in a different direction, implementing the National Policy of high tariffs, beginning in 1879. The policy won little support in the West and the Maritimes, but was popular in central Canada, home to most Canadian manufacturers. Commercial interests in Montréal and Toronto were opposed to freer trade, seeing a high tariff as necessary to protect domestic industry from foreign, mostly American, competition. Tariffs became more than just a question of trade policy; for many in central Canada they became linked to the national identity – Canadian government and industry standing together against outside economic threats – a sacred part of public policy that no government dare touch. The Liberal Party continued to favour freer trade, but discovered in the 1891 and 1911 federal elections that the policy was political suicide: Macdonald had linked free trade with treason in the minds of many English-speaking Canadians – something that supposedly threatened the security of the country. As a result, Canadian tariffs remained high until the mid-1930s.

The National Policy had the effect of encouraging American firms to set up factories (known as branch plants) north of the border, so they could sell their products to the Canadian market without paying the tariff. By the early 1920s, the U.S. had surpassed Britain as the leading provider of foreign investment in Canada. Likewise, the U.S. was Canada's main trading partner. In the late 19th century, proximity meant that the U.S. had become the major source of Canadian imports. The U.S. was also the premier buyer of Canadian exports in most years after the First World War.

Post-War Trade Policies

After the Second World War, successive Canadian governments adopted a policy of lower tariffs to encourage trade. Canada was one of the original signatories of the GATT agreement and took part in negotiations that substantially lowered international tariffs. Many viewed multilateral trade agreements as a way of offsetting the economic and political influence of the U.S. Canadian exports expanded, creating an era of economic growth that lasted until the mid-1970s. The period was marked by high living standards and low unemployment rates.

In the 1960s, many Canadians became troubled by their country's growing dependence on the U.S. The international image of the U.S, was tarnished by that country's war in Vietnam and by violence in American streets and on college campuses. In Canada, a nationalist movement arose, determined to distance the country from its neighbour to the south. In the 1960s and 1970s, Ottawa created Canadian content quotas for radio and television (see CRTC), and enacted policies to assist Canadian filmmakers and magazine publishers. In the economic realm, the government of Pierre Trudeau created the Foreign Investment Review Agency in 1974 to screen foreign investment. It also adopted the "Third Option," which called for a diversification of Canada's trade to reduce the country's dependence on the American market and to become more truly global. The policy had scant impact, as other countries showed little interest in expanding trade with Canada, and as geographic realities ensured that the U.S. continued to be Canada's natural trading partner.

The economic nationalism of the 1960s and 1970s had little long-term effect. In the 1980s, the Canadian business elite abandoned its traditional preference for high tariffs and began advocating free trade. The government of Brian Mulroney took up the cause and negotiated the Free Trade Agreement with the U.S., which came into effect in 1989. The agreement saw a substantial increase in Canada's already-high level of trade with its southern neighbour. The North American Free Trade Agreement, which came into force in 1994 and brought Mexico into the relationship, did not significantly alter Canada's reliance on the U.S.

21st Century Global Links

Canada continues to be heavily connected to and dependent on the rest of the world. More than 80 per cent of Canadians use the Internet. More than two-thirds of television-viewing time is devoted to foreign programming. More than 20 per cent of the Canadian population is foreign-born. Every year, Canadians make about 30 million trips of one night or longer to other countries. Foreigners have invested more than $600-billion in Canada. Exports, mostly to the U.S., amount to about one third of Canada's gross domestic product (GDP). Canada is a member of more than a dozen international organizations.

Globalization Debate

Trade, Culture and Foreign Money

Long before the word globalization became commonly known, Canadians debated the merits of globalization. For much of the 19th and 20th centuries, the issue was trade. Was a high tariff necessary to promote domestic manufacturing, or was freer trade desirable because it would allow Canadians to purchase lower-cost products abroad?

Since at least the 1920s, culture has been a major concern. Should the government preserve and protect Canadian culture, or should the free market be left to decide which movies Canadians watched and what music they listened to?

After the Second World War, foreign investment was added to the debate. Was foreign capital an essential ingredient of Canadian prosperity, or was Canada allowing foreigners to exert too much influence over its economic and political life?

Anti-Globalization Movement

At the end of the 20th century, globalization became the subject of a heated struggle. An anti-globalization movement gained widespread international attention at the 1999 World Trade Organization ministerial meeting in Seattle. Many Canadians, mostly from the political left, took part in the massive protests outside the convention centre and were present when the police used tear gas to disperse the crowd. Smaller protests occurred at subsequent international meetings, including the 2001 Summit of the Americas in Québec City, where violent clashes broke out between the police and some of the more than 30,000 demonstrators.

A Canadian, Naomi Klein, wrote the movement's bible, No Logo: Taking Aim at Brand Bullies, which argues that a few multinational corporations have been exploiting workers in the developing world and reducing choice in the marketplace.

For its critics, globalization has been driven by businesses seeking to enrich themselves and their owners. They say multinational corporations are increasingly operating beyond the reach of governments, undermining national sovereignty. By playing governments off against each other, corporations have created a "race to the bottom," critics argue, adding that governments have lured investment by lowering corporate taxes, as well as environmental, social, and labour standards. Reduced tax rates have meant less government revenue, which has translated into lower levels of government funding for social programs. Critics also say that less stringent regulations have led to environmental degradation and the exploitation of workers, and that a global monoculture is increasingly destroying local traditions.

Pro-Globalization

Supporters of globalization insist that international trade and investment provide benefits to rich and poor countries alike. They point to Taiwan, Hong Kong, South Korea and Singapore, countries that have opened their doors to the international economy and have enjoyed much higher growth rates than those places that have tried to shut out the world. Workers in industrializing countries might toil under poor conditions, but they are enjoying a higher standard of living than before. As a result, globalization has helped lift millions of people out of poverty, its supporters say. Globalists also insist that economic integration helps the cause of world peace. Nations are much less likely to go to war when they are economically dependent on each other.

How Global is it?

Globalization and its effects are often misrepresented. Some analysts perceive globalization as an unstoppable force. Yet governments have chosen to increase global integration and can choose to move in another direction – though this option may well come with large economic costs.

In many ways globalization is not global. The poorest areas of the planet have not received much new capital, as most of it flows from one rich country to another, or from a rich country to a rapidly industrializing one. International trade has been less global than regional, as witnessed by major continental trading blocs (such as those created by the European Union and the North American Free Trade Agreement).

As for Canada, since the Second World War, the country has become more dependent on international trade, but most of this trade has been with the U.S., not the rest of the globe.

(See also: Canada and the United States)