From the 2nd half of the 20th Century to the early 21st Century the economy of the world has transformed relatively rapidly into a global economy. Discuss its process and major positive and negative features.
The process of post WWII economic globalization until today was somewhat consistent with the idea of “free trade”, determined to avoid the economic nationalism, trade restrictions, and currency instability of the interwar years. In accordance with previously mentioned Kindleberger’s hegemonic stability theory and his emphasis on the positive role of hegemony as the provider of stable exchange rate regime and the “lender of last resort”, the participants at the Bretton Woods conference of 1944 agreed to set up IBRD (World Bank), GATT, and IMF to ensure stability and openness of world economy; and more importantly, they established fixed exchange rates of international currency (peg) through “gold-dollar standard”. All of these new agreements confirmed a new hegemonic role of the US in world economy. However in 1971, due to accumulating trade deficits (“Triffin dilemma”), President Nixon gave up the gold-dollar standard and devalued the dollar, putting an end to the Bretton Woods monetary system.
The sense of mutual interdependence in the global economy came to be widely shared since the breakdown of postwar Bretton Woods system. The heads of the seven largest industrial powers with market economies (the “Group of Seven”—the US, Britain, France, West Germany, Italy, Canada, and Japan) met from the 1970s on in annual economic summits to consult on the state of the economy. The Organization for Economic Cooperation and Development (OECD) brought together the leading industrial nations of the world, and GATT continued negotiations to reduce tariffs until succession by WTO in 1997. The process of “the US solo -> G7 -> G20” indicates that no one dominant actor in global economy exists and it’s getting more and more decentralized and liberal.
However, the developing countries or “peripheries” of global economy have constantly suffered from heavy debt, underdevelopment, and intensified dependence on the “core” industrial regions of the world. When the economic globalization accelerated in 1990s with “new economy”—which is driven by information technology strategically supported in the US—the gap between the developed countries and LDCs were even more widened, since the latter lacked capacity to form infrastructures of the new computer technology (the digital divide). The gap between rich and poor was widening. This is why many believe that globalization is nothing more than Westernization, Americanization, or just another form of liberal imperialism. On top of that, concerning that our globalization was mostly economy driven, conflicts in political, social, ethnical, or cultural terms are steadily rising, due to the difference of speed and aspects of the change.