Lecture2 - Global Studies: Lecture 2 Outline Measuring...

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Global Studies: Lecture 2 Outline Measuring globalization Economics Politics Culture: Flows 3 models Homogenization Fragmentation Hybridity Announcements Recommended reading, Section switching, Pod-casting, Reader, calpirg
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Measuring Globalization What should we measure? Dimensions Economic, Political, Cultural Policies/Flows/Outcomes Policies (absence of policy barriers) Flows (amounts) Outcomes (consequences) Unit? Intl system Individual countries
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Trends: Measuring Economic Globalization Two baselines for measuring globalization: 1. History . Compare today to previous era of globalization (1880-1913) in terms of levels of: a. Capital b. Trade c. Migration 2. Complete Globalization. Compare today to hypothetical case of full integration a. Deviations from the “Law of One Price” b. Home Market Bias and Border Effects
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Patterns of globalization: capital markets
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Hypothetical: Law of one price (LOOP) Goods and services should cost the same in all countries, except for the cost of transportation. (FPE:capital/labor) Not much evidence for this until recently. Crossing the US/Canada border made the same price difference as adding 2,500 miles between US cities (Engel and Rogers 1996). International convergence typically takes 5-6 years after a price shock in one country. Convergence appears to be occurring fastest in the EU. Eliminated all carriers to factor flows in 1992. Price gap for goods/services is about 2:1. Biggest gap in prices for same good: labor (10:1)
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Home market bias Portfolio Theory (Risk-Reward Maximization, Optimal Diversification) US stock markets ≈ 50% of global stock market capitalization. Optimal diversification ≈ 50% US portfolio investment should be invested here. Yet 90% invested at home. US portfolio investors biased towards US stock markets. Punchline: Economic globalization has a long way to go!
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Patterns of globalization: politics Much harder to evaluate extent of globalization Do not know what a fully globalized world would look like. (i.e., no theoretical benchmark) World government? Single, centralized body that sets global standards for certain activities. Does not mean every decision would be centralized International Law would trump local laws; supra- national entity would be final arbitrar on disputes.
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Supra-national governance as benchmark Historical comparison Until 20 th century, there were no permanent international
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This note was uploaded on 04/06/2010 for the course GLOBAL STU global stu taught by Professor T during the Fall '07 term at UCLA.

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Lecture2 - Global Studies: Lecture 2 Outline Measuring...

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