Globalization and its Effects : Introduction and Overview

In 1997-98 Thailand, Korea, and Indonesia were attacked by international financial interests convinced that the countries were not running their economies properly. The trio had borrowed heavily in hard currency, and were unable to repay their debts, at least in the short term. Money flowed out of Bangkok, Seoul, and Jakarta; currencies plummeted in value and interest rates went sky-high; unemployment spurted upward. The Indonesian government fell, and the others barely averted collapse. The IMF insisted on draconian measures before providing financial assistance. With much greater reserves, even China and Japan skated near financial peril. The lesson was clear: no country is large enough to withstand huge financial drains imposed by the globalization of the world economy. To paraphrase the English poet, John Donne: No country is an island entire unto itself. Each is part of the main.Globalization has the effect of incapacitating states as autonomous units. Under its influence, states have come to rely on distant markets for raw materials, production, and finance, and have thereby become dependent on economic forces they do not control. In a globalized world, national governments are not able to insulate their citizens from the effects of world inflation and depression, causing unemployment and low growth