The Unbalanced Globalization

Analyzed insightfully, globalization implies the preferential engagement of comparatively small regions rather than entire nation states, which may be even more typical jn the future, including in the very long run.

Analyzed insightfully, globalization implies the preferential engagement of comparatively small regions rather than entire nation states, which may be even more typical jn the future, including in the very long run.

The Role of Territory in a Globalized World

To a large extent, globalization signifies networking involving relatively small territories often located in different states [1]. Take the economic region of South California that is located immediately north of the U.S.-Mexican border. Some authors insist on the nationally oriented approach to globalization studies. However, ask yourself the following question: is there any sense in manipulating statistical data aggregated to a territorial level, whose constituent parts have little in common in view of the dynamics under review?

This point is quite true for many regions of the world. Is there anything in common between Tibet and Shanghai within the context of networked communications? Or between Bombay and Assam? Besides a common government? Why not ask a question by no means less critical than the survival and political future of a state, i.e. related to the overall role of territory in the new globalized world.

Over the past decade we have observed a distinct trend towards the consolidation of wealth, knowledge and human capital in comparatively small territories [2] whose population constitutes a relatively minor share of the total population, even within the OECD countries.

Maybe, we should word the question differently. Will national institutions withstand the growing gap in development within countries becoming involved in the process of globalization? While the issue may be trifling for the Netherlands or Denmark, it could be of great significance for Great Britain.

Then why use average data for a country? Are the living and education standards in a Xingjian village really that important for China's future? Hong Kong and Shanghai are definitely of much greater significance.

A Gateway to the Global World

At present, it seems practically impossible to forecast the world’s future in terms of existing nation states, because this conceptual system will become irrelevant.

Instead, we should concentrate on the destiny of the gateways to the global world, i.e. territories that are swiftly accumulating financial resources, knowledge, human capital, as well as transportation and communication assets. There are dozens of such entities – areas of Washington, Boston, Seattle and New York City in the United States, the London-Oxford-Cambridge triangle in the United Kingdom, the Osaka-Tokyo area in Japan, Shanghai and Guangzhou in China, Greater Amsterdam (including the Hague, Leiden, Rotterdam – the so-called Ranshtad) in the Netherlands, Sao Paulo and Rio de Janeiro in Brazil, and many others. The accumulation of finances, transport links and knowledge in these places is unstoppable. And between these global centers we are seeing emerging economic, financial and scientific communications that make up an intricate networked structure, i.e. the gateway to the global world.

Due to quite simple reasons, there can be no global village for everyone to stay at home and work through the Internet. As shown by Douglass North, winner of Nobel Prize in Economic Sciences [3], we must cut down the transaction costs that make over one half of GDP in industrialized countries.

Meanwhile, deal-making in a changing economic environment requires a high level of trustworthiness [4], which cannot be achieved through phone or e-mail. Contracting and assessments of scientific and technical innovation imply the need for personal contact. Globalization leads to more but not less personal links, which means an absolute need for the spatial consolidation of businesses, science and science-intensive operations in order to bring down the transaction costs. In actuality, this is the process of defining the growing importance of the gateways to the global world.

Notably, this is not the first time the global economy has seen the amassing of might in small territories. Just remember Venice, Antwerp and Amsterdam, whose historical consequence in centering the world economy was colorfully described by Fernand Braudel [5]. The Longobardian and Carolingian rulers could hardly imagine a small 100,000-population lagoon city successfully warring against a coalition of all the leading European powers, as well as the global dominance of tiny Holland over international trade.

Global gateways. Infographics (in russian)

A thoughtful figures-based analysis shows that the global economic structure is very similar to the late-Medieval European urban network (and also is a network of megalopolises), or gateways to the global world that accumulate wealth, power and innovation just like the Hanseatic and North Italian cities of the Middle Ages.

Why is this happening? With the growth of transaction, knowledge and expectation-based economies, hubs for transportation, financial and intellectually innovative infrastructure help concentrate confidence, a most significant resource for the transaction-based economy of expectations. As a matter of fact, trust is supported not only and not so much by institutions but primarily by stable networked (not the Internet, but socially networked) interactions. The mutual and permanent interaction within networks of a narrow localized area helps bring about a synergic effect, as the emerging concentration of transaction and knowledge economies accumulates more and more resources for such development, drawing them largely out of the near and then out of the distant environments.

Clearly, the traditional transformation economy of the global gateways is contracting, as it becomes noncompetitive with the economy of trust typical for gateways and is ousted to the periphery. Of course, the gateways retain and enhance the development of services and knowledge.

The Formation of Global Gateways

Photo: Wikipedia.org
Skyscrapers in Tijuana, industrial and the
financial center of Mexico, Baja California

Understanding the conditions necessary for gateway construction as well as the conclusions to be made from the operations of the gateways in view of defining the policies for the development of their near and distant peripheries, i.e. the khora, requires a detailed examination of their structure.

At that, the issue should be studied mostly with help of the comparative analysis. The global gateway model proper was developed through comparative analysis of the economic and political characteristics of major megalopolises. Classification of these global entities and the types of interaction with state entities is the result of cross-temporal comparisons.

Several years ago, David and Ake Andersson outlined the overall contours of the problem and provided quite detailed technical descriptions of roughly a dozen global gateways, from New York to Singapore [6]. Primarily, their work describes the conditions for the creation, functioning and effective interaction of high-density social networks. The key issue is why high-density networks emerge and interact within territories of limited-size. What is preventing the up-to-date computer and communications technologies from spreading these networks somewhat more uniformly over vast territories (setting up a global village) to engage huge the human and economic assets of the untapped areas into the global economy? At first glance, this could help lay a more solid foundation for the global economy.

To answer this question, one should pay heed to a vital feature of the integration of social networks. They do not merge only through formal textual communications, with the most important component of their integration mechanism being figurative and informal communication, including non-verbal. This means that, contrary to the texts that could be easily transmitted through communication channels using modern computer technologies, figurative and informal communication are more difficult to transmit through existing channels. Despite successes in distant learning, teleconferences, etc., it is common knowledge that personal contacts still offer the best avenue of ensuring a higher level of trust between communicants than interaction via technical channels. Meanwhile, it has already been mentioned that it is trust that constitutes the key factor for the emergence of social networks, especially when a social network requires a high level of reliability and a network structure suggests high-level density. Institutional confidence, especially within a fast changing economic and political environment, will not supplant personal trustworthiness built by means of stable and recurring personal contacts.

The functioning of dense social networks with a high level of trust appears economically more beneficial if the networks are concentrated in small territories. Since the formation of gateways is related to the creation of a powerful centre of attraction of the trust networks, one should find out how and under what circumstances networks of different types become attracted and repelled in relation to each other. Primarily, we are interested in the interaction of the trust and power networks vital for political life. In fact, political regimes of any type may be regarded as a specific configuration of power networks under certain institutional limitations. Such a mixed institutionally networked nucleus provides the body for other elements of a political system, first of all influence and information networks.

World-Economy

Photo: Wikipedia.org
Barack Obama and Dmitry Medvedev.
Globalization leads to more but not less
personal links

Trade networks have always been the most widely spread trust networks, as their existence and expansion have always required trustworthiness. Trading implies trust because otherwise one cannot be sure about the quality of goods. If we speak about anything beyond a one-time exchange, in the absence of trust there is no guarantee for the observance of contracts. No contract can specify all aspects of a deal, and many hinge on personal trust. Besides, there is practically always a time gap between the delivery of goods and payment. Networks of trust in trade gradually give rise to the practice of credit and the movement of promissory notes and other securities over these networks that form financial credit networks. With time, the development of these networks in the same geographic area gives rise to the global gateways.

The world-economy [5] may exist at the numerous levels, down to small cities and their environs, each of them featuring points of concentration for exchange and credit networks. It is these focal points that constitute the internal economic unity of a region. Cities play an exceptionally vital role. All high levels of the world-economy divisions are characterized by a city hierarchy – the main city and the city serving its economy, each of them controlling subordinate districts varying in size. The world-economy is headed by one or more cities that may be labeled gateways to the world-economy. And this passageway seems the most likely both for the immediate and the distant future.

1. Ohmae K. The End of the Nation State: The Rise of Regional Economies. L.: Harper Collins, 1996.

2. Kasper W. Spatial Economies // Henderson D.R. (ed.) The Fortune Encyclopedia of Economics. N.Y.: Warner Books, 1993. Pp. 82–86.

3. North D. Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press, 1991.

4. Sergeev V. The Wild East. Armonk; N.Y.: M.E. Sharpe, 1998; Kaase M. Interpersonal Trust, Political Trust and Non-Institutionalized Political Participation in Western Europe // West European Politics. 1999. Vol. 22. № 3. Pp. 1–21; Axelrod R. The Evolution of Cooperation. N.Y.: Basic Books, 1984.

5. Fernand Braudel. Civilisation matérielle, économie et capitalisme, XVe-XVIIIe siècle (in Russian translation), Volume 3. Vremya Mira Publishers, Moscow. 1992.

6. Andersson A.E., Andersson D.E. (eds.) Gateways to the Global Economy. Aldershot: Edward Elgar, 2000.