FC150: Globalization in the 1990S



Two events in the 1980s led to changes on a global scale in the 1990s.  The first was the collapse of communism in Eastern Europe in 1989, followed two years later in the Soviet Union, which also dissolved into a number of new nations, Russia still being overwhelmingly prominent.  Thus ended the Cold War, and with it the need to fund corrupt (and financially wasteful) regimes to gain or maintain political influence.  The other, less heralded but at least as significant, event was the introduction of the personal computer.  While it could be said about any previous decade of the last two centuries, the 1990s saw by far the most dramatic leaps in technology in history.  According to a principle referred to as Moore's Law, computing capacity doubles every two years.  For example, portable storage capacity has gone from 5.25" floppy discs introduced in 1976 and storing 250 kilobytes on information, to 3.5" discs (1982) with 1.44 megabytes, to zip drives in the late 1990s storing 250 megabytes to portable hard drives a decade later storing 500 gigabytes of information.  These represent a jump in storage capacity of 4 million times. 

Connecting more and more of these computers across the planet was something known as the Internet, which made possible instantaneous information sharing and business deals on a global scale.  Out of this arose any number of multi-national corporations that were more active globally than most nation states.  Joining these corporations were millions of investors from across the globe, a phenomenon Thomas Friedman dubbed the "electronic herd".  Very rapidly, larger and larger segments of the human race were logging, investing, and buying on the Internet.  Together, the end of the Cold War and the computer revolution pushed companies to invest in other countries to get profits rather than political influence.  As a result, profits soared, leading to new technologies, more profits, and so on.

However, countries wanting foreign investors had to meet two rigorous criteria.  First of all, they had to let the Internet spread in their countries so business could be done efficiently.  The problem was that people in general would have access to much more information about the world than repressive dictatorships wanted to allow, since it might give those people ideas about freedom.  Secondly, potential investors demanded transparency, meaning governments had to open their books to scrutiny of their ruling policies, liberalize their economic practices, and cut corruption. 

As a result, developing countries in the 1990s tended to break down into two categories: the countries that made the necessary reforms to attract foreign investors to develop their economies, and those countries that didn't make such reforms and therefore got no investors or economic growth.  Of course this put growing pressure on developing countries (both from outside investors & their own people) to liberalize their political systems and keep peace with their neighbors so business could carry on peacefully.  The result of all these forces and pressures, plus the ongoing cycle of foreign investment and spread of industrialization, was rapid globalization, not just of economies, but also of cultures in remote areas of the planet that were increasingly being tied to the mainstream. 

However, this was not good news to everyone.

Globalization met growing resistance from people in both developed countries and those with more traditional cultures.  For many people in developed countries, foreign investment meant losing their jobs to workers in poorer countries with cheaper labor.  There were also groups that feared unrestricted corporate greed was destroying the environment in poorer countries that had little or no environmental.  Especially worrisome to growing numbers of people was the issue of global warming.  Therefore, meetings of economic leaders in the World Trade Organization were often met with massive, and sometimes violent, demonstrations.

In developing countries, there were two, somewhat different, fears that both saw globalization as a threat.   One fear was that they were being left behind by rapidly modernizing neighbors.  At the same time, many people felt their traditional cultures and values were being overwhelmed by globalization.  In each case, these fears were often expressed in terms of religious backlash and acts of terrorism.  Thus as the new millennium approached, what looked to many as a bright new world dawning concealed some very real fears, conflicts, and dangers.