" (2007. p. 46) Guay also states that a consequence of "increased international trade is a corresponding increase in demand for commodities." (2007, p. 46) Guay writes that companies that are producers for civilian and military markets "are susceptible to increased global competition on the civilian side, even as the military side of their business may be fairly protected." (2007, p. 46) These firms may be forced to restructure which means restructuring as well as "selling divisions, reducing workforces, or ultimately going out of business - which could seriously affect the defense industrial base." (Guay, 2007, p. 46)
VI. GLOBALIZATION, FREE TRADE and NATIONAL SECURITY (JUSTER, 2001)
Juster (2004) relates that while free trade is important and "the salience of economic integration as a primary component of globalization...globalization involves much more than an increase in economic activities throughout the world. Globalization also involves the integration - or, at times, the collision - of political, social, and cultural activities and values." (p.1) Economic risks at the micro-level includes "inevitable short-term dislocations, as resources and capital move across open borders to seek out comparative advantages, such as lower labor or raw material costs." (Juster, 2004, p.1) at the macro level, "markets are increasingly volatile due to large amounts of cross-border investment and the ease with which capital can be injected into and withdrawn from different markets." (Juster, 2004, p.1) as noted by Juster, " a downturn in one financial market can have almost immediate repercussions around the world as a result of the interconnectedness and interdependence of financial markets arising from globalization." (Juster, 2004, p.1)
Globalization has resulted in markets becoming "increasingly volatile due to large amounts of cross-border investment and the ease with which capital can be injected into and withdrawn from different markets." (Juster, 2004, p.1) Juster relates that export controls that are effective in nature have the potential to bring about a reduction in the chance that an act of terrorism will "disrupt out critical infrastructures, deflate our consumer confidence, and throw our economy into a tailspin. Effective export controls also help ensure that markets are not destabilized by regional arms races or by the proliferation of weapons of mass destruction." (Juster, 2004, p.1)
Disruption of the infrastructures within the United States makes a requirement of risk management relating to service disruption. It is related that due to the dependence of shared information systems and networks, "the very information systems and networks that facilitate commerce also leave us vulnerable to a new type of threat - that of cyber attacks. And the interconnected nature of our infrastructure sectors significantly magnifies the consequences of a service disruption. Today, disturbances originating locally or in one sector are more likely than ever before to cascade regionally or nationally and affect multiple sectors of the economy. For example, a significant electrical or communications problem in one part of the country could adversely affect our banking and finance system, our air traffic control system, or even our oil and gas distribution system." (Juster, 2004, p.1) Juster summarizes by stating that the result of globalization is that the "economic integration and national security are more intertwined than ever. No longer is national security narrowly limited to national defense and military preparedness. Our conception of national security must also be concerned with securing the international conditions necessary for preserving and enhancing free trade and U.S. economic prosperity." (Juster, 2004, p.1)
Guay relates that in effect globalization as "strengthened the hand of defense companies at the expense of national governments. With more opportunities to expand their international presence, governments, at times, are being required to make concessions that would have been unheard of even a decade ago." (Guay, 2007, p. 63) Recommendations stated by Guay include those, which are described as "multilayered, with different roles for the private sector and the various branches, departments and agencies of the federal government and include those as follows:
1) Monitor international production patterns of leading U.S. defense industrial companies; (2) Make the approval process for foreign acquisitions more transparent;
3) Take a proactive stance in terms of investment in the United States by foreign defense companies;
4) Give preference to foreign companies with U.S.- based production when awarding contracts;
5) Be judicious in restricting technology transfer;
6) Diversify into nondefense sectors;
7) Improve math and science education;
8) Rebalance security concerns with economic competitiveness in areas of scientific research;
9) Ease restrictions on foreign high-skilled workers; and 10) Work with global institutions to harness the benefits of globalization. (Guay, 2007, p. 69-71)
This research study has sought to answer the question of whether U.S. security has been enhanced or if U.S. security has declined both economically and militarily due to the effects of globalization. As noted in this study, the Department of Defense (DOD) defines globalization as "the integration of political, economic and cultural activities of geographically and/or nationally separated peoples..." Furthermore, globalization cannot be viewed as an option of policy but instead it is simply a given that must be adapted to by policymakers. Globalization's affect to defense is in two primary ways that overlap one another. The first of these is the composition of DOD's supporting industrial base being altered in a fundamental manner requiring that DOD reengineer its business and acquisition practices and secondly, globalization has resulted in the competitive environment both militarily and technologically to be reshaped. No longer is the industrial base of DOD one that is of the nature of a dedicated industrial base for developing, producing and providing services and equipments and this is because of large defense cuts since the late 1980s, an expansion in commercial sector high-tech R&D investment and technological advancement, a sustained acquisition reform effort on the part of DOD and a transition in emphasis on the procurement of weapons and platforms to information technology that is more sophisticated and that amplifies capabilities.
Opening up of international trade and the trade agreements which have ensued has resulted in the United States having a trade deficit and furthermore, FDI for the United States has fallen in recent years. Privatization has also resulted from globalization and this has resulted in assets that the governments of countries formerly held in their possession becoming owned by private investors and this includes the defense industry. This has resulted in fraud and waste and due to oversight safeguards being lifted, the problem has become exacerbated during the Iraq war.
This study has also noted that the integration of political, social and cultural activities and values result in economic risks both at the micro and macro levels. Micro-level economic risks include 'inevitable short-term dislocations, as resources and capital move across borders to seek out comparative advantages..." (Juster, 2004) including cheaper labor and lower raw material costs. Macro-level risks are due to the increasingly volatility of investment across borders and the increasingly ease of injecting and withdrawing capital from different markets. Additionally, one financial market experiencing a downturn can immediately result in affects worldwide because the markets are so very interconnected and interdependent due to the affects of globalization. Export controls however, that are effective may potentially reduce the possibility that some act of terrorism might completely disrupt the critical infrastructures of the United States and result in consumer confidence dropping and the economy going into a spin. Effective export controls assure that destabilization of markets does not occur due to arms races on a regional basis or due to WMD proliferation.
This study has clearly demonstrated that the economic and military security of the United States has been greatly reduced due to the affects of globalization and that national security is no longer limited narrowly to considerations of national defense and the preparedness of the military and instead national security must also take into consideration international conditions of security necessary in preservation and enhancement of economic prosperity in the U.S. In a manner that serves to enhance free trade. Globalization has challenges and promises for the United States however, it is important that the interconnectedness of the various markets be first comprehended and then allowed for in strategy and national security agendas.
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