Globalization

Dr. Priti Rachayeeta

pritirachayeeta@asthaeducati
on.in
 Objectives
 Characterise ‘globalisation’
 Factors causing globalization of
business
 Consider issues impacting globalisation
 Consider the implications and potential
impact on the global economic cycle
 What is Globalization?
 The shift toward a more
integrated and
interdependent world economy
 Refers to free cross-border
movement of goods, services,
capital, information, and people.
 Breaking down of artificial barriers to
the flow of goods and services, capital,
knowledge, and people across the world
 Arrival of internet: transaction costs of
transferring ideas and information have
declined
 Types of globalization
 Economic Globalization
 Social Globalization
 Cultural Globalization
 Political Globalization
 Environmental Globalization
 Economic globalization
 Two components:
 The globalization of markets
 The globalization of production
 Globalization of
Production
 Vizio flat panel TV is
 designed in a small office in California
 assembled in Mexico
 From
 panels made in South Korea
 electronic components made in China
 microprocessors made in the U.S.
 Not just manufacturing…
 Globalization of production has
historically been about manufacturing
 Increasingly companies are using
modern communications to outsource
service activities to low-cost nations
 Globalization of markets
 In the past, each country had
its own companies in many industries
and its own products
 Today, everyone knows…
 Nintendo
 Starbucks
 Coca-Cola
 Ikea
 McDonald’s
No matter where you go in the world, certain businesses will
 Samsung always have a presence.
Copyright: mkeky, stock.xchng
 Social Globalization
 In the pre-modern world, the context of
human identity was narrow and limited.
 In terms of family, ethnicity, tribe,
village, religion etc., the identity of
individual people was determined.
 Social Globalization
 As the globalization process expands, the
personal and collective identities of people
become weaker.
 Former identities of the past lose its
importance.
 Relationships with people from distant places
developed
 In this case the Internet, e-mail, website etc.
opens up a new world in front of people.
 Cultural globalization
 Cultural globalization is the process by
which a world-class of goods, ideas and
information is produced in one part of
the world.
 As a result, cultural differences between
different races, regions and individuals
are removed.
 Cultural globalization
 Hollywood movies are screened worldwide.
 Adidas sports goods are sold around the world.
 The Coca-Cola market is worldwide.
 McDonald’s has demanded the world’s fast food
market.
 Such products are many and varied worldwide.
But all these international brands have to do
with the dignity of local culture and the touch of
social customs.
 Political Globalization
 Political ideology is often referred to as
one of the characteristics of
globalization.
 That is, the expression of globalization
also occurs in political ideology.
 Political Globalization
 Extending the boundaries of the single state of the
international organization extends to the international
sphere of many states.
 There are many and many international organizations
in the present world. Most of these were formed in
the aftermath of World War II. Notable examples of
this are the United Nations Organization (UNO), the
European Economic Community (EEC), the World
Bank, the International Monetary Fund (IMF), and
the World Trade Organization (WTO), etc.
 Environmental
Globalization
 Environmental globalization refers to
internationally coordinated practices
and regulations in the form of
international treaties regarding
environmental protection.
 The growth of globalization and its
impact on the global environment is an
important concern to the world
 Globalization increases our
consumptions of lot of products made
through natural resources which is
affecting ecological cycle very badly.
 Due to the industrialization harmful
chemicals have been thrown to the
environment and it affects environment
dangerously.
 Environmental Effects of
Globalization
 Example. 2nd December in 1984, India,
an accident occurred at the
Union Carbide pesticide plant in Bhopal
(the capital city of the Indian state of
Madhya Pradesh).
 Environmental responsibility should be
established throughout the globe.
 Globalization also can decrease the bad
effects to the environment by
establishing global regulating system to
ensure the environmental protection.
 Drivers of Globalization

 Two factors underlie globalization

 “Decline in barriers to the free flow of
goods, services, and capital” that has
occurred since the end of World War II
 Technological change
Factors Causing Globalization
 Declining Trade and
Investment Barriers

 During the 1920s and ‘30s, many of nations

erected formidable barriers to
international trade and
foreign direct investment
 Advanced industrial nations of the West
committed themselves after World War II to
removing barriers to the free flow of
goods, services, and capital between
nations.
Affects of Lowering Trade
Barriers
Average Global Tariff %
 The Role of Technology
 Lowering of trade barriers made
globalization possible;
 Technology has made it a
transforming movement
Internet Usage Growth
Globalization is acceleration of
trends of the last 10,000 years
 People lived for 250,000 years in hunter-
gatherer bands
 Rise of agriculture 10,000 years ago led to
rise of empires and nation-states
 Science and ‘enlightenment’ after 1680
produced global trade and empires
 Free trade and tech after 1980 produced
globalization
 The Changing Roles of Countries
in
the Global Economy
In the 1960s:
 The U.S. dominated the world economy and
the world trade picture
 U.S. multinationals dominated the
international business scene
 About half the world-- the centrally planned
economies of the communist world-- was off
limits to Western international business
Today, much of this has changed.
 The Changing World Output
and World Trade Picture
 In the early 1960s, the U.S. was the world's
dominant industrial power accounting for
about 40.3% of world manufacturing output
 By 2007, the U.S. accounted for only 20.7%
 Other developed nations experienced a similar
decline
 The Changing Nature of
the Multinational Enterprise
 Since the 1960s,
 there has been a rise in non-U.S.
multinationals
 there has been a rise in mini-multinationals
 The Globalization Debate
Pro Con
 Destroys manufacturing
 Lower prices for goods
jobs in wealthy nations
and services
 Wage rates of unskilled
 Economic growth
in advanced countries
 Increase in consumer decline
income
 Companies move to
 Creates jobs (for many) countries with fewer
 Countries specialize in labor and environment
production of goods and regulations
services that are  Loss of sovereignty
produced most
 Homogenized cultures
efficiently
 The Emergence
of Global Institutions
 The World Bank which promotes economic
development
 the United Nations (UN) which maintains
international peace and security, develops
friendly relations among nations, cooperates
in solving international problems and
promotes respect for human rights, and is a
center for harmonizing the actions of nations
 The Emergence
of Global Institutions
 the World Trade Organization (WTO) which is
responsible for policing the world trading
system and ensuring that nations adhere to
the rules established in WTO treaties
 In 2008, 151 nations accounting for 97% of
world trade were members of the WTO
 the International Monetary Fund (IMF) which
maintains order in the international monetary
system
 Barriers to continued
globalisation?
 The nature of the product/service
 Political concerns
 Inflation
 Cultural diversity(?)
 Concerns about Globalization
 Loss of unique cultures
 Short term gains over positive long-term
consequences
 Corporate profits before workers rights.
 Loss of indigenous culture, replaced by homogeneity
 Loss of jobs because of economic globalization
 Environmental concerns over demands put on Earth’s
resources..
 The list goes on……………
 Conclusion
 Complex global dynamics
 Notoriously unpredictable
 Is the future of the global economy
continued globalisation?

Can the proposed economic cycle

continue?
Thank you!