ECONOMIC

GLOBALISATION
 Introduction

Evaluation

 Attendance: 10% of total mark

 Mid-term presentation: 30% of total mark
 Final exam: 60% of total mark
Lecture 1

INTRODUCTION
 INTRODUCTION

Contents

 Introduction of Globalization
 Word Trade Organization (WTO)
 Economics Integration (Trade blocs)
 Multinational Corporations in the Global
economy
 Developing Nations in the Global
economy
1 DEFINITION

What is Globalization?
1 INTRODUCTION

What is Globalization?
“All of us felt sorry
when we read about
the story of a bunch of
blindmen trying to
figure out the shape
and form of an
elephant. Although we
are not blind, our task
is more challenging
than the blindmen who
studied a standing
animal”
(Peng, 2009:13)
 1 INTRODUCTION

What is Globalization?
 ‘Globalization can thus be defined as the intensification of worldwide
social relations which link distant localities in such a way that local
happenings are shaped by events occurring many miles away and vice
versa.’
Anthony Giddens, Former Director of the London School of Economics
 ‘The concept of globalization reflects the sense of an immense
enlargement of world communication, as well as of the horizon of a
world market, both of which seem far more tangible and immediate
than in earlier stages of modernity.’
Fredric Jameson, Professor of Literature, Duke University
 ‘Globalization may be thought of as a process (or set of processes)
which embodies a transformation in the spatial organization of social
relations and transactions – assessed in terms of their extensity,
intensity, velocity and impact – generating transcontinental or
interregional flows and networks of activity, interaction, and the
exercise of power.’
David Held, Professor of Political Science, London School of Economics
 ‘Globalization as a concept refers both to the compression of the world
and the intensification of consciousness of the world as a whole.’
Roland Robertson, Professor of Sociology, University of Aberdeen, Scotland
 What is
Globalization?
Global industrialism
or globalization is a
process of
forging 7-11 Beijing

international
political,
economic,
religious, and
socio-cultural KFC Kuwait
1 INTRODUCTION

What is Globalization?
 “The best definition of globalization”
Princess Diana's death
An English princess with an Egyptian boyfriend
crashes in a French tunnel, driving a German car with a
Dutch engine, driven by a Belgian who was drunk on
Scottish whisky, followed closely by Italian Paparazzi, on
Japanese motorcycles; treated by an American doctor, using
Brazilian medicines.
This is sent to you by an American, using Bill Gates's
technology, and you're probably reading this on your
computer, that uses Taiwanese chips, and a Korean monitor,
assembled by Bangladeshi workers in a Singapore plant,
transported by Indian lorry-drivers, hijacked by
Indonesians, unloaded by Sicilian longshoremen, and
trucked to you by Mexican illegals..... (from the web)
 What is Globalization?

 Definition:
 An economic phenomenon?
 A social phenomenon?
 A cultural phenomenon?
 The movement towards the expansion of economic
and social ties between countries through the
spread of corporate institutions and the capitalist
philosophy that leads to the shrinking
of the world in economic terms.
Globalisation

Globalisation
could
involve all
these
things!
1 INTRODUCTION

Globalization: Culture
1 INTRODUCTION

Globalization: Cultur e
1 INTRODUCTION

Globalization: Culture
 The Global Village
We live in a world in which all regions
are in contact with one another through
the mass media, instantaneous
communication, intercontinental travel,
and highly integrated economic and
political networks.
(Marshall McLuhan, 1964)
And it is changing cultures

Mobile phone tower Tanzania

 1 INTRODUCTION

Globalization: Political
Different statements:
I. Against the State
 Some scholars predict the “end” of national state
power.
 Some argue that the state may only adjust to
globalization, without having an active role in it.
 Nation States is losing power:
 MNCs power, force of world markets
 Intl bodies and law (UN, EU...), global protest movement
(Greens..)
 Trans-national media and public opinion
 1 INTRODUCTION

Globalization: Political
Which structures will replace the State?
 The global companies or
 The International organizations, such as UN, which
has instruments for realizing global governance.
 1 INTRODUCTION

Globalization: Political
II. In defense of the State

The facts of practice show that the role of the state is

increasing in all aspects of social life, including
economics. Economic globalization does not remove
the necessity for functioning of the state.
 1 INTRODUCTION

Globalization: Political
Some arguments in defense of the state
 The state has guaranteed internal and external
security;
 The state has underpinned the law;
 The state has funded national welfare
systems;
 The state has provided the structures for popular
representation
 The state has built the framework for economic and
social activities.
 So the state plays fundamental role in creating of
institutional forms and strategies of globalization
processes.
 1 INTRODUCTION

Globalization: Political
Two realities co-exist:
1. The so called borderless virtual world where
geography does not count, and communication and
business transactions can occur in a matter of
seconds.
2. The other world is that of the everyday life of people
in which borders still count, local realities are still
complex and very different among themselves, and
most fundamentally where social and economic
problems still need to be addressed.
 1 INTRODUCTION

Globalization: Political
Why have not all countries benefited to the same extent
from globalization?
 Countries that do not have strong institutional
framework, as well as solid social policies and
networks to cope with negative externalities most
suffer the negative effects of globalization.
 External factors, such as the global trading
environment, are crucial in creating greater
opportunities or in posing constraints on a country’s
economic growth.
 1 INTRODUCTION

Globalization: Economics

the trade roads were built;

global companies started their functions;
global economy and finance system have been

created.
1 INTRODUCTION

Integration of Economies
 The increasing reliance of
economies on each
other
 The opportunities to be able
to buy and sell in any
country in the world
 The opportunities for labour
and capital to locate
anywhere in the world
 The growth of global markets
in finance
Stock Markets are now accessible
from anywhere in the world!
Copyright: edrod, stock.xchng
 1 INTRODUCTION

Integration of Economies

 Made possible by:

 Technology
 Communication networks
 Internet access
 Growth of economic cooperation – trading blocs
(EU, NAFTA, etc.)
 Movement to free trade
 Cheap shipping cost
1 INTRODUCTION

Globalization: Economics

Free Trade
 1 INTRODUCTION

Globalization: Economics
Exports: 2011
 Value: 18.26
Billion
USD
1980
2.03
Billion USD

 Ratios:
Increa
se > 4
1 INTRODUCTION

Globalization: Economics
Trade and GDP growth, 1980 – 2011 (annual percentage
change)
 1 INTRODUCTION

Globalization: Economics
Many factors may have contributed to the faster growth of trade
relative to GDP over the past three decades.
1.The end of the Cold War provided a “peace dividend” in
developed economies, which allowed them to reduce military
expenditures and boost investment in other areas.
2.The development of the internet and the digital economy also
appears to have boosted trade, possibly to unsustainable levels
as witnessed by the subsequent bursting of asset bubbles
around the world.
3.Finally, large developing economies such as China and India
embraced economic reform and initiated a process of catch-up
growth in which trade has played an important role.
Source: World Trade Report
2013
1 INTRODUCTION

Globalization: Economics

Markets
Economics
integration:
faster and
broader Productions
 1 INTRODUCTION

Globalization of markets
The globalization of markets refers to the merging of
historically distinct and separate national markets into one huge
global marketplace
In many industries, it is no longer meaningful to talk about the
“German market” or the “American market”
Instead, there is only the global market
Falling trade barriers make it easier to sell internationally
The tastes and preferences of consumers are converging on
some global norm
Firms help create the global market by offering the same
basic products worldwide
 1 INTRODUCTION

Globalization of production
The globalization of production refers to the sourcing of goods
and services from locations around the globe to take advantage
of national differences in the cost and quality of factors of
production like land, labor, and capital.
 Trade is increasingly driven by global value chains
 About 60 per cent of global trade, which today amounts to
more than $20 trillion, consists of trade in intermediate goods
and services that are incorporated at various stages in the
production process of goods and services for final
consumption.
 The fragmentation of production processes and the
international dispersion of tasks and activities within them
have led to the emergence of borderless production systems.
 These can be sequential chains or complex networks, their
scope can be global or regional, and they are commonly
1 INTRODUCTION

A Supply Chain
 1 INTRODUCTION

A Supply Chain
 A Supply Chain is a network of suppliers, factories, storage
facilities, distributors, transporters and clients that participate
in the sale, delivery and production of a specific product
 The value chain describes the full range of activities that
firms and workers perform to bring a product from its
conception to end use and beyond.
 This includes activities such as design, production,
marketing, distribution and support to the final consumer.
 The activities that comprise a value chain can be contained
within a single firm or divided among different firms.
 The fact that they are increasingly spread over several
countries explains why the value chain is regarded as
“global”.
Gereffi and Fernandez-Stark (2011)
 1 INTRODUCTION

Globalization of production
 Over recent decades, one of the most important changes in the nature
of international trade has been the growing interconnectedness of
production processes across many countries, with each country
specializing in particular stages of a good’s production.
 In the trade literature, this phenomenon is referred to as “global supply
chains”, “global value chains”, “international production networks”,
“vertical specialization”, “offshore outsourcing” and “production
fragmentation”
 International fragmentation of production through global supply
chains has been a business reality since the generalization of the so-
called “Toyota” model30 and the spread of international outsourcing in
the 1980s.
 The Business Guide to the World Trading System, published by the
International Trade Centre (ITC) and the Commonwealth Secretariat in
1999, says “virtually all manufactured products available in
markets today are produced in more than one country”.
Leontief and Strout, 1963
1 INTRODUCTION

Globalization of production

global supply chains

global value
chains
international production networks
vertical specialization
offshore outsourcing
production fragmentation
 1 INTRODUCTION

Globalization of production
 Outsourcing is the “acquisition of an input or
a service from an unaffiliated company”.
 Offshoring is the sourcing of input goods or
services from a foreign country.
 This includes sourcing from a foreign affiliate
through foreign direct investment (FDI) and
sourcing from a foreign non-affiliate through arm’s
- length contracts.
 While FDI involves intra-firm trade, arm’s-length
offshoring involves trade between firms.
Source: (Helpman, 2006)
 1 INTRODUCTION

Globalization of production
Outsourcing
affiliate non-affiliate
at domestic domestic
production outsourcing
home within the firm
abroad FDI International
Offshoring

intra-firm trade outsourcing

arm‘s length trade

Source: The world is flat

1 INTRODUCTION

Globalization of
production
 1 INTRODUCTION

Globalization of production
The concept of GVC was introduced in the early 2000s and has been
successful in capturing several characteristics of the world economy:
1)The increasing fragmentation of production across countries.
 Global value chains link geographically dispersed activities in a
single industry and help to understand shifting patterns of trade and
production.
2)The specialisation of countries in tasks and business functions
rather than specific products.
 “foreign” products VS “made in the world”  countries compete on
economic roles within the value chain.
3)The role of networks, global buyers and global supplier
4) Gives insights on economic governance and helps to identify firms
and actors that control and coordinate activities in
production
networks. Source: OECD, Mapping Global Value Chains (2012)
1 INTRODUCTION

Globalization of production
BMW
1 INTRODUCTION

Globalization of production
1 INTRODUCTION

Globalization of production
 1 INTRODUCTION

Globalization of production
 The spread of GVCs is greater in some industries where activities
can be more easily separated, such as electronics, automotive or
garments, but GVCs increasingly involve activities across all
sectors, including services. While the share of services in gross
exports worldwide is only about 20 per cent, almost half (46%) of
vale added in exports is contributed by services-sector activities,
as most manufacturing exports require services for their
production
 The majority of developing countries are increasingly participating
in GVCs. The developing-country share in global value added
trade increased from 20 per cent in 1990 to 30 per cent in 2000 to
over 40 per cent today.
 However, many poorer developing countries are still struggling to
gain access to GVCs beyond natural resource exports. Regional
value chain links are often more important than global
ones, especially in North America, Europe, and East
and South-East Asia. In the transition economies,
Latin America and Africa, regional value chains are
 1 INTRODUCTION

Globalization of production
 GVCs lead to a significant amount of double counting in trade,
as intermediates are counted several times in world exports
but should be counted only once as “value added in trade”.
 Today, some 28 per cent of gross exports consist of value
added that is first imported by countries only to be
incorporated in products or services that are then exported
again.
 Some $5 trillion of the $19 trillion in global gross exports (in
2010) is double counted.
 Patterns of value added trade in GVCs determine the
distribution of actual economic gains from trade to individual
economies.
1 INTRODUCTION

Globalization of production

GVCs are typically

coordinated by whom?
 1 INTRODUCTION

Globalization of production
 Countries with a higher presence of FDI relative to
the size of their economies tend to have a higher
level of participation in GVCs and to generate
relatively more domestic value added from trade
(figure).
 TNCs coordinate GVCs through complex webs of
supplier relationships and various governance
modes, (i.e.: from direct ownership of foreign
affiliates to contractual relationships (in non-equity
modes of international production, or NEMs), to

arm’s-length dealings.)
 1 INTRODUCTION

Globalization of production
GVCs are typically coordinated by TNCs
 Cross-border trade of inputs and outputs taking
place within their networks of affiliates, contractual
partners and arm’s-length suppliers.
 TNC-coordinated GVCs account for some 80% of
global trade.
 Patterns of value added trade in GVCs are shaped
to a significant extent by the investment decisions of
TNCs.

Source: World Investment Report

1 INTRODUCTION

Globalization of production

GVCs can make an important

contribution to
development, but GVC
participation is not
without risks
 1 INTRODUCTION

Globalization of production

At the global level:

 GVCs spread value added and employment to more
locations, rather than hoarding them only in those
locations that are capable of carrying out the most
complex tasks.
 As such, they can accelerate the “catch-up” of
developing countries’ GDP and income levels and
lead to greater convergence between economies.
 1 INTRODUCTION

Globalization of production
At the country level:
 GVC participation tends to lead to job creation in
developing countries and to higher employment
growth.
 But the experience of individual economies is more
heterogeneous.
 GVCs can serve as a mechanism to transfer
international best practices in social and
environmental issues,
 However, the potential long-term development
benefits of GVCs are not automatic  dependency
 1 INTRODUCTION

Globalization of production
At the firm level
 Increase productivity and upgrade to higher value
added activities in GVCs depend on the nature of
the GVCs in which they operate.
 At the same time, it involves gradual expansion of
participation in GVCs of increasing technological
sophistication
 moving from resource-based exports to exports of
manufactures and services of gradually increasing
degrees of complexity
2 THE HISTORY OF GLOBALIZATION
 2 THE HISTORY OF GLOBALIZATION

The historical milestones

1. The origins of economic globalization (from

Antiquity to the 14th century)
2. The new horizons of the Renaissance (15th
century-18th century)
3. The Industrial Revolution and the explosion
of international trade (late 18th century-1914)
4. The two World Wars stall the globalization
process (1914-45)
5. Growing economic integration in a divided
world (from 1945 to the 1990s)
 2 THE HISTORY OF GLOBALIZATION
The origins of economic globalization
(from Antiquity to the 14th
century)
 The two essential inventions that spurred trade
were:
 Shipping: the invention of the wheel during the 4th
century BC in Mesopotamia marked a turning point.
 Writing: Its oldest form – also invented in
Mesopotamia in the 4th century BC – was initially
used to record livestock and harvests, then written
legal contracts, which were particularly important to
make sure transactions were carried through over
 2 THE HISTORY OF GLOBALIZATION
Empires and “world
economies”
 The first forms of globalization are linked in part
to the great empires that, by politically unifying
very vast and disparate territories, enhanced the
movement of goods and people across
continents.
 From the 6th to the 4th century BC, merchants
crisscrossed the vast Persian Empire, which
spread from the Mediterranean to the River
Ganges and covered a mosaic of peoples and
civilizations.
 2 THE HISTORY OF GLOBALIZATION
The new horizons of the Renaissance
(15th century-18th century)
 Major technological advances and expanded
trade through all the continents, setting a new
milestone for globalization:
 New products and processes.
 Postal services also progressed.
 The printing press encouraged the spread of
knowledge.
 Developments in transportation also played a
part.
 Ships and fleets grew larger.
 The European colonial enterprise also went hand
in hand with increased economic movement.
 2 THE HISTORY OF GLOBALIZATION

Trade – A tool of power

 Trade grew considerably worldwide thanks to
metropolises and their colonies.
 Applying protectionist measures, according to the then
dominant political economy theory – mercantilism.
 This doctrine assumed that a nation-state’s power
depended on its reserves of precious metals.
 To grow richer, the state had to develop international trade
and increase its exports by exploiting the resources of
colonial territories.
 But the tariff schedule forced certain colonies to trade
solely with their ruling kingdom and so the international
trading posts on different continents stayed attached to
their respective crowns (Spain, Portugal, Netherlands,
France, Great Britain, etc.).
 2 THE HISTORY OF GLOBALIZATION
The Industrial Revolution (late 18th
century-1914)
 Technological innovations and new production
methods:
 mechanization (particularly in textile
manufacturing)
 mining (particularly coal extraction)
 and metallurgy.
 The Industrial Revolution saw the emergence of
the steam era and new transportation methods.
 Railroads expanded and ships grew faster.
 Shipping costs dropped drastically throughout the 19th
century (Suez Canal and (later) the Panama
 2 THE HISTORY OF GLOBALIZATION
The Second Industrial Revolution – late
19th century
 The emergence of oil and advances in chemistry and
mechanics (i.e. combustion engine).
 Some major innovations transformed modes of
communication.
 The first underwater transatlantic cable came into operation,
making information almost instantaneous.
 Distances became more manageable.
prices were set on a global scale (wheat prices in the US and
GB)
 New laws facilitated capital movements between
countries and across continents:
 Invested abroad.
 supported free trade (abolished the Corn Laws)
 2 THE HISTORY OF GLOBALIZATION
The two World Wars
stall the globalization process (1914-45)
 The First World War caused a trade downturn in most
Western countries, except the United States.
 In 1913, exports represented only 3.7% of its GDP,
compared with 17.5% in the UK, 16.1% in Germany and
7.8% in France.
 the US became one of the largest global exporters of
agricultural products
 It only regained half of the lost ground by the eve of the
Second WW in 1938, which destroyed the fragile
recovery.
 During the first half of the 20th century, countries
willingly or unwillingly placed obstacles in the way of
globalization.

 On the contrary, the second half of the 20th century

 2 THE HISTORY OF GLOBALIZATION
Growing economic integration in a divided
world (from 1945 to the 1990s)
 From the post-war period to the 1990s, the
logic of the Cold War and decolonization – and
particularly the Non-Aligned Movement of
countries – fostered world fragmentation.
 Governments experimented with several
political and economic models within their own
borders or areas of influence.
 Even though globalization progressed unevenly,
economic ties grew tighter inside
these areas.
 2 THE HISTORY OF GLOBALIZATION
Growing economic integration in a divided
world (from 1945 to the 1990s)
 An ecosystem that promoted trade took root under
the combined effects of the Bretton Woods
framework and technological progress. This
environment facilitated global economic
integration, of which MNEs were a vital driver.
 Political developments also had a considerable
impact on globalization.
 Technological advances played a major role at the
end of the war, as is the case at every stage of
intensive globalization.

 The post-war period marked a rejection of

 3 THE DRIVERS OF GLOBLAIZATION

Two main drivers

 The increasing of technology development.
 The reducing of trade barriers.
A two-way relationship exists between
technology and trade. Technology
drives trade and trade is one
of the factors shaping
technological progress.
 3 THE DRIVERS OF GLOBLAIZATION

The drivers

 Trade affects technological progress through

incentives to innovate and through
technology transfers.
 Incentives for firms to innovate that are
affected by trade include
 market size,
 competition
 and technological spillovers.
 3 THE DRIVERS OF GLOBLAIZATION

The drivers

 Trade also affects institutions that shape the

economic incentives facing firms.
 Imports of technologically advanced goods
provide access to the technologies they
embody.
 Exporting is also a channel of technology
transmission.
 3 THE DRIVERS OF GLOBLAIZATION

The drivers: Technology

 Innovation makes an
important contribution to the
reduction of transportation
costs.
 3 THE DRIVERS OF GLOBLAIZATION

The drivers: Technology

 Technological advances played a major role

at the end of the war, as is the case at every
stage of intensive globalization:
1. The development of commercial civil
aviation brought operators closer together
2. Productivity also grew in the merchant
marine
3. The telephone as the main mode of
communication.
 Cost of a 3-Minute Telephone Call,
New York to London
(Constant 1990, U.S. $)

350

300

250

200

150

100

50
$0.30
0
19 1940 1950 1960 1970 1980 1990
30
 3 THE DRIVERS OF GLOBLAIZATION

The drivers: Trade Barriers

 Lowering trade barriers is one of the most

obvious means of encouraging trade.
 The barriers concerned include customs duties (or tariffs)
and measures such as import bans or quotas.
 In addition, international trade provides a
channel of communication that favors cross-
border learning of production methods,
product design and market conditions.
4 GLOBALIZATION: INSTITUTIONS

Institutions
 4 GLOBALIZATION: INSTITUTIONS

Roles

 Institutions are needed to:

 help manage, regulate, and police the global
marketplace
 promote the establishment of multinational treaties
to govern the global business system
 4 GLOBALIZATION: INSTITUTIONS

IMF & WB
 International Finance & International Trade.
 Bretton Woods Conference (1994, Mount
Washington Hotel, rural Bretton Woods, New
Hampshire).

"The economic health of every country is a proper

matter of concern to all its neighbors, near and far.”
– US President Franklin D. Roosevelt
at the opening of Bretton Woods
 4 GLOBALIZATION: INSTITUTIONS

IMF & WB
“We, the delegates of this
Conference, Mr. President,
have been trying to
accomplish something very
difficult to accomplish.[...] It
has been our task to find a
common measure, a common
standard, a common rule
acceptable to each and not
irksome to any.”
- Keynes at at the closing
plenary session of the Bretton
Woods
4 CÁC THỂ CHẾ TOÀN CẦU

IMF & WB – Hoàn cảnh ra đời

 4 GLOBALIZATION: INSTITUTIONS

Bretton Woods

 The delegates focused on two key issues:

1. how to establish a stable system of exchange
rates
2. how to pay for rebuilding the war-damaged
economies of Europe
two international organizations to deal with
these problems.
1. IMF: enforce a set of fixed exchange rates that
were linked to the dollar.
 4 GLOBALIZATION: INSTITUTIONS

IMF

 The IMF was conceived in July 1944.

 The IMF came into formal existence in
December 1945, when its first 29 member
countries signed its Articles of
Agreement.
 It began operations on March 1, 1947. Later
that year, France became the first country
to borrow from the IMF.
 The IMF's membership began to expand in
 4 GLOBALIZATION: INSTITUTIONS
IMF: Original aims
 The founders aimed to build a framework for economic
cooperation that would avoid the global conflict.
 Since then the world has changed, the IMF continues
to:
• provide a forum for cooperation on international monetary
problems
• facilitate the growth of international trade, thus promoting job creation,
economic growth, and poverty reduction;
• promote exchange rate stability and an open system of international
payments; and
• lend countries foreign exchange when needed, on a temporary basis and
under adequate safeguards, to help them address balance of payments
problems.
 4 GLOBALIZATION: INSTITUTIONS

IMF: Key activities

• Policy advice to governments and central banks based
on analysis of economic trends and cross-country
experiences;
• Research, statistics, forecasts, and analysis based on
tracking of global, regional, and individual economies
and markets;
• Loans to help countries overcome economic
difficulties;
• Concessional loans to help fight poverty in developing
countries; and

• Technical assistance and training to help countries

 4 GLOBALIZATION: INSTITUTIONS

IMF: Decision-making power

Managing Director:
Decision-making power:
Quota subscription:
 USA (18%)
 Germany, Japan, France and
UK (5% each)
 Saudi Arabia (3.5%)
6 countries have about 40% of the decision-
making power
 4 GLOBALIZATION: INSTITUTIONS

IMF: Surveillance
 Surveillance
 The IMF is mandated to
oversee the international
monetary system and
monitor the economic
and financial policies of
its 188 member
countries. This activity is
known as surveillance.
 Highlights possible risks to stability and advises on
 4 GLOBALIZATION: INSTITUTIONS

IMF: Technical Assistance

 Technical Assistance
supports the development of the
productive resources of
member countries by helping
them to effectively manage
their economic policy and
financial affairs.
 helps countries to strengthen their capacity in both human

and institutional resources, and to design appropriate

 4 GLOBALIZATION: INSTITUTIONS

IMF: Lending
 Lending
A core responsibility of
the IMF is to provide
loans to member
countries experiencing
actual or potential
balance of payments
problems.
 enables countries to rebuild their international
reserves, stabilize their currencies, and restore conditions.
 4 GLOBALIZATION: INSTITUTIONS

WB
The World Bank is different from the World Bank Group,
an extended family of five international organizations:
 International Bank for Reconstruction and Development
(IBRD) - 1945
 International Development Association (IDA) - 1960
 International Finance Corporation (IFC) - 1956
 Multilateral Investment Guarantee Agency (MIGA) -
1988
 International Centre for Settlement of Investment
Disputes (ICSID) - 1966
 4 GLOBALIZATION: INSTITUTIONS

WB: Introduction
 WB is not a bank in the ordinary sense but a
unique partnership to reduce poverty and support
development.
 Managed by 188 member countries: the IBRD and
the IDA.
 The IBRD aims to reduce poverty in middle-income and
creditworthy poorer countries ( GDP>$1305)
 while IDA focuses exclusively on the world’s poorest
countries (GDP<$805)
 Established in 1944, headquartered in Washington,
D.C: 9,000 employees, >100 offices worldwide.
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WB: Strategy
Six strategic themes drive the Bank’s work, focusing
on:
1. the poorest countries
2. fragile and conflict-affected states,
3. the Arab world,
4. middle-income countries,
5. global public goods issues,
6. and delivery of knowledge and learning
services.
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WB: Strategy
Also strategies for the key areas
 Thematic and sector strategies:
 reduce poverty in a specific sector or aspect
of development.
 Country assistance strategies:
 support a country in reducing poverty and
achieving sustainable development.
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UN: Introduction
 Founded in 1945 after the Second World
War(1939–1945) by 51 countries committed
to maintaining international peace and
security, and promoting social progress.
 The UN can take action on a wide range of
issues, through:
 the General Assembly,
 the Security Council,
 the Economic and Social Council,
 and other bodies and committees.
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UN: History
 After the League of Nations failed to
prevent WW II  third world war?
 Franklin D. Roosevelt first coined the term
'United Nations' as a term to describe
the Allied countries.
 Officially used on 1 January 1942, when 26
governments signed the Atlantic Charter.
 On 25 April 1945, the UN Conference on
International Organization drafting the United
Nations Charter.
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UN: main purposes

4 main purposes:
 To keep peace throughout the world;
 To develop friendly relations among nations;
 To help nations work together to improve the
lives of poor people, to conquer hunger, disease
and illiteracy, and to encourage respect for
each other’s rights and freedoms;
 To be a centre for harmonizing the actions of
nations to achieve these goals
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UN
4 GLOBALIZATION: INSTITUTI ONS

UN
4 GLOBALIZATION: INSTITUTI ONS

UN
5 OPPORTUNITIES AND CHALLENGES

OPPORTUNITIES
5 OPPORTUNITIES AND CHALLENGES

OPPORTUNITIES
 5 OPPORTUNITIES AND CHALLENGES

OPPORTUNITIES
The Global Competitiveness Report
(GCR) is a yearly report published by
the World Economic Forum.
5 OPPORTUNITIES AND CHALLENGES

CHALLENGES
5 OPPORTUNITIES AND CHALLENGES

CHALLENGES
5 OPPORTUNITIES AND CHALLENGES

CHALLENGES
5 OPPORTUNITIES AND CHALLENGES

CHALLENGES
5 OPPORTUNITIES AND CHALLENGES

CHALLENGES
Globalization’s impact has, generally, been viewed pessimistically
Cons Increased environmental damage
increased poverty, inequality, injustice
erosion of traditional culture
Corporations are motivated by profit
and have little concern for people
economic globalization developments
feed into ethnic, religious, and factional
tensions that lead to wars and help
breed terrorism
Terrorists now globally interconnected
and empowered with knowledge, create
a whole new category of warfare based,
in part, on the disruption of the
interconnections which are both created
by and necessary for globalization
Corporations shape political policy of
countries e.g. over fishing
 Pros
increases economic
prosperity and opportunity
higher degrees of political
and economic freedom in the
form of democracy
Improved standard of living
– reduction in poverty
 Improved gender relations
 Increased life-span
 Globalization Issues
 Poverty: Enhanced or Diminished?

 Child Labor: Increased or Reduced?

 Women: Harmed of Helped?
 Democracy at Bay?
 Culture Imperiled or Enriched?
 Wages and Labor Standards at Stake?
 Environment in Peril?
 Corporations: Predatory or Beneficial?
 READINGS

 Friedman, Thomas. 1999. The Lexus and

Olive tree.
 Friedman, Thomas L. 2005. The world is
Flat.
 Stiglitz, Joseph E.2002. Globalization and Its
Discontents.
 Stiglitz, Joseph E.2006. Making Globalization
Work.