Session 16 Globalization There are only two families in the world, my old grandmother used to say, The Haves and the Have-Nots. Cervantes, Miguel de (1547

Session 16Session 16

GlobalizationGlobalization

There are only two families in the world, my old grandmother used to say, The Haves and the Have-Nots.

Cervantes, Miguel de (1547 - 1616)Spanish novelist. Don Quixote, Pt. II, Ch. 20,

1615

What is globalization?What is globalization?


Make the world your sales territory


World IWorld I National economies National economies

were self-contained were self-contained entitiesentities

Barriers to cross-Barriers to cross-border trade and border trade and investmentinvestment

National differences National differences in government in government regulations, culture, regulations, culture, etc.etc.

World IIWorld II Barriers to cross-Barriers to cross-

border trade and border trade and investment are investment are tumblingtumbling

Perceived distance is Perceived distance is shrinkingshrinking

National economies National economies are mergingare merging

Material culture is Material culture is becoming similarbecoming similar

Today factsToday facts

The volume of goods, The volume of goods, services, and services, and investment crossing investment crossing national borders has national borders has expanded faster than expanded faster than world outputworld output

Drivers of Drivers of globalizationglobalization

1.1. Declining trade and Declining trade and investment barriersinvestment barriersProtectionism (1920s – 1930s)Protectionism (1920s – 1930s)WWIIWWIIGATTGATTFrom 1991 to 2000 of the From 1991 to 2000 of the 1121 changes worldwide in 1121 changes worldwide in the laws governing FI, 95% the laws governing FI, 95% created more favorable created more favorable environmentenvironment

word trade >> world outputword trade >> world output

Firms are finding their home Firms are finding their home markets under attack from markets under attack from foreign companies.foreign companies.

CountryCountry 19131913 19501950 19901990 20020000

FranceFrance 21%21% 18%18% 5.9%5.9% 3.9%3.9%

GermanGermanyy

2020 2626 5.95.9 3.93.9

ItalyItaly 1818 2525 5.95.9 3.93.9

JapanJapan 3030 -- 5.35.3 3.93.9

HollandHolland 55 1111 5.95.9 3.93.9

SwedenSweden 2020 99 4.44.4 3.93.9

BritainBritain -- 2323 5.95.9 3.93.9

United United StatesStates

4444 1414 4.84.8 3.93.9

Average tariff rates on manufactured products as %value

Drivers of Drivers of globalizationglobalization2.2. The role of The role of

technological technological changechange

– Microprocessors Microprocessors and and telecommunicationtelecommunicationss

– InternetInternet– Transportation Transportation

technologytechnology

Source: National Science Board, Science and Engineering Indicators - 2000

The Changing The Changing Demographic of the Global Demographic of the Global EconomyEconomy World output and world tradeWorld output and world trade

CountryCountryShare of World Share of World

OutputOutputShare of World Share of World

ExportExport

19631963 20002000 20002000

United United StatesStates

40.3%40.3% 27.0%27.0% 12.3%12.3%

JapanJapan 5.55.5 14.214.2 7.547.54

GermanyGermany 9.79.7 7.37.3 8.78.7

CanadaCanada 3.03.0 2.02.0 4.44.4

ChinaChina NANA 3.23.2 3.923.92

South KoreaSouth Korea NANA 1.41.4 2.72.7

The Changing The Changing Demographics of the Demographics of the Global EconomyGlobal Economy

2. The changing FDI picture2. The changing FDI picture

The Changing The Changing Demographics of the Demographics of the Global EconomyGlobal Economy

3. The changing 3. The changing nature of the MNEnature of the MNESince 1960s, Since 1960s, -The rise of non-US MNEsThe rise of non-US MNEs-The rise of The rise of

mini-multinationalsmini-multinationals

CountryCountry 19731973 19901990 19971997 20002000

USAUSA 48.5%48.5% 31.5%31.5% 32.4%32.4% 26%26%

JapanJapan 3.53.5 1212 15.715.7 1717

UKUK 18.818.8 16.816.8 6.66.6 88

GermanyGermany 8.18.1 8.98.9 12.712.7 1212


0 2 4 6 8 10

FinlandUSA

CanadaIsraelkoreaBrazil

MexicoRussia

VenezuelaIndonesia

Is Globalization threatening your economy?

it is Is not


0 2 4 6 8

NetherlandsUSA

CanadaJapanChina

MexicoIndia

RussiaVenezuela

Attitudes Toward Globalization

negative postitive

Documents

Session 16 Globalization There are only two families in the world, my old grandmother used to say, The Haves and the Have-Nots. Cervantes, Miguel de (1547