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SHORT AND SIMPLE PRESENTATION FOR GLOBALIZATION IN ECONOMICS
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GLOBALIZATION
PRESENTATION BY: 1.KARAN POSHATTIWAR 2.NITIN CHAVHAN 3.ARPIT KHANDELWAL 4.ASHISH KURWANSHI
Globalization
What does “globalization” mean?
◦What are its causes?
◦Why is it proceeding rapidly?
◦What are its aspects?
GlobalizationGlobalization is the system of interaction among the countries of world in order to develop global economy
Power in the hands of stock, bond and currency traders moving fundsaround the world
Multinational corporations looking for most efficient, low-cost producers
MNCs
1-4
Globalization
Private sector primary engine of economic growth
Maintain low inflation and price stability
Shrink government bureaucracy Balance budget
Globalization and the MNE
A multinational enterprise (MNE) is any business that has productive activities in two or more countries
Globalization of Markets
Distinct/separate markets merging into a huge global marketplace◦Mostly NOT consumer product markets
◦Mostly industrial products◦Tastes and preferences of consumers converging (??)
MNCs creating global marketplace?MNCs more vulnerable to competition
in their home markets
“Drivers” of Globalization:
Globalization of markets and production◦result of lowering of trade barriers◦enabled by technological change
Telecommunications and microprocessors
The internet and the world-wide web
Transportation technology
Global Telecommunications
“Drivers” of Globalization:
Average Tariff Rates on Manufactured Products (% value)
1913 1950 1990 2002 France 21 18 5.9 4.0 Germany 20 26 5.9 4.0 Italy 18 25 5.9 4.0 Japan 30 – 5.3 3.8 Holland 5 11 5.9 4.0 Sweden 20 9 4.4 4.0 Britain – 23 5.9 4.0 USA 21 18 5.9 4.0
Global Institutions’ Emergence
Supra-national organizations define the
“rules” of international economic activity:
World Trade Organization (succeeded
GATT)
International Monetary Fund (IMF)
World Bank
United Nations
Globalization and the Global Economy
% share of world output and exports1963 1997 2003 1998 2003
output exports
United States 40.3 20.8 21.1 12.7 11.0Japan 5.5 8.3 7.0 7.3 5.7Germany 9.7 4.8 4.5 10 9.6France 6.3 3.5 3.2 5.7 5.7United Kingdom 6.5 3.2 3.2 4.5 4.7Italy 3.4 3.2 3.0 4.5 4.1Canada 3 1.7 1.9 4.0 3.6China NA 11.3 12.6 3.4 5.0
Globalization of Production
Each MNC◦ Sources particular goods and services from a set
of locations it selects around the world◦ Develops a global web of suppliers as a source of
competitive advantage◦ Decides “where to produce” depending on a
country’s factors of production Labor, land, capital, energy, expertise
Host governments have a stake in the successful establishment of an MNC’s operations
Globalization
Eliminate or lower tariffs, quotas, domestic monopolies
Increase exports Encourage FDI Privatize state owned industries and
utilities
Globalization
Deregulate capital markets Open up stock and bond markets to
direct foreign investment and ownership
Open banking, telecommunications systems to private ownership
Globalization
Citizens able to chose from variety of competing pension options including foreign-run pension and mutual funds
Deregulate economy to promote domestic competition
Eliminate government corruption, kickbacks and subsidies
5 ASPECTS OF GLOBALIZATION
1. ECONOMIC2. TECHNOLOGICAL3. CULTURAL4. POLITICAL5. MILITARY
THESE ASPECTS ARE ALL INTERCONNECTED!
1. ECONOMIC GLOBALIZATION
EARLY CAPITALIST IDEAS:1. “Free Market Economy” (Adam Smith,
Wealth of Nations, 1776)Market is “free” from State control
2. Division of labor
3. Competition
Economic GlobalizationTODAY:
Economies Are Increasingly Linked TogetherEXS: NAFTA (MX, CA, US), The EU, WTO (World Trade Organization)
WTO Top 100 multinationals are all US-owned
companies!
Goal: help producers of goods and services, exporters, and importers conduct their
business
2. TECHNOLOGICALGLOBALIZATION
• “World Wide Web” has exploded in last 10 years
• Computers can move money around world = “finance capital”
The “G” Technology
3. CULTURAL GLOBALIZATION
Cultural Imperialism = Dominance of one culture over others
Hollywood movies, MacDonald’s, Disneyland, Starbucks
Dominance of the English language
and invasion of other languages
CULTURAL GLOBALIZATION
McArabia Kofta
4. POLITICAL GLOBALIZATION
The United Nations: Global assoc. of govts. facilitating cooperation in international law,
security, economic development, and social equi
The US and the UK were the only nations in support of going to war in Iraq
POLITICAL GLOBALIZATIONSouth Africa
• In 2001, US pharmaceutical corporations sued South African companies for infringing on AIDS medication patent laws
• In 2003, President George W. Bush announced the Emergency Plan in 2003 - the largest international health initiative in history by one nation to address a single disease
• HIV/AIDS Situation in 2004HIV Infected: 5.3 millionAIDS Deaths: 370,000AIDS Orphans: 1.1 million
5. MILITARYGLOBALIZATION
Nuclear Bombs F/A-22 Raptor
MILITARYGLOBALIZATION
Global alliances become clear during war time
Ex: Today’s US alliance with Britain in wars against Afghanistan and Iraq
MILITARYGLOBALIZATION
Smart Bombs Sidewinder Missiles
THANK YOU…!!