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SMU MBA-4 2011 ASSIGNMENT MB0037-SET1

SMU MBA-4 2011 ASSIGNMENT MB0037-SET1

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SMU ,MBA-4,HR, 2011 ASSIGNMENT, MB0037-SET1
SMU ,MBA-4,HR, 2011 ASSIGNMENT, MB0037-SET1

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Published by: SAMDAVIDCB on May 26, 2011
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SMU/MBA/ASSIGNMENT/MB0037/SET-1/L. C. CODE 0120
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Name SAM. C. B. DAVIDRole No. 520960228L.C .No.00120Master of Business Administration -MBA Semester IVSubject Code – MB0037-
Subject Name International Business ManagementAssignment Set- 1
Q.1 What is globalization? What are its benefits? How does globalization help in international business? Give some instances
.
Economic "globalization" is a historical process, the result of human innovationand technological progress. It refers to the increasing integration of economiesaround the world, particularly through trade and financial flows. The termsometimes also refers to the movement of people (labor) and knowledge(technology) across international borders. There are also broader cultural, politicaland environmental dimensions of globalization that are not covered here.At its most basic, there is nothing mysterious about globalization. The term hascome into common usage since the 1980s, reflecting technological advances thathave made it easier and quicker to complete international transactions – both tradeand financial flows. It refers to an extension beyond national borders of the samemarket forces that have operated for centuries at all levels of human economicactivity – village markets, urban industries, or financial centers.
 
SMU/MBA/ASSIGNMENT/MB0037/SET-1/L. C. CODE 0120
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Markets promote efficiency through competition and the division of labor – the specialization that allows people and economies to focus on what theydo best. Global markets offer greater opportunity for people to tap into more andlarger markets around the world. It means that they can have access to more capitalflows, technology, cheaper imports, and larger export markets. But markets do notnecessarily ensure that the benefits of increased efficiency are shared by all.Countries must be prepared to embrace the policies needed, and in the case of thepoorest countries may need the support of the international community as they doso.Globalization is not just a recent phenomenon. Some analysts have argued that theworld economy was just as globalized 100 years ago as it is today. But todaycommerce and financial services are far more developed and deeply integrated thanthey were at that time. The most striking aspect of this has been the integration of financial markets made possible by modern electronic communication.The 20
th
The story of the 20century saw unparalleled economic growth, with global per capita GDPincreasing almost five-fold. But this growth was not steady – the strongestexpansion came during the second half of the century, a period of rapid tradeexpansion accompanied by trade – and typically somewhat later, financial –liberalization. Chart 1 break the century into four periods. In the inter-war era, theworld turned its back on internationalism – or globalization as we now call it – andcountries retreated into closed economies, protectionism and pervasive capitalcontrols. This was a major factor in the devastation of this period, when per capitaincome growth fell to less than 1 percent during 1913-1950. For the rest of thecentury, even though population grew at an unprecedented pace, per capita incomegrowth was over 2 percent, the fastest pace of all coming during the post – WorldWar boom in the industrial countries.
th
Globalization means that world trade and financial markets are becoming moreintegrated. But just how far have developing countries been involved in thisintegration? Their experience in catching up with the advanced economies hascentury was of remarkable average income growth, but it isalso quite obvious that the progress was not evenly dispersed. The gaps betweenrich and poor countries, and rich and poor people within countries, have grown.The richest quarter of the world’s population saw its per capita GDP increasenearly six-fold during the century, while the poorest quarter experienced less than athree-fold increase (Chart 1). Income inequality has clearly increased. But, asnoted below, per capita GDP does not tell the whole story.
 
SMU/MBA/ASSIGNMENT/MB0037/SET-1/L. C. CODE 0120
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been mixed. Chart 2
 
shows that in some countries, especially in Asia, per capitaincomes have been moving quickly toward levels in the industrial countries since1970. A larger number of developing countries have made only slow progress orhave lost ground. In particular, per capita incomes in Africa have declined relativeto the industrial countries and in some countries have declined in absolute terms.Chart 2b illustrates part of the explanation: the countries catching up are thosewhere trade has grown strongly.Consider four aspects of globalization:·
Trade:
Developing countries as a whole have increased their share of world trade– from 19 percent in 1971 to 29 percent in 1999. But Chart 2b shows greatvariation among the major regions. For instance, the newly industrializedeconomies (NIEs) of Asia have done well, while Africa as a whole has faredpoorly. The composition of what countries export is also important. The strongestrise by far has been in the export of manufactured goods. The share of primarycommodities in world exports – such as food and raw materials – that are oftenproduced by the poorest countries, has declined.·
Capital movements:
Chart 3
 
depicts what many people associate withglobalization, sharply increased private capital flows to developing countriesduring much of the 1990s. It also shows that:· the increase followed a particularly "dry" period in the 1980s;· net official flows of "aid" or development assistance have fallen significantlysince the early 1980s; and· the composition of private flows has changed dramatically. Direct foreigninvestment has become the most important category. Both portfolio investment andbank credit rose but they have been more volatile, falling sharply in the wake of the financial crises of the late 1990s.·
Movement of people:
Workers move from one country to another partly to findbetter employment opportunities. The numbers involved are still quite small, but inthe period 1965-90, the proportion of labor forces round the world that was foreignborn increased by about one-half. Most migration occurs between developingcountries. But the flow of migrants to advanced economies is likely to provide ameans through which global wages converge. There is also the potential for skillsto be transferred back to the developing countries and for wages in those countriesto rise.

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