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INTERNATIONAL FINANCE (BS419/THM407

UNIT TWO (2)


GLOBALISATION, TRADE LIBERALISATION AND ECONOMIC
INTEGRATION
1.

GLOBALISATION

1.1

Globalisation has helped driving change in the world: has brought about
increased trade, reduced poverty, increased business dealings, increased
foreign investments, access to technology, increased international financial
activities etc.
What do you understand by the term globalization?
What are the globalization issues affecting international business and
international finance?
Globalisation Defined:
Globalisation website define Globalisation as expansion of global linkages,
organisations of social life on global scale, and growth of global
consciousness, hence consolidation of World society
Friedman T.L (1999), defined Globalisation as The inexorable integration of
markets, nation-states and technologies to a degree never witnessed before
in a way that is enabling individuals, corporations and nation-states to reach
around the world further, faster, deeper and cheaper than before; the spread
of free market capitalism to virtually every corner in the world

Globalization (or Globalisation) refers to the increasing global relationships of culture,


people and economic activity. Most often, it refers to economics: the global distribution
of the production of goods and services, through reduction of barriers to international
trade such as tariffs, export fees, and import quotas. Globalization contributes to
economic growth in developed and developing countries through increased specialization
and the principle of comparative advantage.[1][2] The term can also refer to the
transnational circulation of ideas, languages, and popular culture.

According to Hill, 2009, Globalisation is the shift toward a more integrated


and interdependent world economy
Redding, cited in Hartungi, 2006, defines Globalisation as the increasing
integration between the markets for goods, services and capital and at the
same time the breakdown of borders

1.2

Drivers of Globalisation
Technological change eg ICT has increased connectivity between people

1.3

1.3

Declining trade barriers


Dec lining investment barriers
Changing demographics, cultural and other societal aspects eg beliefs,
clothing, consumption preferences etc
Effects of Globalisation
Enlarged markets eg financial markets through globalization of markets
More goods and services through globalization of production
Global institutions eg WTO, UN, World Bank etc
IT and knowledge proliferation
Reduced trade barriers through commodity agreement, trade blocs and most
favoured nations
Increased international financial transactions
Increased need for more accountability and reliability in international financial
reporting
There are also negative effects eg stiff competition, cultural imposition by the
powerful to less powerful nations etc.
Recent Trends in the Globalisation of the World Economy