Introduction to Globalization

Globalization
 Is the process of interaction and integration among people, companies and
governments worldwide. Globalization has accelerated since the 18 th century due
to advances in transportation and communication technology.
 Is the increasing interaction of people, states or countries through the growth of
the international flow of money, ideas and culture.
 It is the interconnectedness of people and business across the world that
eventually lead to global, cultural, political and economic integration.
 It is the ability to move and communicate easily with others all over the world in
order to conduct business internationally.
 It is the free movement of goods, services and people across the world on a
seamless and integrated manner.
 It is the liberalization of countries of their impact protocols and welcome foreign
investment into sectors that are mainstays of its economy.
 It refers to countries acting like magnets attracting global capital by opening
up their economies to multinational corporations.
Expanded Definition of Globalization (as defined by Several Authors)
 Globalization as those processes by which people of the world are incorporated
into a single world society. (Martin Albrow and Elizabeth King)
 Globalization as the intensification of worldwide social relations which link
distant localities in such a way that local happenings are shaped by event
occurring many miles away and vice versa. (Anthony Giddens)
 Globalization as the compression of the world and intensification of the
consciousness of the world as a whole. (Roland Robertson)
Historical Foundation of Globalization (important events that shaped the evolution of
Globalization)
 1930 – The word “globalize” as a noun appeared in a publication entitled
Towards New Education where it denoted a holistic view of human experience
in education.
 1970 – The word “globalization” was coined.
 1981 – The term “globalization” had been used in its economic sense.
 1987 – Charles Taze Russell coined a related term CORPORATE GIANTS.
 Early 2000s – The International Monetary Fund (IMF) identified four basic steps
of globalization.
o Trade and Transactions
o Capital and Investment Movements
o Migration of Knowledge
o Dissemination
 2017 – The term “globalization” was often used in teaching, discussion,
meetings and conferences, lectures and so on.
  2018 – Phenomenon of globalization is now on full swing in all academic
disciplines.
Indicators of Globalization
 The jet engine, internet, e-banking, e-bike, LRT, MRT and other inventions of
science and technology are attribute to the spread of globalization.
 Likewise, environmental challenges such as global warming, cross-boundary
water, air pollution and over-fishing of the ocean are linked with globalization.
 Three Major areas of Globalization
o Economic
o Cultural
o Political
Nature of Globalization
 Globalization is a conglomerate of various multiple units located in the different
parts of the globe which are linked by common ownership.
 Multiple units draw on a common pool of resources such as money, credit,
information, patents, trade names and control systems.
Dimensions of Globalization
1. Planning to expand the business on a worldwide scope.
2. Giving up the distinction between domestic and foreign market and instead
developing a global of such business.
3. Locating the production and the physical facilities of the business by considering
global business dynamics irrespective national consideration.
4. Creating products development and production planning on a global market
sphere.
5. Global sourcing of the factors of production such as raw material components,
machinery, technology, finance and others that are obtained from the best source
anywhere in the world.
6. Global orientation or organization
Reasons for Globalization
 (insert)
Why we have to globalize in this Contemporary World?
1. Rapid shrinking of time and distance across the world.
2. Domestic markets are no longer rich.
3. Companies and institutions go global.
4. To get the technological and managerial “know-how” of other countries.
5. To reduce high transportation costs.
6. To be close to raw materials and to markets for their finished products.
7. The creation of the World Trade Organization (WTO) had made it possible in
stimulating increased cross border trade.
Five stages of Globalization
1. The arm’s length service activity of an essentially domestic company or institution
which moves into new market overseas by linking up with local dealers and
distributors.
2. The company/institution takes over these activities on its own.
3. The domestic-based company/institution begins to carry out its own
manufacturing, marketing and sales in key foreign markets.
4. The company/institution moves to a full insider position in these markets
supported by a complete business system including Research and Development
and engineering.
5. The company/institution moves towards a genuinely global mode of operation.
Global localization happens, that is company/institution serves local customers in
markets around the globe responding to their needs.
Merits of Globalization
 Global competition and imports keep a lid on prices.
 An open economy spurs fast innovation with fresh ideas from abroad.
 Exports jobs often pay more than other jobs.
 Unfettered capital flow keeps interest rates low.
 Living standards grow up faster.
 Productivity grows more quickly.
 Countries liberalize their visa rules and procedures.
 It results in freeing up the unproductive sector to investment and the productive
sector to export.
Demerits of Globalization
 Several people lose their jobs.
 Workers face pay cut demands from employers.
 Unregulated globalization can cause serious problems.
 High foreign stakes on industries.
 Sovereignty of a country and company may be at stake.
Importance of studying Globalization
 There is greater demand in business and industry, health, engineering and
technology.
 There is a greater demand of promoting the local business and industries to
other countries.
 The contemporary world face global challenges that will take interdisciplinary
groups to solve these challenges.
 Creating meaningful, harmonious and workable relationship that link globally.
 Knowledge of the merits, demerits and reasons for globalization will enable the
students to work as model of collaborative international team soon.
  Globalization is the expansion of local economies and businesses into a broader
international marketplace.
 Small businesses have gotten active in the global environment as the internet
and mobile technology have enabled communication across continents and
countries.
The Structures of Globalization
What is Global Economy?
Referred as World Economy
It refers to the International Exchange of Goods and Services that is expressed in
monetary units of money.
It also means as the free movement of goods, capital, services, technology and
information.
World Economy
It is exclusively limited to human economic activity and is typically judged in
monetary terms.
Typical examples are illegal drugs and other black market goods which by any
standard are a part of the world economy but for which this is by definition no
legal market of any kind.
Global Economy/Economic Globalization
Concerned on the globalization of production, finance, markets, technology,
organizational regimes, institutions, corporations and labor.
Market Integration
When prices among different location or related goods follow the same patterns
over a long period of time.
When groups of prices often move proportionally to each other and when this
relation is very clear among different markets.
International Financial Institutions (IFIS)
1. International Monetary Fund (IMF)
2. Multilateral Development Banks (MDBS)
a. World Bank Group
b. African Development Bank
c. Asian Development Bank
d. Inter-American Development Bank
e. European Bank for Reconstruction and Development
Membership Composition of IFIS
1. Only sovereign countries are admitted as member-owner.
2. Include borrowing developing countries and developed donor countries.
3. Membership in Regional Development Banks include countries around the world
as members
 4. Has its own independent legal and operational states.

Objectives of IFIS
International Monetary Fund (IMF) provides temporary financial assistance to
member countries.
Multilateral Development Banks (MDBS) provide financing for development to
developing countries
o Long-term loans with maturities of up to 20 years
o Very long-term loans sometimes called as credit with maturities of 30-40
years.
o Grant financing by some MDBS for technical assistance advisory service
or project preparations.
History of Global Market Integration
1882 and 1936 – Labor Market Integration in ASIA from South India to
Southeastern China
1880s – Steamships replaced sailing vessels for transport within ASIA.
Late 19th Century – Gave rise to Integrated Asian Labor Market and a period of
real wage convergence.
Comparison between Global Corporations and International Company
Global Corporation International Company
Operates in more than one country. It has headquarters, like us but also does
Has significant investments and facilities business overseas and might have a
in multiple countries. large presence in multiple areas,

Global Interstate System

Consists of International Division of Labor
1. Core – developed and industrialized countries
2. Semi-periphery – developing countries
3. Periphery – underdeveloped and poor countries
The world system theory stresses not for individual states but on the relations
between the three groupings.
Global Governance
Sometimes referred as world governance
The process of designating laws, rules or regulations intended for a global scale.
Global governance is not a singular system. There is no world government but
the many different regimes of global governance do have commonalities.
Effects of Globalization Governance
Globalization restrains governments by inducing increased budgetary pressure.
 As a consequence, governments may attempt to curtail the welfare state which is
seen a drag on international competitiveness by reducing their expenditure on
transfers and subsidies.
World System
Deals with Inter-Regional and Transnational Division of Labor
o (1) Core countries
 Focus on higher skill, capital intensive production
o (2) Semi-periphery and (3) Periphery countries
 Focus on low skill, labor intensive production and extraction of raw
materials.
World-System Theory
It is also known as World-Systems Analysis or World-Systems Perspectives.
World system theory is a multidisciplinary, macro-scale approach to world
history and social change which emphasizes the world-system (and not nation
states) as the primary (but not exclusive) unit of social analysis.