Economic Globalization Average Tariff Rates on Manufactured Products

 is a historical process, the result of human

innovation and technological progress.
 increasing integration of economies around
the world, particularly through the
movement of goods, services, and capital
across borders.
 movement of people (labor) and knowledge
(technology) across international borders.

The phenomenon can thus have several

interconnected dimensions, such as:

1. the globalization of trade of goods and services;

2. the globalization of financial and capital
markets;
3. the globalization of technology and
communication; and
4. the globalization of production

Global Market

1. The proliferation of the Internet and the

emergence of market places like eBay
2. Tramp shipping, international shipping industry,
a certain market segment in which vessels that
operate do not trade regularly between certain
fixed ports. MULTINATIONAL CORPORATIONS
3. The market for foreign exchange is the largest
Multinational corporation (MNC) is usually a
market in the world in terms of turnover.
large corporation incorporated in one country which
GLOBALIZATION produces or sells goods or services in various countries.
The two main characteristics of MNCs are their large
Globalization has been around since the size and the fact that their worldwide activities are
15th century when European exploration & centrally controlled by the parent companies.
colonization created global empires & markets,
but most historians and economists agree that How do global corporations function?
today is special by the extent of
International companies are importers and
interdependence and the speed by which it has
exporters, typically without investment outside of their
occurred.
home country
Drivers of Globalization
Multinational companies have investment in
Two factors underlie globalization: other countries, but do not have coordinated product
offerings in each country.
1. “Decline in barriers to the free flow of goods,
services, and capital” that has occurred since
the end of World War II
2. Technological change

Declining Trade and Investment Barriers

During the 1920s and ‘30s, many nations

erected formidable barriers to international trade and
foreign direct investment

Advanced industrial nations of the West

committed themselves after World War II to removing
barriers to the free flow of goods, services, and capital
between nations.

THE ROLE OF TECHNOLOGY
 Technology is the vital force in the modern
form of business globalization.
 Technology has revolutionized the global
economy and has become critical
competitive strategy.
 The technological advancement has helped
a lot in creation and growth of global
market.
Lowering of trade barriers made globalization
possible;
Technology has made it a transforming movement
“World Wide Web” has exploded in last 20 years
Computers can move money around the world =
“finance capital”
Silicon Valley is 9th largest economy in world!
Why it is called Silicon Valley?
A region on the San Francisco Peninsula in
California where the miniaturized electronics
industry is centered, so called because most of the
devices built there are made of semiconductors
such as silicon.
What companies are located in Silicon Valley?
ECONOMIC GLOBALIZATION
Economic globalization refers to the increasing
interdependence of world economies as a result of
the growing scale of cross-border trade of
commodities and services, flow of international
capital and wide and rapid spread of technologies.
EARLY CAPITALIST IDEAS
The first stage of capitalism came about during
the 17th century, when merchants gradually
became more involved in the production of goods
by supplying materials and paying wages. The
merchant made the transition to capitalism by
making profits from the ownership and control of
the means of production.
It has three main ideas:
1. Free-market Economy - proposed by
Adam Smith in his book, Wealth of the
Nations, 1776
2. Division of labor - the separation of a
work process into a number of tasks,
with each task performed by a separate
person or group of persons. It is most
often applied to systems of mass
production and is one of the basic
organizing principles of the assembly
line.
3. Competition - serves as the driving
force for creative innovation, the
mechanism by which market supplies
and demands are brought into
coordinated balance ...
TODAY: Economies are
increasingly linked together.
NAFTA- The North American Free Trade Agreement
(NAFTA) is a treaty entered into by the United States,
Canada, and Mexico; it went into effect on January 1,
1994. (Free trade had existed between the U.S. and
Canada since 1989.