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GLOBALISATION
ERA
Introduction and
Definition:
The social and economic process
through which the borders of
geography, national politics and
culture are overcome by global
flows of capital, technology,
investment and trade at a highly
accelerated rate.
WHAT IS
GLOBALISATION?
Globalisation is an ‘Umbrella’ term
defined precisely by IMF as the
growing economic interdependence of
countries worldwide through
increasing volume and variety of
‘cross-border’ transactions in
goods and services, ‘free
international capital flows’ and
more rapid and widespread diffusion
of technology.
FREE MOVEMENT OF
GOODS

FREE FREE
MOVEMENT MOVEMENT
OF GLOBALISATION OF
CAPITAL TECHNOLOGY

FREE MOVEMENT OF
SERVICES
Why Globalisation

New opportunities to developing countries

Greater access to developed country markets

Technology transfer lead to improved productivity

Higher living standard


Tools of Globalisation

OUTSOURCI
NG

+ =
GLOBALISA
TION

IT
Theories of Globalization
• A. Globalization is good and all have
benefited.
– Frances Fukuyama End of History and the Last Man
– Thomas Friedman, The Flat Earth, 2005
• Global players: Nandan Nilekani (CEO, Infosys in India),
Walmart, UPS etc.
• World is flat playing field and has shrunk in size due to
communications/technology
• B. Globalization is the Victory of
Corporate Power:
– Globalization is generally bad
– David Korten When Corporations Rule the World,
1995.
• Globalization has caused
– Poverty
Theories of Globalization
• C. Globalization is the end of the
nation state
– Kenichi Ohmae The End of the Nation State:
The Rise of Regional Economics
– David Held, Democracy and Global Order
• D. Globalization benefits some more
than others:
– Joseph Stiglitz: Globalization and Its
Discontents 2001
• Capital market liberalization not the answer in all
markets
• Globalization benefits certain parties
• Excessive reliance on market fundamentalism
Globalization: Historic
Background
Globalization: Components
Modernization: the upgrading of technologies
and living standards that occur as ideas,
products, and services diffuse through world
markets
Westernization: the emulation of lifestyles and
behaviors of Western societies, most notably
those of North America and Western Europe
Globalization: Historic
Background
qThe Exploration Era to 1500
qCivilization of Latin America (Incas,
Mayans, Aztecs), Asia (India & China),
Western Europe (Romans) and Egypt
(pharaohs and pyramids)
qSixth century B.C.: Silk Road from
Middle East to China
qRoman Empire established trade routes
and common currency
q12th & 13th centuries: Major
navigational advances for sail ships
q15th century: Major period of
exploration to Americas, Africa and Asia
Globalization: Historic
Background
q 1900-today: The Era of the Modern International
Corporation
Ø 1900-1945: Company Internationalization
Ø “Companies began to replace countries as the major
catalysts of economic and cultural change” Aided by air
travel, automobiles, radio and television
Ø 1945-1980: Era of Increasing International
Competition
Ø “Corporations began to reassert themselves in
international markets” European and Japanese
companies challenge US corporations in international
markets
The Major Catalysts of Post 1980
Globalization
Ø International Trade: GATT and WTO.
Trade increases to about $8 trillion in
2002
Ø Trade Blocs: Trade blocs to facilitate
commercial interactions among
members: EU, NAFTA
Ø Foreign Direct Investments (FDI):
International companies make
investments in factories, plant and
machinery in non-domestic markets. 10
fold increase over 1980-2002 to over $7
trillion
Ø Global Movements towards Capitalism:
Benefits and Drawbacks of
Globalization
A. Benefits
– Increase in overall wealth b/w 1950 - 1995
• Global economic output from $ 6.4 trillion to $35.5 trillion
• Trade went from .4 trillion to 5 trillion

n Ease of travel, communication, information


n Exchange of Cultures
n International Democratization
Benefits and Drawbacks of
Globalization
B. Drawbacks
– Globalization benefits rich and does little for poor
– Growing Inequalities
• Despite increase in wealth persistent and enormous gap
between rich and poor in world
Benefits and Drawbacks of
Globalization
B. Drawbacks of Globalization
– Loss of Sovereignty
• International Instruments
• Regional Instruments
– Common currency
– Trading Agreements

– Neocolonialism?
• Case Study: Malaysia
– Stanley Fish IMF
» ‘sick patient’
– PM Malathir of Malaysia
» West creates dependency/deliberately manipulate
currency for their own profit
» Conditions of bail out = neocolonialismm
Benefits and Drawbacks of
Globalization
B. Drawbacks of Globalization
– Backlash against West rooted in anger
• Inequality and poverty
• Sense of rules not fair to all
– Violent Protest
– Terrorism
– Negative implications for environment?
• Globalized economy assumes perpetual growth
• Consumption of non-renewable resources
– ‘Addiction to oil’ goes global
• Increase in waste products
– Global warming
Political Implications of
Globalization
• A. Increased Growth/Wealth (Vincente
Fox)
• B. Economic Inequality (75% of world is
poor)
• C. Political Instability (Indonesia)
• C. Loss of Sovereignty (IMF in Asian
Crisis)
• D. Pressures on Immigration and
Borders (Mexican crisis - flood of
economic immigrants)
• E. Environmental Impact of Growth
Globalization and the Developing
World
Up to 1985, the Triad nations of North
America, Western Europe, and Japan
were dominant in world commerce
As developing markets opened up to
trade and investments, so new ideas
and technologies began to contribute to
economic and cultural change
The diffusion of technologies and
consequent modernization processes
have barely impacted many emerging
CONCLUSION:
-

We’re witnessing no less than a paradigm shift in the


global business and consumer landscape. The ability
to interpret, navigate and respond to capital flows and
investments, talent and intellectual property, energy
and resource allocation, connectivity and information
transparency, GDP and consumer purchase influence,
and innovation will define the future success of every
business aspiring to position itself for success in the
post-globalization environment.
PRESENTED BY :-