Globalization

Globalization Defined
Trend toward greater economic,
cultural, political and technological
interdependence among national
institutions and economies

The increased freedom and capacity of

individuals and firms to:
 undertake economic transactions with
residents of other countries
 operate on a global scale
 Strategy of optimizing the available resources
 Global Mindset turns Global village to global table
Globalization Defined
Globalization as ‘Deterritorialization’
 Breakdown of borders of Space and Time

 GLOBALIZATION = INTERNATIONALIZATION

 Not a new phenomena – Colonization,

mercantilism(16th - 18th Century, improvement
in maritime technology than spread of American
and French Revolutions from 18th Century
 Two Phases:
 1870-1913
 1950 onwards
Examples of price decline in of price decline in
transport and communication

 Between the early 1980's and 1996 real

sea freight costs fell 70%.(Great age of
maritime exploration, discovery and
mercantilism)
 Real air freight costs have fallen 3-4% a
year over a long period.
 Real costs of international phone calls fell
4% a year in the developing countries in
the 1990's and 2% a year in the industrial
countries. How much now???????
Measures of Globalization

 Trade integration
 Market Integration
 Financial integration
 Global production networks
 Globalization
Globalization of
Globalization of
production
markets
Dispersal of production
activities worldwide to
Convergence in buyer
minimize costs or
preferences in markets
maximize quality
around the world

•• Reduces
Reducesmarketing
marketingcosts
costs •• Access
Accesslow-cost
low-costlabor
labor
•• New
Newmarket
marketopportunities
opportunities •• Acquire
Acquiretechnical
technicalexpertise
expertise
•• Levels
Levelsincome
incomestream
stream •• Obtain
Obtainproduction
productioninputs
inputs
 Sources of Globalization
 Internationalization of Economic Activity
 Trade & Finance, Economic Centre activity shifting from developed
to developing countries
 Global Liberalization
 Domestic and International

 Technological Changes
 IT Revolution (Speed and Cost)

 Improvements in Transportation, Infrastructure & Cheap labour

 EX: Containerized Shipping, Movement Tracking, Sea/air ports

 Globalized Production Structures

 ‘Stateless Corporations’ (Nike)
 Greater homogeneity, from locality to regional identities like Pan
European, Pan-Asian, Pan-Arab and Pan-American with Unified
market, unified culture, unified language, unified liberal democratic
state with cosmopolitan identities and communities leading to
universal civilization
 Four dimensions of globalization: four
types of change
1. It involves a stretching of
activities across political
frontiers, regions and
continents.
2. It suggests the intensification,
or the growing magnitude, of
interconnectedness i.e. flows of
trade, investment, finance,
migration, culture etc.
3. The growing extensity and
intensity of global
interconnectedness can be
linked to a speeding up of
global interactions and
processes, as the evolution of
diffusion of ideas, goods,
information, capital and people.
4. The growing extensity,
intensity and velocity of
global interactions is
associated with their
deepening impact such that
the effects of distant events
can be highly significant
elsewhere and even the
most local developments
may come to have
enormous global
consequences. In this
sense, the boundaries
between domestic matters
and global affairs become
increasingly blurred.
Stages for Globalization
 Physical movement of good and services from the
country of its origin
 Strengthen and stabilize one overseas market
 Establish a manufacturing base in the importing
country
 Spread the distribution and increase production in
the region
 Mover to other regions by investing and producing
 Global mindset, customer orientation and constant
innovation
 Plan Action, Anticipate risks and hurdles for
successful end results.
Debate
 It’s a two-step link between
globalization and poverty
 Its due to comprehensive domestic
policy measures of openness
 More Opportunities and Level of
Development for developed and
developing countries
Jobs and Wages
Opponents Supporters

 Eliminates jobs in  Increases wealth and

developed nations efficiency

 Forces wages lower in  Generates labor

developed nations market flexibility

 Exploits workers in  Creates jobs in

developing nations developed countries

 Advances economies
of developing nations
 Labor and Environment

Opponents Supporters

 Globalization lowers  Investment raises

labor standards labor standards

 Weakens protection  Open economies

of the environment most environment
friendly
 Exploits workers in
poor nations  Companies concern
for future markets
 Impact on Culture

Opponents Supporters

 Destroys cultural  Specialize and trade

diversity to obtain other goods

 Homogenizes our  Import cultural goods

world from other nations

 Bankrupts local  Protects deeper moral

small businesses and cultural norms
Income Inequality
Income : An Observation
Inequality debate in Support

1 Inequality within nations

Poor people in developing
nations benefit most from
open economy

2 Inequality between nations

Nations open to world trade
and investment grow faster
than rich nations
3 Global inequality
Inequality has fallen, but
experts disagree on the
extent of the decline
Thank You