• What is

globalization?

• Factors
Affecting
globalization

• Pros and Cons of

Lesson 1: Globalization globalization

• Institutions that
BBC 1200- International Business and Trade facilitate
globalization
2nd sem 2019-2020
Mildred Lorenzo-Sotelo
 GLOBALIZATION is a socioeconomic reform
process of eliminating trade, investment, information
technology, and cultural and political barriers across
countries, which in turn can lead to increased
economic growth and geopolitical integration and
interdependence among nations of the world
What is ( Gaspar, et al 2017)
globalization?
Globalization as you experience it:

Imagine yourself sitting and relaxing on a

leather couch in your house, sitting a cup
of coffee , and watching a television show
on Netflix.

• There is a good chance that the leather

couch you are seated on was made in
Italy
• The cup was made by Noritake of
Japan, the coffee bean came from
Kenya but was processed by Nestle of
Switzerland
• The television was manufactured in
South Korea , movie was filmed in
Hollywood
• Perhaps the clothes that you are
wearing are from China
• Your cultural lifestyle has been made possible by certain key aspects of
globalization: the elimination of barriers to trade, investment, culture , and
information technology that separate countries.

• It also reflects the growing integration and interdependence among people,

communities, and economies around the world.

• Globalization has made it possible for goods, services, capital, technology, and
cultures to cross national borders.

• Thus, globalization and international trade are interlinked However,

globalization reaches further. It includes a process of integrating the nations of
the world so that they become more economically efficient and
interdependent.
 Benefits of Globalization:
1. Free trade

• Lower prices for consumers

Pros and • Greater choice of goods
• Bigger export markets for
Cons domestic manufacturers
of
Globalization
2. Free movement of labor

• Increased labor migration gives advantages to both workers and recipient

countries.
- if a country experiences high unemployment, there is an increased
opportunity to look for work elsewhere
- it helps countries with labor shortage to fill important posts

3. Increased economies of scale

-Production is increasingly specialized.
-Globalization enables goods to be produced in different parts of the
world.
-This greater specialization enables lower average costs and lower
prices for consumers.
4. Greater Competition

- “competition breeds efficiency

- increased creativity and innovation

5. Increased investment

- globalization has made it easier for countries to attract short-

term and long-term investment from both local and foreign
businessmen

6. Sharing of culture

- access to foreign culture has became easier

The promise of globalization is higher standard of living for all

 Costs of Globalization:

1. Free trade can harm developing economies

- developing countries often struggle to compete with
developed countries
- “infant industry “argument
Pros and - job losses in advanced industrial economies
- income stagnation for local developing economy workers
Cons
of
Globalization
2. Environmental costs
- globalization increased the use of
non-renewable resources
- firms can outsource production to
where environmental standards are less
strict
- arguably, it is not globalization
itself that caused the degradation of the
environment but the failure of
governments and people to value the
environment
 3. Labor drain
- some countries find it difficult to hold onto their skilled workers who are
attracted by higher wages elsewhere

4. Loss of national identity

- the success of certain cultures throughout the world have caused other
countries to emulate these lifestyles and culture. When cultures begin to lose their
distinctive features, we lose our global diversity.

5. Loss of local control over economic policies and developments

- the developed world still holds the reigns on international order and how
capital flows from country to country
- loans acquired by less developed countries may have provisions that is
compromise its economic sovereignty

You may read :

https://www.cgdev.org/sites/default/files/examining-debt-implications-belt-and-road-initiative-policy-perspective.pdf
 1. Technology
- information technology has fundamentally changed
everything people do in all daily life- at home, at school, at
play , and at work
- internet –related technologies help reduce corporate
and societal hierarchies because of greater access to
information for everyone concerned

Factors 4th Industrial Revolution

The First Industrial Revolution used water and steam power
Affecting to mechanize production. The Second used electric power to
Globalization create mass production. The Third used electronics and
information technology to automate production. Now a
Fourth Industrial Revolution is building on the Third, the
digital revolution that has been occurring since the middle of
the last century. It is characterized by a fusion of technologies
that is blurring the lines between the physical, digital, and
biological spheres.
You may read:
https://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-what-it-means-an
d-how-to-respond
/
2. Transportation
- faster and cheaper transportation systems allow multinational
corporations to build manufacturing facilities across the globe while
maintaining scheduled , frequent deliveries of parts and finished products.
- examples, advances in the aviation system allow businesses to
substitute just-in0time deliveries from remote manufacturing plants in lieu
of large inventories

3. Government Policies
- creation of more competitive markets by implementing
anti-trust laws and minimizing the role of state-owned enterprises
- protection of the property rights
- anti-corruption policies
* illicit dealings undermine economic performance by
raising costs, creating uncertainty, and thwarting completion and
transparency and loss of trust in the government
4. Emerging markets
Decoupling- global shift in
which industrialized country-
dependent developing economies
begin to grow based on their own
underlying economic strengths
rather than the ups and downs of
the world’s richest countries
 1. International Monetary Fund (IMF)
- Conceived in July 1944 at the Bretton Woods Conference
- Created a framework for international economic cooperation to
avoid a repetition of the disastrous economic policies that
contributed to the Great Depression
- IMF tracks global economic trends and performances, alerts its
Institutions members when it sees problems on the horizon, provides a
forum for economic policy dialog, and disseminates information
that Facilitate to governments on how to implement economic reforms to
meet global challenges
Globalization - IMF also lends to countries to help address balance of payment
problems
2. The World Bank
- conceived at the Bretton Woods Conference
- primary role was to aid the reconstruction of Europe after WW II
- today, reconstruction and restructuring economies to make them
efficient remain as the major role of the Bank together with poverty
reduction

3. World Trade Organization

- commenced operation on January 1, 1995, but its
system began in 1948 under General Agreement on Tariffs
and Trade (GATT)
- the WTO addresses the rules of trade between
nations
- the WTO has been an organization for liberalizing
trade, a forum for governments to negotiate trade
agreements, and a place for member governments to
settle trade disputed
The End