Globalisation

Material culture is beginning to look similar. National economies merging into an interdependent global economic system. . global challenges are not solved. Tendency of prescribing same policies throughout However. Perceived distances are shrinking due to advances in transportation and telecommunications.Trade and investment barriers are disappearing. No Comprehensive Definition Available Current conjecture through liberalisation and rapid technological progress is new Neo-Liberalism in 1980s and 1990s.

Globalising developing countries have shifted to manufactured goods exports from primary product exports The relationship between trade liberalization and growth is debatable The impact of trade liberalization and poverty alleviation is indirect.Growth. . In some cases. Empirical evidence of trade and reduction in wage inequality is mixed. Openness and Poverty Poverty level has come down but not equally. Poor management of globalisation could lead to further marginalisation and impoverishment World Trade growth is more than world GDP growth. it has increased. More globalised countries have experienced higher growth and also witnessed declining poverty In general inequality across the world shows a decline but within countries it is rising. Growth and openness has a positive impact on poverty reduction in general.

1 .Volume of world trade and production. 1950-2002 Fig: 1.

services. ideas and people move around the world. capital.Globalisation: Some Issues Transport and ICT • Transport and Communication cost is coming down but digital divide is increasing. . • It has also increased the efficiency with which goods. • Reduction in transportation cost and accessibility of modern communication technology has a positive impact on trade and growth.

They remain underdeveloped and can not attract further FDI. driven by market mechanism and there are presence of moral hazards and financial scams Poorer countries receive very less FDI.Globalisation: Some Issues Issues in Finance Financial crisis leads to depreciation of currency and wide scale unemployment Handling financial crisis is difficult as it is contagious. lack of efficient financial system and institutions and low level of investment . The situation needs attention as ODA has also slowed down. Many developing countries are hesitating to globalise their economies due to insufficient domestic resources.

• Pro-democracy movement (suppressed) in China.The Changing World Order • The fall of Communism in Eastern Europe and the former Soviet Union. • Czechoslovakia has divided itself into two states. • Yugoslavia has divided into 5 (often warring) successor states. . • Latin America has seen both democracy and free market reforms.

Changing demographics of the world economy • World output and trade • Changing foreign direct investment • Changing nature of multinationals – Mini multinationals – Non US multinationals .

• Globalization does not mean the advance of a homogeneous civilization and uniform business system. • Growing interaction makes people more aware of the differences among them. Globalization and International Business .

goods.What is International Business • The business activities that involve the transfer of resources. skills or information across national boundaries. services knowledge. • May involve – Individuals – Companies – Government bodies – International institutions .

• International entrepreneurs – Individuals or companies that invest and operate in another country without a home base International versus Domestic Business . • Most major corporations started their operations in the domestic market.• International business is the outgrowth of domestic business.

• Firms expand internationally for various motives: – Market motives – Economic motives – Strategic motives Why Do Firms Expand Internationally? • Motives vary from one business activity to another. .

Modes of International Business • • • • • • Importing and exporting Tourism and transportation Licensing and franchising Turnkey operations Management contracts Direct and portfolio investment 1-7 .

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