The Environment of International

Business (cont.)
Lecture 2
Lecture Outline
 The Changing Demographics of the Global Economy
 Globalization in the 21st Century (Workshop)
 Coronavirus and Globalization (Workshop)
 Self Structured Learning (Week 9)
 Course Project (Week 11 and 12)
The Changing Demographics
Of The Global Economy
Workshop
 What are Demographics?

 Watch the video “Documentary raises concerns over

global population shrinking”

 Watch the video “Top 10 Country GDP (PPP) History

(1990-2021)”
• How can demographics affect globalization?
– Example: In Japan only around 8.4 children
were born for every 1,000 Japanese people over
last five years
The Changing Demographics
Of The Global Economy

 There has been a drastic change in the demographics

of the world economy in the last 30 years
 Four trends are important:
1. the Changing World Output and World Trade Picture

2. the Changing Foreign Direct Investment Picture

3. the Changing Nature of the Multinational Enterprise

4. the Changing World Order

The Changing World Output and -1
World Trade
 In 1960, the United States accounted for over 40% of world
economic activity
 By 2008, the United States accounted for just over 20% of
world economic activity
 A similar trend occurred in other developed countries
 The share of world output accounted for by developing nations
was rising and was expected to account for more than 4.4% of
world economic activity by 2020 (Before COVID-19)
 The Changing World Output and World
Trade
Share of world output
Country
Jan. Dec. Jan
1963 2015 2018
2020 2020 2021
United 40.3% 15.9% 2.9% 2% 3.4%- 5.1%
States
Germany 9.7 3.4 1.5% 1.2% 5.4%- 3.5%
France 6.3 2.4 1.7% 1.3% 9%- 5.5%
Italy 3.4 2.0 0.8% 0.9% 9.2%- 3%
Euro Area N/A 12.2 1.9% 1.7% 7.2%- 4.2%
Japan 5.5 4.4 0.3% 1.8% 5.1%- 3.1%
China N/A 16.6 6.6% 5.9% 2.3% 8.1%
Workshop
 What is Foreign Direct Investment (FDI)?
 Watch the video “Foreign Direct Investment (FDI)”
 How can FDI affect and be affected by globalization?
The Changing Foreign Direct .2
Investment Over Time
 Foreign direct investment (FDI) occurs when a firm
invests directly in new facilities to produce and/or market
in a foreign country
 the firm becomes a multinational enterprise
 FDI can be in the form of
 greenfield investments - the establishment of a wholly new
operation in a foreign country
 acquisitions or mergers with existing firms in the foreign
country

9
 2. The Changing Foreign Direct
Investment Over Time (Cont.)
 In the 1960s, U.S. firms accounted for about two-thirds of
worldwide FDI flows
 Today, the United States accounts for less than one-fifth of
worldwide FDI flows
 Other developed countries have followed a similar pattern
 In contrast, the share of FDI accounted for by developing countries
has risen
 Developing countries, especially China, have also become popular
destinations for FDI
Multinational Enterprise (Workshop) -3
 What do you know about Multinational Enterprises?
Evolution of a Multinational Enterprise
 A multinational enterprise (MNE) is any business that has
productive activities in two or more countries
 By the middle of the 1950s, economic growth had reached
a point, and the world political situation had stabilized to
such a degree, that many of the largest U.S. corporations
were looking again to invest abroad.
 The country's foreign aid programs, which increasingly
tied foreign loans and economic assistance to the
procurement of American goods and services, also helped
stimulate direct foreign investment.
Evolution of a Multinational Enterprise
 The result was an expansion of MNCs in the middle of the
1950s that has continued largely. Between 1950 and 1965
the leading U.S. corporations increased their
manufacturing subsidiaries in Europe.
Evolution of a Multinational Enterprise
 Since the 1960s, two important trends have emerged.
 First, we’ve seen an increase in the number of non-U.S.
multinationals.
 Multinational firms from France, Germany, Britain, and Japan
have become more important, and there has been a notable
decline in the role of U.S. firms.
 Firms from developing countries such as China and South Korea
have also emerged as important players.
4- The Changing World Order
 Many former Communist nations in Europe and Asia
are now committed to democratic politics and free
market economies
 so, there are new opportunities for international businesses
 but, there are signs of growing unrest and totalitarian
tendencies in some countries
Globalization in the 21st Century
(Workshop)

 In groups answer - What do you know about the 1st, 2nd, 3rd
and 4th Industrial Revolution?
 Watch the video “4th Industrial Revolution”
Coronavirus and Globalization (Workshop)

 How did COVID-19 affect globalization? Why?

 Watch the video “What Globalization Looks Like in
2021”
Self Structured Learning (Week 9)
 In groups submit and present a PPT not more than 7 slides
discussing the effect of COVID-19 on any of the
following fields according to your department:
 International Value Chains and Supply Chains
 International Transportation
 International Trade
 Energy Management
 Course Project (Week 11 and 12)
 In groups submit a Word document and a PPT about one of the following topics:

1.  Discuss the importance of infrastructure in encouraging a country’s inward FDI

2.  Discuss from your point of view the best entry mode for foreign investors
regarding the pandemic crisis the world is facing at the moment.

3. Globalization vs. Localization discuss the probabilities of both terms post

COVID-19 and its effect on businesses.

4. US-China Trade War: Implications on International Business

5. Discuss the 4th industrial revolution contributions during the COVID-19 and its
importance to the international business showing how the crisis of the pandemic
reflected the importance of more research and advancements in the 4th IR
Lecture Outline
 The Changing Demographics of the Global Economy
 Globalization in the 21st Century (Workshop)
 Coronavirus and Globalization (Workshop)
 Self Structured Learning (Week 9)
 Course Project (Week 11 and 12)