ECONOMICS OF GLOBALIZATION AND IT'S

IMPACT
 Advantage of Globalization

➲ Refute barrier in any part the world by establishing

economic and social transaction.

➲ Establishment of technology in transportation to

reduce time in reaching any part of the world.

➲ Defining a global village by establishing trade and

commerce.

➲ Increase of cross-border division of labor

 Defining Economics of Globalization

➲ Interdependence of world economies with cross-

border trade of services and commodities.

➲ Flow of international capital.

➲ Cross-border investment.

➲ Rapid growth of foreign sector.

➲ Exchange of labor.
 Effects of Economics of Globalization
Advantage

 Rapid industrial growth.

 Cross-border investment.
 More employment opportunities.
 Opportunity to promote new products.
 More financial flow.

Disadvantage

 Less growth on indigenous products.

 Global economic crisis from any specific events.
 Unable to acquire foreign market resulting to loss.
 Global Economic Crisis

➲ Originated in 2007 – 08 leading to massive

slump in global economy.
➲ Global economic crisis resulting to
shutdown of many industries.
➲ Attrition of skilled resources resulting to
higher unemployment ratio.
➲ Cross-border investment reduced
drastically.
➲ Instability of market.
 Quantitative data of slowdown

➲ 1.9% growth in global financial assets since

2007, down from 7.9%.
➲ 60% decline in cross border capital flows.
➲ $3.7 trillion in cross-border claims by
Eurozone banks since 2007.
➲ $15.4 trillion increase in government debt
securities since 2007.
➲ 30% reduction in global current account
imbalance.
 Status of Global Financial Market

➲ World financial assets grew from $12 trillion in

1980 to $206 trillion in 2007, which stood at $225
trillion after 2007.

➲ Global financial assets has fallen by 43 percent

since 2007.

➲ Annual growth was 7.9% from 1990 to 2007,

which ended up at 1.9% since the crisis.
 Global Economic Crisis

➲ Originated in 2007 – 08 leading to massive slump

in global economy.

➲ Global economic crisis resulting to shutdown of

many industries.

➲ Attrition of skilled resources resulting to higher

unemployment ratio.

➲ Cross-border investment reduced drastically.

➲ Instability of market.
 Decline in cross-border capital flow

➲ In the year 1998, cross-border capital flow was

$0.5 trillion.

➲ In the year 2007, cross-border capital flow was

$11.8 trillion.

➲ After the crisis the ratio of growth is 60% percent

lower than the peak time.
Strategy to fix gap for Global Financial Market

➲ Taking lesser risk by limiting cross-border investment

to maintain a balanced capital flow

➲ Implementing a global regulatory framework

➲ Encourage FDI, which can be considered as the most

stable for flow of capital.
 Ideas to set right the situation

➲ Completion of current agenda for global regulatory

reform.

➲ Build Capital Market to meet the demand for

credit.

➲ Create new financing scheme for limited

borrowers.

➲ Promote stable cross-border flow of finance.

➲ Enable accurate data collection to monitor the

market.