Globalization of world economy ppt

Globalization of the World

World wide integration and deepening of economic activities
I ntegrated production and consumption systems
F acilitated by IT revolution, liberalization and deregulation
U nprecedented mobility of goods, services, capital and people
E vents all over the world strongly interdependent
What is Globalization?

“… (the) integration of national economies into the international economy through trade, direct foreign investment…short-term capital flows, international flows of workers and humanity generally, and flows of technology…” (Bhagwati, In Defense of
Globalization, p. 3)
Definition

Internationalization (trade & investment)
Liberalization (freeing markets)
Universalization (cultural interchange)…or…
Westernization (Western cultural dominance)
“ Deterritorialization” (compression of time and space)
Globalization Encompasses

1. Globalization of consumption : The nation in which a product was made becomes independent of the nationality of the consumer.
Globalization -Two types

2. Globalization of production/ownership:
The nationality of the owner and controller of productive assets is independent of the nation housing them. For example, Canada's assets are owned by foreigners at the same proportion as foreigners own all world assets. Consequently, only about 3% of Canadian assets would be owned by Canadians. Similarly, Canadian based firms would have roughly 97% of their total assets overseas.
Globalization -Two types

Globalization Example Airbus Consortium

Jointly owned by companies from 4 countries:
France
German
Britain and
Spain.
Wings from Britain,
Fuselage and tail from Germany,
Doors from Spain,
Cockpit and final assembly in France.

1,500 suppliers in 27 countries.
More than 35 percent of components for the consortium's aircraft are supplied from over 500 American companies.
Numerous suppliers also are located in the Asia-Pacific.
Singapore Technologies Aerospace produces wing ribs and passenger doors for the A320, and engine mounts and thrust reverser doors for the A340.
India's Hindustan Aeronautics Limited also builds A320 passenger doors.

Globalisation Globalisation could involve all these things!

Integration of Economies
The increasing reliance of economies on each other
The opportunities to be able to buy and sell in any country in the world
The opportunities for labour and capital to locate anywhere in the world
The growth of global markets in finance
Stock Markets are now accessible from anywhere in the world!

Integration of Economies
Made possible by:
Technology
Communication networks
Internet access
Growth of economic cooperation – trading blocs (EU, NAFTA, etc.)
Collapse of ‘communism’
Movement to free trade

Trade versus Aid?
Benefits of Trade:
Increased choice
Greater potential for growth
Increase international economies of scale
Greater employment opportunities
Trade has led to massive increases in wealth for many countries.

Trade versus Aid?
Disadvantages of trade:
Increase in gap between the rich and the poor
Dominance of global trade by the rich, northern hemisphere countries
Lack of opportunities for the poor to be able to have access to markets
Exploitation of workers and growers
How far does trade help children like these?

Corporate Expansion
Multi-national or trans-national corporations (MNCs or TNCs) – businesses with a headquarters in one country but with business operations in a number of others.
No matter where you go in the world, certain businesses will always have a presence.

Corporate Expansion
Characteristics:
Expanding revenue
Lowering costs
Sourcing raw materials
Controlling key supplies
Control of processing
Global economies of scale
Controlling supplies may be one reason for global expansion.

Corporate Domination
Key Issues:
Damage to the environment?
Exploitation of labour?
Monopoly power
Economic degradation
Non-renewable resources
Damage to cultures
Shell and Nike’s activities have come under severe criticism in some quarters.

Global Telecommunications

Manufacturing Design

Globalization In India

China in late 1980’s

China in 2005

India in late 1980’s

India in the present day

WHAT DO THE PREVIOUS FOUR IMAGES TELL US?
India in 1980
Ahead of China esp. in free enterprise and per capita earnings
India in 2005
Full of vigour but political system still trapped in clanship management of the Nation instead of taking charge of enterprise
China in 1980
Still struggling with Communist Egalitarian past and lack of enterprise
China in 2005
Government took charge of enterprise in late 1980’s, transforming China into a modern industrial nation which increased per capita income by a factor of 5

We have everything by globalization, we have nothing by globalization.

Globalization and its impact in the Indian economy

What is globalisation?
Spread of; manufacturing, services, markets, culture, lifestyle, capital, technology and ideas across national boundaries and around the world.
Also the integration of these geographically dispersed economic and social activities.
Huge impacts on people and nations. The whole world is affected by globalisation

Globalization in India has allowed companies to increase their base of operations, expand their workforce with minimal investments, and provide new services to a broad range of consumers.
Globalization in India

One of the major forces of globalization in India has been in the growth of outsourced IT and business process outsourcing (BPO) services.

Effects of Globalization in India

Effects of Globalization? Whether Positive or Negative

Access to television grew from 10% of the urban population (1991) to 75% of the urban population (1999).
Cable television and foreign movies became widely available for the first time and have acted as a catalyst in bulldozing the cultural boundaries.
All these technologies have changed perceptions and dreams of ordinary people.
Unmarried boys and girls are sharing same apartment and staying away from their parents.
Indian youths leaving education in mid-way and joining MNC's
Cultural Changes In India

There has been a increase in the violence, particularly against women.
Scientific and technological innovations have made life quite comfortable, fast and enjoyable.
More availability of cheap and filthy material (CD's or DVD's of Hollywood movies, porn movies, sex toys, foreign channels like MTV) in the name of liberalization.
In India, land-line or basic phone was a prestige symbol few years back but now you find people riding bicycle with a mobile in hand, talking or listening music or even clicking cameras of their phones targeting pretty girls or ladies.

Society has become more open compared to its earlier conservative look due to exposure to other cultures through DTH or cable network.
This has contributed to dating, celebration of friendship days/valentine day, and resulted to rising number of call girls and make them more prone to sexually transmitted diseases.
People are less worried for government jobs as MNC's and private or public sector are offering more lucrative jobs.

Extension of internet facilities even to rural areas.
In place of old cinema halls, multiplex theatre are coming up.
Old restaurants are now replaced by Mc. Donalds. Fast food and Chinese dishes have replaced juice corners and Parathas.
More inflow of money has aggravated deep rooted problem of corruption?
More scandals and scams compared tp pre-globalization era.
Girls being blackmailed by their ex-boy friends using MMS
Ban on TV channels for showing sex and violence violating all norms
Girls being raped in moving vehicles
There is deterioration in social values as evident from less respect for ladies, older people

Indian Economy under Globalization
Key Elements
Economy opened up to imports of goods, services and capital
Privatization vigorously pursued
Deregulation accelerated

India: Fastest Growing Free Market Democracy

Fastest GDP growth of 9.4 percent in 2006-07, since last 18 years Growth in sectors (2006-07): Industry: 10.9% Services: 11% Agriculture: 2.7% The Indian economy has witnessed an unprecedented growth…. Booming Indian services and industry sector are providing the required impetus to the economic growth 4% 8.5% 7.5% 8.4% 9.4%

India's Export and Import

India's FDI

USD 12.1 billion Tata Steel buys Corus Plc USD 6 billion Hindalco acquired Novelis Inc. USD 1.58 billion Essar Steel acquired Algoma Steel USD 1.6 billion Suzlon Energy Ltd. acquires REpower USD 730 million Videocon Industries acquired Daewoo Electronics Corporation Limited

Some facts about India
Huge country, large numbers, big territory: Billion plus people over 2.5 million square kilometers
Diverse languages, ethnicities, religions
Caste and other pre-capitalist relations

72 % live in rural areas (2001)
73 % of rural labour force in agriculture and allied activities. ( Males 66.5 %, Females 83.6 %) ( 2004-05 )
As of 2004-05, estimated employment was 457 million, of which 70 million were regularly employed, 130 million casual and 257 million self-employed
86.32 % of the employed were in the unorganized sector, rest in organized sector
India’s Working People

A country of savers has become spenders.
Greater employment opportunities for the masses.
Companies and government have changed the way they do business to cut the red tapisum.
The rupee has gained on the dollars so it is less advantage for Indians to live overseas and send money back home.
Economic Changes

The rate of growth of the GDP of India has been on the increase from 5.6 % during 1980-90 to 7% in the 1993-2001 period.
In the last four years, the annual growth rate of the GDP was impressive at 7.5% (2003-04), 8.5% (2004-05),9% (2005-06) and 9.2% (2006-07).
The foreign exchange reserves were $ 39 bn (2000-01), $107 bn (2003-04),$145 bn (2005-06) and $180 bn (in February 2007).
The Bright Side of Globalization

India’s trade deficit during 1990-1991 to 2006-2007 ranged between 3.6% to 6.9% of GDP.
The fluctuation in Foreign portfolio Investment were much sharper then FDI, The FPI rate decreases by 36% from period 1990-00 and again shows upward growth rate in period 00-07 was 22.1%.
FDI (net) shows a gradual upward growth from $97 million in 1990-1991 to $3272 million in 2000-2001 and again rising and touching the peak of $8779 million in 2006-2007.

Share in world exports raise from 0.52% in 1990 to 1% in 2007. In the rate of growth of per capita income there has been a sharp acceleration in the growth of per capita income, almost doubling to an average of 7.2% p.a. (2003-04 to 2007-08).

Industrialisation did not take place as per expectation.
Share of agriculture in the GDP went down drastically to 24 per cent and further to 22 per cent in 2006-07.
The number of rural landless families increased from 35 per cent in 1987 to 45 per cent in 1999, further to 55 per cent in 2005.
Darker Side of Globalisation

Corruption, lack of efficiency in work and ineffective management became the common features of public sector. Decreased FDI: The data of FDI shows 50% (approx) gradual upward growth from 90-00. The FDI growth decreased by 20% from period 2000-07.

Our progress in education has been slow and superficial , without depth and quality, to compete the international standards. People depending on agriculture in India is about 60% where as the same for U.K. Is 2% and U.S. Is 2%.

Growing Indian Economy

2010 GDP – USD 1.36 trillion GDP growth rate – 9% Services contribution – 60-65% Balance of Trade – Negative balance should increase with surging imports versus exports Investment goal – USD 370 billion 2008 GDP – USD 1.16 trillion GDP growth rate – 9.5% Services contribution – 60% Balance of Trade – Negative balance should increase with surging imports versus exports Investment goal – USD 305 billion 2006 GDP – USD 590 billion GDP growth rate – 9% Services contribution – 54% Balance of Trade – USD (-)46.2 billion Investment goal – USD 250 billion

To conclude the benefits of economic reforms on the Indian economy would get achieved, only if the negative impacts are settled or neutralized. Hence, along with globalisation and restructuring the economy, efforts.
Conclusion

Indian Economy Opportunities Unlimited

Thank You

Globalization of world economy ppt

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