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  1. 1. Globalization
  2. 2. Globalization is the process of interaction andintegration among the people, companies andgovernments of different nations, a processdriven by international trade and investmentand aided by information technology.
  3. 3. Globalization is the flow across nationalboundaries of goods and services, capital,people, technology, ideas, and culture.
  4. 4. More evidence of Globalization• World trade increased about 20x since 1950 while• Global production has increased about 6.5x• Between ’90 and ’00 FDI increased 5x, trade by 2x and world output by 0.2x• By 2000: – 60,000 parent companies operated away from home markets through 820,000 subsidiaries/affiliates – Produced US$14 trillion in global sales, twice the value of global exports – US, Japanese, Western European companies the major investors in Europe, Asia, and North America
  5. 5. Examples of Globalization• The Internet• Selling local products in the global market• Attending lectures by a British professor teaching in an American University via a web-conference in NUS• Wearing Made in China clothes• Driving Made in Japan cars
  6. 6. Key Driving Forces of Globalization1) Developments in 2) Transnational transportation and Companies communications
  7. 7. 1) Developments in transportation and communications – Improvements in transport technology has “shrunk” the world – 19th century steam engine  20th century jet engine, – Faster and more convenient communication – People all over the globe can communicate via telephone, e-mail, fax, video conferencing, etc• Internet has transferred the way people communicate, do business, obtain information and purchase goods and services
  8. 8. 2) Transnational Companies• TNCs set up operations in different parts of the world: – Sourcing for new markets – Lowering cost of production – Production of different parts for products and assembly done in a variety of countries
  9. 9. Impact of Globalization1) Economic Impact2) Social Impact3) Environmental Impact
  10. 10. 1) Economic Impact• Widening Income Gap Between the Rich and the Poor – The rich developed countries prosper with better opportunities while the poor developing countries face economic uncertainties like retrenchment – Widening income gap can lead to social problems, increasing tension between the rich and the poor
  11. 11. Of the largest 100 economies in the world, 52are now corporations; only 48 are countries.Mitsubishi is the 22nd largest economy in theworld. General Motors is 26th. Ford is 31st.All are larger than Denmark, Thailand, SouthAfrica, Saudi Arabia, Norway, Malaysia, andChile.Institute for Policy Studies, Top 200: The Riseof Corporate Global Power, 2000
  12. 12. 2) Social Impact• Increased Awareness of Foreign Culture – Travel, the Internet, mass media (products of globalisation allow you to learn more about foreign culture• Loss of Local Culture – Global (Western) brands dominate consumer markets in developing countries – Creation of homogenous culture across the world – Spread of pop culture and erosion or loss of local culture – Negative influence of youth – Enforced beliefs
  13. 13. 3) Environmental Impact• Depletion of natural resources by TNCs• Concern over profits vs. protection of the environment• Lack of funds to implement environmental protection• Environmental Degradation – Deforestation and Related Problems – Global Warming – Environmental Management
  14. 14. Globalization Quiz
  15. 15. Globalization has led to a rapid increase in which of the following?A. water stressB. international tradeC. transboundary pollutionD. population density
  16. 16. Which term describes a business that has operations all over the world?A. trade blocB.common marketC.micro-enterpriseD.multinational corporation (your answer)
  17. 17. A company in Mexico ships fruit to the United States for sale without paying tariffs. This is an example of which of the following?A. free tradeB. vertical tradeC. subsistence agricultureD. comparative advantage
  18. 18. China looks to Japan for foreign investment and technology. Japanese consumers buy many goods made in China. The result is which of the following?A. ethnic diversityB. sustainable developmentC. supranational cooperationD. economic interdependence
  19. 19. Which best describes why factorieshave been moved to Asian countries in the last 50 years?A.low labor costs in developing countries (your answer)B.workers are faster than American workersC.Asian countries have better materials to work withD.there are more people to work in factories