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International Business Globalization_Mukesh _Mishra

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  • 1. International Business Globalization By Mukesh Mishra Kathmandu, Nepal
  • 2. Topics for the discussion
    • Introduction
    • Agent/Facilitator of Globalization
    • Positive effects of Globalization
    • Negative effects of Globalization
  • 3. Globalizaion
    • Integration of National economies with international Economy.
    • The closer integration of the economies of the world as a result of the reduction of transportation and communication costs and the reduction of manmade barriers to the movements of goods, services and capital throughout the world.
    • Globalization refers to the shift toward a more integrated and interdependent world economy.
  • 4. Globalizaion
    • Globalization of Market refers to the merging of historically distinct and separate national markets into one huge global marketplace. Falling barriers to cross- border trade have made it easier to sell internationally.
    • Globalization of production refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (such as labor, energy, land and capital )
  • 5. Globalization
    • Advocates of Globalization see not only the increases in incomes but also the spread of democratic values. Opponents of the globalization worry not just about the loss of jobs but about loss of local culture.
  • 6. Agent/Facilitator of Globalization
    • World Trade Organization (WTO)
      • Rule based international Organization deals with free and fair trade among member nations.
      • Currently, there are 153 members in WTO
      • Established in 1995, successor of General Agreement of Tariffs and Trade (GATT)
      • GATT was formed in 1947.
  • 7. Agent/Facilitator of Globalization
    • United Nations (UN)- Although the UN is perhaps best known for its peacekeeping role, one of the organization’s central mandates is the promotion of higher standards of living, full employment, and conditions of economic and social progress and development all issues that are central to the creation of a vibrant global economy.
  • 8. Agent/Facilitator of Globalization
    • World Bank
      • World Bank is taken as a lending institution, development agency, think tank, forum for international governmental politics and economic diplomacy.
      • Formed in 1944 as International Bank of Reconstruction and Development (IBRD).
      • From 1970’s bank started the process called ‘Structural Adjustment’ program, under which infrastructure, telecommunications and some social services are privatized, labour, the civil service and judiciary are revamped.
      • Other facets are lowering deficits and tariff barrier, opening the economy to short term capital flows.
      • In return IMF and World Bank provides assistance to the economies.
      • It offers highly leveraged loan to poor countries.
  • 9. Agent/Facilitator of Globalization
    • International Monetary fund (IMF)
      • Its an organization that oversees the global financial system by following the macroeconomic policies of its member countries, in particular those with an impact on exchange rates and the balance of payments.
      • Designer of Structural Adjustment Program. (Sister Org. of World Bank).
      • IMF is often seen as the lender of last resort to nation state whose economies are in turmoil and currencies are losing value against those of other nations
  • 10. Agent/Facilitator of Globalization
    • Regional Economic Integration
      • Free Trade Area (FTA)- A free trade area occurs when a group of countries agree to eliminate tariffs between themselves but maintain their own external tariff on imports from the rest of the world. The north American free trade area (NAFTA), South Asian Free Trade Area (SAFTA) are FTA’s.
      • A regional Economic integration agreement is the next step to Regional Economic Agreement (RTA), it can include the free movement of capital as well as goods and services, a common currency and a common economic policy. European Union.
  • 11. Effects of Globalization
    • Industrial- Movement of material and goods between and within national boundaries. International Trade in manufactured goods increased more than 100 times (from $95 billion to $12 trillion) in the 50 years since 1955.
    • Financial- It is the world where $1.2 billion in foreign exchange transactions are made everyday. Current economic crisis is the example of financial integration
    • Economic- Four Indians were among the world's top 10 richest in 2008, worth a combined $160 billion. In 2007, China had 415,000 millionaires and India 123,000. 300 million Indians lifted up from poverty during 1991 to 2008.
    • On the global scale, health becomes a commodity. In developing nations under the demands of Structural Adjustment Programs, health systems are fragmented and privatized
    • Political- China and India are emerging as a political power. Their rapid economic growth provided them space in global arena.
  • 12. Effects of Globalization
      • The most popular language is Mandarin (845 million speakers) followed by Spanish (329 million speakers) and English (328 million speakers).
        • About 35% of the world's mail, telexes, and cables are in English.
        • Approximately 40% of the world's radio programs are in English.
        • About 50% of all Internet traffic uses English.
  • 13. Effects of Globalization
    • WHO estimates that up to 500,000 people are on planes at any one time, in 2008.
    • The IOM estimates there are more than 200 million migrants around the world today. Newly available data show that remittance flows to developing countries reached $328 billion in 2008. Around 2.5 millions people are working abroad. Remittance inflow per year is around 209 bn.
  • 14. Effects of Globalization
    • Farmers are loosing market due to cheaper (subsidized) products coming from outside, mainly in developing nations
    • Globalization has led to exploitation of labor. Prisoners and child workers are used to work in inhumane conditions.
    • Job insecurity, Increased job competition has led to reduction in wages and consequently lower standards of living.
  • 15. Effects of Globalization
    • Companies have set up industries causing pollution in countries with poor regulation of pollution
    • The benefits of globalization is not universal. The rich are getting richer and the poor are becoming poorer. 20 percent of rich people utilizing 80 percent of resources.
  • 16. Effects of Globalization
    • Poorer countries suffering disadvantages : The main export of poorer countries is usually agricultural goods. Larger countries often subsidies their farmers (like the EU Common Agricultural Policy), which lowers the market price for the poor farmer's crops compared to what it would be under free trade.
  • 17. Effects of Globalization
    • Bad aspects of foreign cultures are affecting the local cultures through TV and the Internet
    • Local industries are being taken over by foreign multinationals
    • Multinational Companies and corporations which were previously restricted to commercial activities are increasingly influencing political decisions
  • 18.
    • Thank you