2. Globalization
Expansion of economic activities across the political
boundaries of nation states
Increasing economic openness and growing economic
interdependence between countries
Opening up of markets to foreign players and vice
versa
2/3/2014
2
3. Globalization
According to IMF globalization stands for ‘the growing
economic interdependence of countries worldwide
through increasing volume and variety of cross-border
transactions in goods and services and of international
capital flows, and also through the more rapid and
widespread diffusion of technology’.
2/3/2014
3
4. What kinds of things cross international borders?
•
•
•
•
•
•
Trade – goods and services.
– You can buy a TV from China, car from Japan, clothes from Indonesia or
Italy.
– You can hire someone from India to write software or answer your
telephone
Capital – money, investment
– You can put your savings into a bank in Zurich.
– You can buy stock in SONY, a Japanese company
People – immigrants, refugees, tourists
– Immigrants come to Calgary from Asia, Africa, S. America, Europe
– You can easily travel to Europe, Asia, S. America
Communication
– You can easily call or email people around the world
Culture (art, music, cuisine)
– You can hear music from Brazil, South Africa, India
– Nearby restaurants: Chinese, Thai, Ethiopian, Indian
2/3/2014
4
Ideas
5. 1. International trade (lower trade barriers
2.
3.
4.
5.
and more competition)
Financial
flows
(FDI,
Technology
transfer/licensing,
portfolio
management, debt)
Communications (traditional media and
internet)
Technological advances in
transportation, electronics, bioengineerin
g and related fields.
Population mobility, especially labour.
2/3/2014
5
6. Driving Forces
1. Improvements in information technology
2. Trade liberalization
3. capital flows
4. Cheap travel
5. Less rigorous immigration policies
6. Marketing
2/3/2014
6
7. Market drivers
Per capita income converging among
industrialised nations
Convergence of lifestyles and tastes
Organisations beginning to behave as global
customers
Increasing travel creating global consumers
Growth of global and regional channels
Establishment of world brands
Push to develop global advertising
2/3/2014
7
8. Cost drivers
Continuing push for economies of scale
Accelerating technological innovation
Advances in transportation
Emergence of newly industrialised countries with
productive capability and low labour costs.
Increasing cost of product development relative
to market life
2/3/2014
8
9. Government drivers
Reduction of tariff barriers
Reduction of non-tariff barriers
Creation of blocs
Decline in role of governments as producers and
customers
Privatisation in previously state-dominated
economies
Shift to open market economies from closed
communist systems in eastern Europe
Increasing participation of China and India in the
global economy
2/3/2014
9
10. Competitive drivers
Continuing increases in the level of world trade
Increased ownership of corporations by foreign
acquirors
Rise of new competitors intent upon becoming
global competitors
Growth of global networks making countries
interdependent in particular industries
More companies becoming globally centred
rather than nationally centred
Increased formation of global strategic alliances
2/3/2014
10
11. Other drivers
Revolution in information and communication
Globalisation of financial markets
Improvements in business travel
2/3/2014
11
12. Pros of Globalization
Increases economic
prosperity and opportunity
Higher degrees of political
and economic freedom in the
form of democracy
Improved standard of living –
reduction in poverty
Improved gender relations
Increased life-span
2/3/2014
12
13. Cons of Globalization
Increased environmental damage
increased poverty, inequality, injustice
erosion of traditional culture
Corporations are motivated by profit
and have little concern for people
economic globalization developments
feed into ethnic, religious, and factional
tensions that lead to wars and help
breed terrorism
Terrorists now globally interconnected
and empowered with knowledge, create
a whole new category of warfare based,
in part, on the disruption of the
interconnections which are both created
by and necessary for globalization
2/3/2014
Corporations shape political policy of
13
countries e.g. over fishing
14. Benefits
1. Foreign capital if properly utilized can provide
substantial benefit to the economic development
of a nation e.g. China
2. Productivity will increase where countries are
producing
products
where
they
have
comparative advantage. Living standards will
also increase
3. Increase competitiveness make companies more
cost and quality conscious
4. Inflation is less likely to have damaging impact
5. Increased consumer choice.
2/3/2014
14
6. Export jobs often pay more than other jobs
16. Adverse Effects
1. Global dominance of MNEs
2. Countries indiscriminate attitude toward foreign
investment
3. Large number of takeovers of national firms by foreign
firms
4. Replacement of traditional and indigenous products by
modern products.
5. Sometimes liberalization is adopted to serve the best
interest of a section of people not the masses
6. Domestic firms are playing with big MNEs without
enough protection thus without a level playing field
2/3/2014
16
17. Adverse Effects
7. MNEs dump obsolete technology to the developing
world.
8. The developing countries as a whole are being in a
disadvantageous position by the international
trading system.
9. Millions of people from developed world have lost
their job due to the shift of the production in low
cost location
10. The job loss, less pay, fear of loosing jobs are
common in both manufacturing and service sector.
2/3/2014
17
18. Globalization
Good news Bad news
Wider markets for trade
Reduction in sovereignty
Larger private capital inflows
Increase in competition may
Better access to technology
lead to some firms closing
Availability of a wider variety
down
of goods
Risk of being left behind
Payoffs are larger, but so are
the penalties for policyin action
or errors
2/3/2014
18
19. India Foreign Exchange Reserves
Foreign Exchange Reserves in India increased to 14760.70 INR
Billion in June of 2013 from 14228.40 INR Billion in May of 2013.
Foreign Exchange Reserves in India is reported by the Reserve
Bank of India. India Foreign Exchange Reserves averaged
4856.84 INR Billion from 1990 until 2013, reaching an all time
high of 14760.70 INR Billion in June of 2013 and a record low of
23.86 INR Billion in June of 1991.
In India, Foreign Exchange Reserves are the foreign assets held
or controlled by the country central bank. The reserves are made
of gold or a specific currency.
They can also be special drawing rights and marketable
securities denominated in foreign currencies like treasury bills,
government bonds, corporate bonds and equities and foreign
currency loans
2/3/2014
19
22. India Exports
Exports in India increased to 1430 INR Billion in June of 2013
from 1348.08 INR Billion in May of 2013.
Exports in India is reported by the Directorate General of
Commerce.
India Exports averaged 243.74 INR Billion from 1978 until 2013,
reaching an all time high of 1678.36 INR Billion in March of 2013
and a record low of 3.75 INR Billion in May of 1978.
India’s main exports are engineering goods (19 percent of total
exports), gems and jewelry (15 percent), chemicals (13 percent),
agricultural products (9 percent) and textiles (9 percent).
India is also one of Asia’s largest refined product exporters with
petroleum accounting for around 18 percent of total exports.
India’s main export partners are United Arab Emirates (12
percent of total exports) and United States (11 percent). Others
include: China, Singapore, Hong Kong and Netherlands.
2/3/2014
22
23. EXPORT IN INDIA
1990-91 - 406.35
2000-01 - 2781.26
2011-12 - 21817.09
2/3/2014
23
25. India Imports
Imports in India decreased to 2166 INR Billion in June of
2013 from 2456.19 INR Billion in May of 2013.
Imports in India is reported by the Directorate General of
Commerce.
India Imports averaged 364.23 INR Billion from 1978 until
2013, reaching an all time high of 2475.94 INR Billion in
January of 2013 and a record low of 4.98 INR Billion in April
of 1978.
India is heavily dependent on coal and foreign oil imports
for its energy needs.
Other imported products include: machinery, gems,
fertilizers and chemicals. India’s main import partners are
China (12 percent of total imports), United Arab Emirates,
Switzerland, Saudi Arabia, United States, Iraq and Kuwait.
2/3/2014
25
26. Import of Goods and
Services
1990-91 - 486.98
2000-01 - 2975.23
2011-12 - 26434.03
2/3/2014
26
28. India GDP
The Gross Domestic Product (GDP) in India was worth
1841.70 billion US dollars in 2012.
The GDP value of India represents 2.97 percent of the
world economy.
GDP in India is reported by the The World Bank Group.
India GDP averaged 485.65 USD Billion from 1970 until
2012, reaching an all time high of 1872.90 USD Billion in
December of 2011 and a record low of 63.50 USD Billion in
December of 1970.
The gross domestic product (GDP) measures of national
income and output for a given country's economy. The
gross domestic product (GDP) is equal to the total
expenditures for all final goods and services produced
within the country in a stipulated period of time
2/3/2014
28
29. GDP IN INDIA
1990-91 - 5862.12
2000-01 - 21686.52
2011-12 - 88557.97
(Amount in Billion)
2/3/2014
29
31. India GDP per capita PPP
The Gross Domestic Product per capita in India was last
recorded at 3649.53 US dollars in 2011, when adjusted by
purchasing power parity (PPP).
The GDP per Capita, in India, when adjusted by
Purchasing Power Parity is equivalent to 17 percent of the
world's average. GDP per capita PPP in India is reported by
the World Bank.
India GDP per capita PPP averaged 1446.39 USD from 1980
until 2011, reaching an all time high of 3649.53 USD in
December of 2011 and a record low of 419.87 USD in
December of 1980. The GDP per capita PPP is obtained by
dividing the country’s gross domestic product, adjusted by
purchasing power parity, by the total population
2/3/2014
31
33. India GDP Growth Rate
The Gross Domestic Product (GDP) in India expanded 1.30
percent in the fourth quarter of 2012 over the previous
quarter.
GDP Growth Rate in India is reported by the OECD. India
GDP Growth Rate averaged 1.63 Percent from 1996 until
2012, reaching an all time high of 5.80 Percent in December
of 2003 and a record low of -1.70 Percent in March of 2009.
In India, the growth rate in GDP measures the change in
the seasonally adjusted value of the goods and services
produced by the Indian economy during the quarter.
India is the world’s tenth largest economy and the
second most populous.
2/3/2014
33
34. The most important and the fastest growing sector
of Indian economy are services. Trade, hotels,
transport and communication; financing,
insurance, real estate and business services and
community, social and personal services account
for more than 60 percent of GDP.
Agriculture, forestry and fishing constitute
around 12 percent of the output, but employs more
than 50 percent of the labor force. Manufacturing
accounts for 15 percent of GDP, construction for
another 8 percent and mining, quarrying,
electricity, gas and water supply for the remaining
5 percent.
2/3/2014
34
