3. • Amongst other things this means that people and countries can
exchange information and goods more quickly and in a less
complicated manner.
• This process in known as GLOBALISATION .
• Etymology – GLOBE.
4.
5.
6. • Both the companies are in direct competition
• But they pay the same
• Salary
• Production cost
• Same class of customers
• Similar suppliers
• As a result of which they offer the end product at a SIMILAR PRICE
7. With globalization..
• The countries that manufacture products (Television) at different
conditions i.e., lower production cost etc., can now offer the same
product in India at a LOWER PRICE.
8.
9.
10.
11. • Globalisation is the growing interdependence between nation as a
result of the free movement of labour, goods and services and
capital.
• With globalisation there is world wide economic activities because
there is a borderless world or global village.
Capital here, refer to the movement of money for the purpose of investment, trade, or business operation.
12. Outcomes of Globalization
Access to New Cultures
• Globalization makes it easier than ever to access foreign culture,
including food, movies, music, and art.
• This free flow of people, goods, art, and information is the reason you
can have McD (America) delivered to your apartments as you listen to
your Spotify (Sweden) or stream a Bollywood movie on Netflix
(America).
13. The Spread of Technology and Innovation
- Many countries around the world can now remain constantly
connected (through Skype, Zoom, G meet) so knowledge and
technological advances, travel quickly.
- As knowledge also transfers fast, scientific advances made in Asia
can be at work in the United States in a matter of days.
14. Lower Costs for Products
- Globalization allows companies to find lower-cost ways to produce
their products. (MacBook - designed in USA, assembled in China)
- It also increases global competition, which drives prices down and
creates a larger variety of choices for consumers. (Onida,
Micromax and mi)
- Lowered costs help people in both developing and already-
developed countries live better on less money.
15. Higher Standards of Living Across the Globe
- Developing nations experience an improved standard of living due
to globalization. According to World Bank, extreme poverty
decreased by 35% since 1990.
- Further, the target of the first Millennium Development Goal was
to cut the 1990 poverty rate in half by 2015. This was achieved
five years ahead of schedule, in 2010. Across the globe, nearly 1.1
billion people have moved out of extreme poverty since that time.
WORLD BANK
16. Access to New Markets
with the coming of globalisation both the consumers as well as
providers are now able to access new market at the comfort of their
homes (Amazon, Flipkart)
17. Access to New Talent
In addition to new markets, globalization allows companies to find
new, specialized talent that is not available in their current market.
For example, globalization gives companies the opportunity to
explore tech talent in booming markets such as Berlin or Stockholm,
rather than Silicon Valley. (Cheaper rate)
21. A rubbish heap can grow but does not develop
- R.L Ackoff
Ackoff was a pioneer in the field of
operations research, system thinking
and management science
Economic Growth
22. Economic Growth
• Is the rubbish heap
• Is the amount of material goods that a society has
• It is the amount of goods and service that are produced in an
economy and it is measured by GDP or GDP per capita i.e. per person
23. GDP
• GROSS DOMESTIC PRODUCT
• GDP is the value of all final goods and services produced within a country
in each year
• Final = only finished goods (T-Shirts) and not intermediary goods (cotton
yarns) unless they are capital goods (tractors).
• Within = imported goods are not included
• Each year = only goods produced in the year of calculation – second
hand goods not included
24. Calculation of GDP (Expenditure Approach)
GDP = C + I + G + NX
Where,
C = consumption
I = Investment
G = Govt. Spending
NX = Net Exports
25. • Consumption – is another way of saying consumer spending
It is the money you and spend on physical goods like coffee, and on services like haircut
etc.
• Investment - this measures how much business spend on things like buildings, land and
equipments it also includes major consumer investments like buying a house etc.
• Govt. spending – this is the money local state and national government spend on things
like roads, schools, defense etc., govt. spending varies a lot on each countries approach
to public goods and services.
• Net exports or (exports - imports) – a lot of countries have –ve net exports because
they bring in more than they send out .
26. • Countries around the world collect data on consumption, investment,
government spending and net exports.
• This makes GDP a universal measure and a way to know the size of an
entire economy.
27. GDP Growth Rate
• Merely finding the GDP doesn’t make any sense, on finding the GDP
we have to find the GDP growth rate using the formula
• GDP growth = (GDP in current period - GDP in the previous period) /
GDP In the previous period * 100
• On finding the GDP growth rate we can find whether there is an
expansion or contraction in the growth of GDP.
28. Expands = Economy is healthy
Contracts = Economy in bad shape
2 consecutive quarters of –ve GDP
= Recession
29. Economic Development
• Economic development unlike economic growth is a much broader
measure
• It looks at the overall health of the nation and it’s people.
• Thus it looks into health care, education, environmental quality and
it also takes into account material wealth i.e., Economic Growth
30. ECONOMIC GROWTH ECONOMIC DEVELOPMENT
Economic growth
- is about material living
standards.
- this is about stuffs or
material goods i.e., how
many cars, take-away
meals, hair-cut a person
can get or buy .
Economic development
- is about the quality of life
- it is about the living
standards
- it is about what it is like
to life in a country.
- Health care, education
etc.
31. How do we compare living standards
between countries?
• Simple, look at how much people earn – income this is a clear indicator of
difference between people’s lives.
• Income tells us the ability of a nation’s citizen to satisfy their material
wants i.e., is their ability to buy a new car etc., it tells us the quality of life
• So if we are just comparing the living standards i.e., just the income we
just need to find the GNI – which is the overall income of a country
• It is usually calculated on per person basis thus it is called GNI per capita.
32. GNI &GDP
• GNI – value of income received
• GDP – value of production
GDP GNI
Is the value of
production i.e. what is
the produced goods
and service worth.
Is the amount of
money that producers
received – it is the sum
of the income.
GDP is just within the
countries.
GNI can be from inside
and outside of that
country.
33. Human Development Index
• With GNI, we are only comparing, economies on the basis of income.
• When looking at GNI, we are only focusing on material living
standards and not on broader quality of life.
• To measure economic development along with GNI we also take into
account health, education, environmental quality etc.
• The primary measure of Economic Development is HDI – Human
Development Index.
34. HDI MEASURES
GNI per capita (PPP Basis) Measures material standards of living
Life expectancy at birth Demonstrates health and nutrition
standards of a country
Levels of education
attainment
Measures years of school attendance.
Education is important for the
development of workforce/Economy
38. • While the orthodox view of development aims to raise people’s
income, Sen argues that this is of little use to people who still suffers
in terms of health and education.
• Sen believed that personal freedom in all aspects of life was an
important way to enhance economic development.
41. • For example – In a working enviroment, if someone can’t read they
will struggle to use their money wisely to develop business. Therefore
if they were able to develop the necessary skill to increase their
freedom it would result in being able to do more and as a result be
more freer
44. Company A
• Employees come in do their job as long as possible and leave
• There is no health care
• There is no training programs
• The managers hired are all from other countries and there is minimal
bounding between managers and workers that would lead to progression.
• If any one tries to speak up against the system they get fired.
45. As a result of this poor working conditions there is a,
• Below average products are produced
• And there is high employee turnover
46. Company B
• Focuses on making sure that the employees are looked after they have
fair pay, holidays and breaks
• If workers protest, issues are discussed leading to a happier workforce
• If the employees are ill they have health care and are back to work
quickly
• Employees get promoted quickly and this motivation means that staff
turn over is less
47. • Here, Company B follows Sen’s model as it is trying to focus on
freedom beyond income with a greater focus on self improvement
and quality of life
• The chances are company B will preform better than the unfree
company.
48. • Sen argues that this inclusive open management structure has be
proven to be a more effective way of creating freedom in the lives of
the people.
49. Conclusion
• Globalization – development.
• Unequal Economic growth.
• Focus on economic development rather than growth.