Globalization - CAGE Framework

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An analysis into the factors / "differences" / "distances" that either enable or deter trade between countries.

A study that I participated in .... conducted by Prof. Pankaj Ghemawat - who propounds the CAGE-framework to
help explain why the world is NOT as globalized as much as we THINK it to be. He introduces a new 'word' gloBaloney that has taken my fancy.

CAGE is acronym for Cultural-Administrative-Geography-Economic

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Globalization - CAGE Framework

  1. 1. Question 1: What focal country did you select (which country’s exports are you going to analyze)? Please feel free to share your focal country’s exports map. Reviewing the presentations by Prof. Ghemwat, from day one I am sure glad I belong to the breed of gloBaloneys ... BUT, would love to use the KNOWLEDGE (gained over the Course) to identify skewed ideas, and make this world (wherever I am), a better place to live - for me and my own. To be a Global strategist in the current semi-globalized world, we need to identify perceptions, fears and idiosyncrasies with factual data before making any moves to go Global. Enabled with a proper mind-set we can then create a global economy that is stable and sustainable. Living in Canada ... and, 'watching' ALL the problems that keep 'popping up' - KeystoneXL pipeline as an example, clearly indicates that there is more to globalization than just distance and borders ... people, politics and processes - are key factors that need to studied and considered. And therefore I have chosen Canada as my focal country to analyze. Question 2: With which other country or countries does your focal country have its most intense export relationships? Canada's exports to United States of America account for 77%, followed by United Kingdom at 3%, and Japan at 2% Please reference the following ... http://maps.ghemawat.com/ShowMapsInOne.aspx?MapName=ECANThis Canada also exports products and services to a number of other countries world-wide ... but those percentages are 1 to less than 1. Question 3: What are the cultural factors that seem to influence the identities of the focal country’s most intense export relationships? Please be as specific and systematic as possible, supporting your points with data as best you can. Canada is a massive land-mass that also encompasses five great lakes (water masses). It is rich in natural resources that have barely been tapped into - resources include oil, forestry, fish, potash, gold, diamond. Do take a moment to review this link ... http://en.wikipedia.org/wiki/Canada Hence it is not surprising that since the two nations (Canada and USA) are land-locked, have a common language (English), culturally they both have immigrants from all across the world that have 'dug heels' and prospered. Politically these two nations have democratic governments. Processes and Policy formulations are also fairly similar. There is also a Trade Agreement that exists between Canada and USA.
  2. 2. Question 4: What are the administrative (political, institutional...) factors that seem to influence the identities of the focal country’s most intense export relationships? Please be as specific and systematic as possible, supporting your points with data as best you can. Canada trades extensively with United States of America - whereto 77% of it’s merchandise is exported (reference http://maps.ghemawat.com/ShowMapsInOne.aspx?MapName=ECAN ) This is NOT hard to understand since both Canada and United States of America do not have too many Administrative-distances. These two nations have colonial-ties linked to Europe {Columbus (Spain, Portugal), United Kingdom (Ireland)}. They also have a Trade Treaty (North American Free Trade Agreement) that have further reduced “home-biases” or protectionism. Although they have separate currencies, they are readily exchanged at current Market-rates and cause no problems to trade. Politically, both these nations are governed by democratically-elected people that are inclined to open-economy with strong and decently-non-corrupt institutions. In addition, these countries are land-locked and have a long east-to-west land-border. Also, English is a commonly spoken business-language. Income levels and Labor-costs are fairly similar. Question 5: What are the geographic factors that seem to influence the identities of the focal country’s most intense export relationships? Please be as specific and systematic as possible, supporting your points with data as best you can. If you choose to upload a file, please upload only PDF format. Canada and USA are separated by the longest undefended border running east to west - these nations are thereby land-locked. Although there are FIVE great water masses (lakes) that are interspersed - rail and road are the major methods used to transport tangible goods. I have used http://www.distancefromto.net/countries.php and http://maps.ghemawat.com/ShowMapsInOne.aspx?MapName=ECAN to tie-in my analysis of Canada’s Major Exports:  USA - 77% ... With a median distance of 2261.43 kilometers between two populated cities;  UK - 3% ... A distance of 5807.15 kilometers separates them  Japan- 2% ... A distance of 8082.32 kilometers separates them Now this is not a standard, but rather a unique trading-relationship between two countries indicating that Geographic-distances along with a number of other ‘distances’ have gone a long way in enabling Canadian exports to USA. Predicting / estimating overall distance elasticity, using the -1.55 factor between Canadian-exports and distances between other countries - just does not apply.
  3. 3. Question 6 What are the economic factors that seem to influence the identities of the focal country’s most intense export relationships? Please be as specific and systematic as possible, supporting your points with data as best you can. References: If you used references, please type your references or upload your references file Economic Factors that have influenced Canadian exports to the USA Economic distances (factors) known to cause problems with exports of a country's products and/or services to another, namely: differences in income / labor costs, differences in capital costs, differences in factor endowments and differences in business-systems are minimal when one looks at Canadian exports to the USA. For a number of years the Canadian dollar was much ‘cheaper’ in comparison to the US dollar - at one point in time, 1 USD returned only 0.65 CAD. This made it attractive for Americans to buy Canadian products and services. This seemed to ‘work’ well for Canadians and their industries. But this did not 'sound' good for Americans and their products/services. In recent years, ‘mad-cow disease', forestry products (building industry), increase in value of the Canadian dollar and Canada's booming oil-industry have seen rifts in NAFTA (Trade Agreement) and general flow of products. Although exports of Canadian goods and services to the USA are still a big factor - recent Trade Agreements that Canada has signed with emerging economies, as well as, European Union - are indicative that Canada is being innovative and will be a global player in world economics.

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