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Globalization

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SHORT AND SIMPLE PRESENTATION FOR GLOBALIZATION IN ECONOMICS

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Globalization

  1. 1. GLOBALIZATION PRESENTATION BY: 1.KARAN POSHATTIWAR 2.NITIN CHAVHAN 3.ARPIT KHANDELWAL 4.ASHISH KURWANSHI
  2. 2. Globalization What does “globalization” mean? ◦ What are its causes? ◦ Why is it proceeding rapidly? ◦ What are its aspects?
  3. 3. GlobalizationGlobalization is the system of interaction among the countries of world in order to develop global economy Power in the hands of stock, bond and currency traders moving funds around the world Multinational corporations looking for most efficient, low-cost producers
  4. 4. MNCs 1-4
  5. 5. GlobalizationPrivate sector primary engine of economic growthMaintain low inflation and price stabilityShrink government bureaucracyBalance budget
  6. 6. Globalization and the MNE A multinational enterprise (MNE) is any business that has productive activities in two or more countries
  7. 7. Globalization of Markets Distinct/separate markets merging into a huge global marketplace ◦ Mostly NOT consumer product markets ◦ Mostly industrial products ◦ Tastes and preferences of consumers converging (??) MNCs creating global marketplace? MNCs more vulnerable to competition in their home markets
  8. 8. “Drivers” of Globalization: Globalization of markets and production ◦ result of lowering of trade barriers ◦ enabled by technological change Telecommunications and microprocessors The internet and the world-wide web Transportation technology
  9. 9. Global Telecommunications
  10. 10. “Drivers” of Globalization:Average Tariff Rates on Manufactured Products (% value) 1913 1950 1990 2002  France 21 18 5.9 4.0  Germany 20 26 5.9 4.0  Italy 18 25 5.9 4.0  Japan 30 – 5.3 3.8  Holland 5 11 5.9 4.0  Sweden20 9 4.4 4.0  Britain – 23 5.9 4.0  USA 21 18 5.9 4.0
  11. 11. Global Institutions’ EmergenceSupra-national organizations define the“rules” of international economic activity:World Trade Organization (succeeded GATT)International Monetary Fund (IMF)World BankUnited Nations
  12. 12. Globalization and the Global Economy % share of world output and exports 1963 1997 2003 1998 2003 output exportsUnited States 40.3 20.8 21.1 12.7 11.0Japan 5.5 8.3 7.0 7.3 5.7Germany 9.7 4.8 4.5 10 9.6France 6.3 3.5 3.2 5.7 5.7United Kingdom 6.5 3.2 3.2 4.5 4.7Italy 3.4 3.2 3.0 4.5 4.1Canada 3 1.7 1.9 4.0 3.6China NA 11.3 12.6 3.4 5.0
  13. 13. Globalization of Production Each MNC ◦ Sources particular goods and services from a set of locations it selects around the world ◦ Develops a global web of suppliers as a source of competitive advantage ◦ Decides “where to produce” depending on a country’s factors of production  Labor, land, capital, energy, expertise Hostgovernments have a stake in the successful establishment of an MNC’s operations
  14. 14. GlobalizationEliminate or lower tariffs, quotas, domestic monopoliesIncrease exportsEncourage FDIPrivatize state owned industries and utilities
  15. 15. GlobalizationDeregulate capital marketsOpen up stock and bond markets to direct foreign investment and ownershipOpen banking, telecommunications systems to private ownership
  16. 16. GlobalizationCitizens able to chose from variety of competing pension options including foreign-run pension and mutual fundsDeregulate economy to promote domestic competitionEliminate government corruption, kickbacks and subsidies
  17. 17. 5 ASPECTS OF GLOBALIZATION1. ECONOMIC2. TECHNOLOGICAL3. CULTURAL4. POLITICAL5. MILITARY THESE ASPECTS ARE ALL INTERCONNECTED!
  18. 18. 1. ECONOMIC GLOBALIZATIONEARLY CAPITALIST IDEAS:1. “Free Market Economy” (Adam Smith, Wealth of Nations, 1776) Market is “free” from State control2. Division of labor3. Competition
  19. 19. Economic GlobalizationTODAY: Economies Are Increasingly Linked Together EXS: NAFTA (MX, CA, US), The EU, WTO (World Trade Organization) WTO Top 100 multinationals are all US-owned companies!  Goal: help producers of goods and services, exporters, and importers conduct their business
  20. 20. 2. TECHNOLOGICAL GLOBALIZATION• “World Wide Web” has exploded in last 10 years• Computers can move money around world = “finance capital” The “G” Technology
  21. 21. 3. CULTURAL GLOBALIZATION Cultural Imperialism = Dominance of one culture over others Hollywood movies, MacDonald’s, Disneyland, Starbucks Dominance of the English language and invasion of other languages
  22. 22. CULTURAL GLOBALIZATION McArabia Kofta
  23. 23. 4. POLITICAL GLOBALIZATION The United Nations: Global assoc. of govts. facilitating cooperation in international law, security, economic development, and social equi The US and the UK were the only nations in support of going to war in Iraq
  24. 24. POLITICAL GLOBALIZATION South Africa• In 2001, US pharmaceutical corporations sued South African companies for infringing on AIDS medication patent laws• In 2003, President George W. Bush announced the Emergency Plan in 2003 - the largest international health initiative in history by one nation to address a single disease• HIV/AIDS Situation in 2004 HIV Infected: 5.3 million AIDS Deaths: 370,000 AIDS Orphans: 1.1 million
  25. 25. 5. MILITARY GLOBALIZATIONNuclear Bombs F/A-22 Raptor
  26. 26. MILITARY GLOBALIZATION Global alliances become clear during war time Ex: Today’s US alliance with Britain in wars against Afghanistan and Iraq
  27. 27. MILITARY GLOBALIZATIONSmart Bombs Sidewinder Missiles
  28. 28. THANK YOU…!!

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