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  1. 1. LOGOLOGO Globalization Group Members Saurabh Nilesh Khushbu Yuvraj Sayli Karishma Sohail Shalini Purnima
  2. 2. LOGO Introduction • Globalization is a common term for processes of international integration arising from increasing human connectivity and interchange of worldviews, products, ideas, and other aspects of culture. • In particular, advance in transportation and telecommunications infrastructure, including the rise of the Internet, represent major driving factors in globalization and precipitate further interdependence of economic and cultural activities. Meaning • “It is the process of integrating country’s economy with global economy with a view to capture global opportunities for long term growth & development.” • Deepak Nayyar defines Globalization as, "the expansion of economic activities across political boundaries of nation states.” Definition
  3. 3. LOGO Measures Exchange Rate & Convertibility. • In 1993-94, full convertibility current account & unified exchange rate system was introduced. Opening up of Indian Economy. • In the New Economic Policy, since 1995, Government has offered various incentives to foreign investors & NRI’s. Import Liberalization. • The New EXIM Policy of 1992-97 allowed the free import of all items, except those in negative list only.
  4. 4. LOGO Benefits Increase in Productivity. Increase in Trade. Higher Living Standards. Opportunities for Growth. Financial Markets. Impact on Property. Economic Gains. Foreign Direct Investment. (FDI) Interdependence & Competitiveness. Better Technologies.
  5. 5. LOGO Shortcomings Takeover of National Firms. Widens the Disparity. Brings the Instability. Excess Utilization. Cultural Disturbances. Traditional De- values. Environmental Degradation. Social Tensions. Neglect to Spiritual Aspects. Beneficial to Developed countries.
  6. 6. LOGO I.M.F The International Monetary Fund (IMF) was established on 27th December, 1945 when 30 countries signed the Articles of Agreement. The Fund was established to remove all restrictions on trade & exchange. It also provided short term capital to the member- state to overcome their balance of payment difficulties to promote the multilateral trade. Today it has about 185 countries associated to it.
  7. 7. LOGO Role of I.M.F To provide Credit assistance. To establish a multilateral system. To maintain orderly arrangement. To serve as a reservoir of Currencies. To promote Exchange Stability. To promote Balanced Growth. To act as a Forum.
  8. 8. LOGO IBRD or World Bank The International Bank of Reconstruction & Development (IBRD) was set up to help the member countries with long term capital for reconstruction of the war-damaged economies & development of underdeveloped countries. • The International Finance Corporation. (IFC) • The International Development Association. (IDA) • The Multilateral Investment Guarantee Agency. (MIGA) • The International Bank of Reconstruction & Development. (IBRD) • The International Centre for the Settlement of Investment Disputes. (ICSID) The World Bank in the early 90’s expanded from single institution to group of 5 development institutions.
  9. 9. LOGO Role of World Bank The poverty reduction & sustainable growth in the poorest countries, especially Africa. The solutions to the special challenges of post-conflict countries & fragile states. The development solutions with customized services as well as financing for middle-income countries. The regional & global issues the cross national boarders- climate change, infectious disease & trade. The greater development & opportunity in the Arab world. The pulling together of the global knowledge to support development.
  10. 10. LOGO Global Recession A recession refers to downswing, when the economy is shrinking & the GDP is growing at a negative rate. No country can remain isolated from the fluctuations of the world trade transactions. Heavy losses suffered by the major international banks is going to affect all the countries of the world as these financial institutions have their investment interests in almost all the connected countries. India is now experiencing the following features of global recession: • Our share markets have been falling everyday. • Our Rupee is weakening against the US Dollar. • Our banks have been facing severe cash crunch towards liquidity in markets.
  11. 11. LOGO Contagion It is the spread of market disturbances on the downside from one country to the other, through co-movements in exchange rates, stock prices, sovereign spreads & capital flows. It is a significant increase in cross market linkages after shock to an individual country or the group of countries. It is a cross country transmission of economic shocks or any of the general cross country spill over effects whether real, financial or from exogenous sunspots.
  12. 12. LOGO Contagion Effects Common Shocks. Trade Links Competitive Devaluations. Financial Links. Margin Calls. Rational Portfolio Re- balancing. International Counterpart Risk. Cross Market Hedging. Herd Mentality. Liquidity Problems. Multiple Equilibriums.
  13. 13. LOGO W.T.O During the Uruguay Round of GATT (General Agreement on Trade & Tariff), W.T.O (World Trade Organization) was established to give the way of further liberalization of international trade. From 77 member countries in 1995 of the GATT completely increased to 127 member countries by 1996 to 147 countries, including India by April 2004. W.T.O is a institutional frame-work established for free global trade at the international level.
  14. 14. LOGO W.T.O Agreements Agreement on Trade in Services. Agreement on Manufactured Goods. Agreement on Agriculture. Agreement on Textiles & Clothing. Agreement on TRIPs. Agreement on TRIMs. Agreement on Subsidies & Countervailing Measures. Disputes Settlements.
  15. 15. LOGO Implications of W.T.O • Increase in export earnings. • Agricultural exports. • Export of textiles & clothing. • Multilateral rules & deciplines. Favorable Impacts.
  16. 16. LOGO Implications of W.T.O • TRIPs • Pharmaceutical Sector. • Agriculture. • Micro-organisms. • TRIMs. • GATS • Trade & Non-Tariff barriers. • LDC Exports. Unfavorable Impacts.
  17. 17. LOGO Dispute Settlements The disputes in the WTO are about broken promises. A dispute arises when one country adopts a trade policy measure or takes some action that one or more fellow WTO members consider to break the WTO agreement. • The Consultation. • The Panel. The Dispute Settlement has following stages.
  18. 18. LOGO Dispute Settlements • Case in Writing. • First Hearing. • Rebuttals. • Experts. • First Draft. • Interim Report. • Review. • Final Report. The main stages describe the work of the panel as:
  19. 19. LOGO Need of Foreign Capital Investment Demand. Initial Stage of Development. Foreign Expertise. Underdeveloped Capital Market. Balance of Payment Problems. Advanced Know-How. Purchasing Capacity.
  20. 20. LOGO Role of MNCs Giant Size. Global Operations. Professional Management. Sophisticate Technology. International Market. Large Employment Opportunities. Rapid Industrial Growth. Breaks Domestic Monopolies. Changes favorable trade. Brings the world closer. Optimum utilization of resources. Benefits of Research & Development.
  21. 21. LOGO Causes of Rising FDI Government Planning. Source of Technology. Cost Benefits. Crucial Inputs. Low Cost Opportunities. Rapid Economic Progress. No Barriers or Permission.
  22. 22. LOGO Thank You