IBM Lecture 1

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IBM Lecture 1

  1. 1. Globalization: Introduction and Overview
  2. 2. What is Globalization? Globalization: A move toward a more integrated and interdependent economy Facets of Globalization: Markets and Production
  3. 3. Facets of Globalization Globalization of Markets : the merging of historically distinct and separate national markets into one huge global marketplace Globalization of Production : Sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production
  4. 4. Drivers of Globalization Declining Trade and Investment barriers Technological Change
  5. 5. Declining barriers GATT  WTO Trade barriers eliminated over time. This has resulted in a remarkable increase in world trade.
  6. 6. Changes in Technology Rise in the use of internet
  7. 7. Changing Demographics of Global Economy 4 Facts from the 1960’s that changed: US dominance in World Economy US Dominance in World FDI Dominance of large US Multinational firms Communist national markets off limits
  8. 8. Changing World Output and World Trade Picture USA and China
  9. 9. Changing Foreign Direct Investment Picture Asian FDI excluding Japan
  10. 10. Changing Nature of Multinational Enterprise Multinational companies emerging from countries other than USA/Europe/Japan Smaller firms engaging in multinational operations due to lowered costs through internet
  11. 11. Evolution of Commercial Institutions Economic activity is the basis for social relationships. - - True or false? Discuss. Past basis for societies: Hunting and Gathering Agriculture Industrialization
  12. 12. Evolution of Commercial Institutions 3 notable institutions of Agri era: Agricultural landlords/barons Military Religious class
  13. 13. Changing World Order
  14. 14. Global Economy of the 21 st Century Increasing volume of cross-border trade Adoption of liberal economic policies Deregulation Lowering of trade barriers Acceptance of market economy by communist and socialist nations
  15. 15. Globalization Debate Is globalization (shift toward a more integrated and interdependent economy) a good thing?
  16. 16. Anti-Globalization Protests Reasons for anti-globalization protests: That wages are pushed lower Jobs ‘exported’ to other countries Detrimental impacts on the environment Globalization promotes ‘colonization’ by other means
  17. 17. Globalization, Jobs and Income Does Globalization increase jobs and income or is it the reverse? PLUS - Cheaper goods free up resources for use to purchase other goods MINUS – Real wages, adjusted for inflation, for the average lowest-income families fell by 6% between 1980 - 2000
  18. 18. Globalization, Labor Policies and the Environment Criticism of Globalization: Manufacturers move to places where they have fewer environmental restrictions. Pollution rates increase Misuse and abuse of labor Carpet industry workers in Pakistan Counter is: As per capita income increases, emission levels decrease
  19. 19. Globalization and the world’s poor Gap between rich and poor increasing: In 1870 average IPC in 17 richest was 2.4 times of others In 1990 the same group was 4.5 times as rich as rest
  20. 20. Managing the Global Marketplace Challenges faced by an international business (any firm that engages in international trade or investment). Challenges in: Use of Currencies Cultural understanding Legal and political understanding Historical understanding

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