globalisation2.ppt (1)

7/26/2019 globalisation2.ppt (1)

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BMP-MBA 504

1M.S Ramaiah School of Advanced Studies - Bangalore

Globalisation

Session Speaer

!a"ashree #

Asst. Professor


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%hat &s 'lo(ali)ation*

+,he orld is moving aa" from self-contained

national economies toard an interdependent

integrated glo(al economic s"stem

+'lo(ali)ationrefers to the shift toard a more

integrated and interdependent orld econom"

'lo(ali)ation has to1/ the glo(ali)ation of marets

$/ the glo(ali)ation of production

/ 'lo(alisation of technolog"

4/'lo(alisation of &nvestment


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,he 'lo(ali)ation f Marets

+,he glo(ali)ation of maretsrefers to the

merging of historicall" distinct and separate

national marets into one huge glo(al

maretplace

+&n man" industries it is no longer meaningful

to tal a(out the 2'erman maret3 or the

2American maret3

+&nstead there is onl" the glo(al maret


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,he 'lo(ali)ation f Marets

+alling trade (arriers mae it easier to sell

internationall"

+,he tastes and preferences of consumers are

converging on some glo(al norm

+irms help create the glo(al maret ("

offering the same (asic products orldide


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,he 'lo(ali)ation f Production

+,he glo(ali)ation of productionrefers to the

sourcing of goods and services from locations

around the glo(e to tae advantage of national

differences in the cost and ualit" of factors ofproductionlie land la(or and capital

+6ompanies compete more effectivel" (" loeringtheir overall cost structure or improving the

ualit" or functionalit" of their product offering


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'lo(alisation &nvestments

M.S Ramaiah School of Advanced Studies - Bangalore

'overnment Polic" since

1881

9i(eralisation in the :&

sector and 6eilings on

oreign investment

:irect &nvestment &nflos

:& in select Asian

6ountries


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,he ?mergence f 'lo(al&nstitutions

&nstitutions are needed to@

+help manage regulate and police the glo(al

maretplace

+promote the esta(lishment of multinational

treaties to govern the glo(al (usiness s"stem


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&nstitutions created over the past half centur"

include@

+the'eneral Agreement on ,ariffs and ,rade

'A,,/

+the%orld ,rade rgani)ation %,/

+the&nternational Monetar" und &M/

+the%orld Ban

+thenited Cations C/


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+,he %orld ,rade rgani)ationlie its

predecessor 'A,,/ is primaril" responsi(le for

policing the orld trading s"stem and maing

sure that nation-states adhere to the rules laiddon in trade treaties signed (" %, mem(ers

+&n $00; the 150 nations that accounted for

8;D of orld trade ere %, mem(ers+,he %, promotes loer (arriers to trade and

investment


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+,he &nternational Monetar" undand the

%orld Banere created in 1844

+,he &M as esta(lished to maintain order in

the international monetar" s"stem

+,he %orld Ban as esta(lished to promote

economic development


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,he nited Cationsas esta(lished in 1845 to@

+maintain international peace and securit"

+develop friendl" relations among nations

+cooperate in solving international pro(lems

and in promoting respect for human rights

+(e a center for harmoni)ing the actions ofnations


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:rivers of 'lo(alisation

+ ?sta(lishment of %,

+ Regional &ntegrationE,rade Blocs

+:eclining ,rade Barriers

+ :eclining &nvestment Barriers

+ 'roth of :&

+ Strides in ,echnolog"+ 'roth in MC6s

M.S Ramaiah School of Advanced Studies - Bangalore


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:rivers f 'lo(ali)ation

,o macro factors underlie the trend toard

greater glo(ali)ation@

+the decline in (arriers to the free flo of

goods services and capital that has occurred

since the end of %orld %ar &&

+technological change


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:eclining ,rade And&nvestment Barriers

+&nternational tradeoccurs hen a firm eFports goods or

services to consumers in another countr"

+oreign direct investment :&/occurs hen a firm invests

resources in (usiness activities outside its home countr"

+After %orld %ar && advanced countries made a commitment to

loer (arriers to trade and investment

+Since 1850 average tariffs have fallen significantl" and are

no at a(out 4D

+6ountries have also (een opening marets to :&


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,a(le 1.1@ Average ,ariff Rates on

Manufactured Products as Percent of =alue


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9oer (arriers to trade and investment mean@

+that firms can vie the orld rather than a

single countr" as their maret

+that firms can (ase production in the optimal

location for that activit"


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,he Role f ,echnological6hange

+,echnological change has made the

glo(ali)ation of marets a realit"

&mportant advances have occurred in@

+microprocessors and telecommunications

+the &nternet and %orld %ide %e(+transportation technolog"


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&mplications of technological change for the

glo(ali)ation of production include@

+loer transportation costs that ena(le firms to

disperse production to economical

geographicall" separate locations

+loer information processing and

communication costs that ena(le firms to createand manage glo(all" dispersed production

s"stems

A 04


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&mplications of technological change for the

glo(ali)ation of marets include@

+lo cost glo(al communications netors help

create electronic glo(al maretplace

+lo-cost transportation help create glo(al

marets

+glo(al communication netors and glo(almedia are creating a orldide culture and a

glo(al maret for consumer products

BMP MBA 504


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,he 6hanging :emographicsf ,he 'lo(al ?conom"

+,here has (een a drastic change in the demographics ofthe orld econom" in the last 0 "ears

our trends are important@+the 6hanging %orld utput and %orld ,rade Picture

+the 6hanging oreign :irect &nvestment Picture

+the 6hanging Cature of the Multinational ?nterprise

+the 6hanging %orld rder

BMP MBA 504


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,he 6hanging %orld utputAnd %orld ,rade Picture

+&n 1870 the nited States accounted for over 40D of

orld economic activit"

+B" $007 the nited States accounted for less than

$0D of orld economic activit"+A similar trend occurred in other developed countries

+,he share of orld output accounted for ("

developing nations is rising and is eFpected toaccount for more than 70D of orld economic

activit" (" $0$0

BMP MBA 504


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,he 6hanging %orld utputAnd %orld ,rade Picture

,a(le 1.$@ ,he 6hanging :emographics of

%orld ':P and ,rade

BMP MBA 504


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,he 6hanging oreign :irect&nvestment Picture

+&n the 1870s .S. firms accounted for a(out to-thirds of

orldide :& flos

+,oda" the nited States accounts for less than one-fifth of

orldide :& flos

+ther developed countries have folloed a similar pattern

+&n contrast the share of :& accounted for (" developing

countries has risen from less than $D in 18>0 to almost

1$D in $005+:eveloping countries especiall" 6hina have also (ecome

popular destinations for :&

BMP MBA 504


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,he 6hanging oreign :irect&nvestment Picture

igure 1.$@ Percentage Share of ,otal :& Stoc 18>0-$005

BMP MBA 504


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,he 6hanging oreign :irect&nvestment Pictureigure 1.@ :& &nflos 18>>-$007

BMP MBA 504


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,he 6hanging Cature f,he Multinational ?nterprise

+A multinational enterprise MC?/is an"

(usiness that has productive activities in to or

more countries

+Since the 1870s there has (een a rise in non-

.S. multinationals and a groth of mini-

multinationals

BMP MBA 504


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,he 6hanging %orld rder

+Man" former 6ommunist nations in ?urope

and Asia are no committed to democratic

politics and free maret economies and so

create ne opportunities for international(usinesses

+6hina and 9atin America are also moving

toard greater free maret reforms

BMP MBA 504


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,he 'lo(al ?conom" f,he ,ent"-first 6entur"

+,he orld is moving toard a more glo(al

economic s"stem (ut glo(ali)ation is not

inevita(le

+'lo(ali)ation also (rings riss lie the

financial crisis that sept through South ?ast

Asia in the late 1880s

BMP MBA 504


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,he 'lo(ali)ation :e(ate

&s the shift toard a more integrated and

interdependent glo(al econom" a good thing*

+Supporters (elieve that increased trade and

cross-(order investment mean loer prices forgoods and services greater economic groth

higher consumer income and more Go(s

+6ritics orr" that glo(ali)ation ill cause Go(losses environmental degradation and the

cultural imperialism of glo(al media and MC?s

BMP MBA 504


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Anti-'lo(ali)ation Protests

+More than 40000 anti-glo(ali)ation protesters

too to the street at the %, meeting in Seattle

in 1888

+Protesters no regularl" sho up at most

maGor meetings of glo(al institutions

BMP MBA 504


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'lo(ali)ation !o(s And &ncome

+'lo(ali)ation critics argue that falling (arriers

to trade are destro"ing manufacturing Go(s in

advanced countries

+Supporters of glo(ali)ation contend that the

(enefits of this trend outeigh the costsHthat

countries ill speciali)e in hat the" do most

efficientl" and trade for other goodsHand allcountries ill (enefit

BMP MBA 504


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'lo(ali)ation 9a(or PoliciesAnd ,he ?nvironment

+'lo(ali)ation critics argue that firms avoid costl"

efforts to adhere to la(or and environmental

regulations (" moving production to countries

here such regulations do not eFist or are notenforced

+'lo(ali)ation supporters claim that tougher

environmental and la(or standards are associated

ith economic progress so as countries get richer

from free trade the" get tougher environmental and

la(or regulations

BMP MBA 504


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'lo(ali)ation AndCational Sovereignt"

+6ritics of glo(ali)ation orr" that toda"Is

interdependent glo(al econom" is shifting economic

poer aa" from national governments toard

supranational organi)ations lie the %, the ?and the C

+Supporters of glo(ali)ation contend that the poer

of these organi)ations is limited to hat nation-

states agree to grant and that the poer of the

organi)ations lies in their a(ilit" to get countries to

agree to follo certain actions

BMP-MBA 504


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'lo(ali)ation And ,he %orldIsPoor

+6ritics of glo(ali)ation argue that the gap (eteen

rich nations and poor nations is getting ider

+Supporters of glo(ali)ation claim that the (est

a" for the poor nations to improve their situationis to reduce (arriers to trade and investment and

implement economic policies (ased on free maret

economies and to receive de(t forgiveness for

de(ts incurred under totalitarian regimes

BMP-MBA 504


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Managing &n ,he 'lo(alMaretplace

+An international (usinessis an" firm that

engages in international trade or investment

BMP-MBA 504


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Managing &n ,he 'lo(alMaretplace

Managing an international (usiness differs from managing a domestic (usiness(ecause@

+countries are different

+the range of pro(lems confronted in an international (usiness is ider and the

pro(lems more compleF than those in a domestic (usiness

+firms have to find a"s to or ithin the limits imposed (" governmentintervention in the international trade and investment s"stem

+international transactions involve converting mone" into different currencies

BMP-MBA 504


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globalisation2.ppt (1)