Contemporary World Chapter 1: Globalization

• Contemporary World, Chapter 1.

Globalization Definitions

• Globalization involves increasing interaction of people, states, or countries.
• It is driven by growth in the international flow of money, ideas, and culture.
• It is primarily focused on the economic process of integration with social and cultural aspects.
• It involves the interconnectedness of people and businesses worldwide.
• This interconnectedness leads to global, cultural, political, and economic integration.
• It enables easy movement and communication to conduct business internationally.

Globalization Defined by Other Authors

• Martin Albrow and Elizabeth King define globalization as a process "by which the people of the world are incorporated into a single world society."
• Anthony Giddens characterizes globalization as "the intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa."
• Prof. Roland Robertson (Sociology, 1992, University of Aberdeen) describes globalization as "the compression of the world and the intensification of the consciousness of the world as a whole."

Characteristics of Globalization

• Social mobility involves the movement of people regardless of reason.
• Intensification of interactions.
• It is an active process.
• Borderless interaction.
• The spread of ideas, knowledge, technology, culture, and religion.

Historical Context of Globalization

• 1897: Charles Taze Russel coined the term "CORPORATE GIANTS."
• He used it in reference to large national trusts and enterprises.
• 1930: "Globalize" appeared as a noun in "Towards new education" denoting a holistic view of education.
• Late 1970s: The term "Globalization" was officially coined.
• Early 1981: "Globalization" was used economically.
• Late 1980s: Theodore Levitt popularized "Globalization."
• Late 2000s: The IMF identified four basic aspects of globalization.
• 2013: Globalization defined a "borderless society."
• 2017: Globalization was often used in the academic context.
• 2018: Globalization is used across all disciplines.

Indicators of Globalization

• Interdependence of countries in different social aspects.
• Advancement of science and technology.
• Environmental issues across borders.
• Economic, cultural, and political globalization.

Nature of Globalization

• It is a conglomerate of units in different parts of the globe linked by common ownership.
• Multiple units use a common pool of resources.
• Resources include money, credit, information, patents, trade names, and control systems.
• Units respond to a common strategy.
• Products are present in different markets worldwide.
• Human resources are diverse.
• Transactions involving intellectual property occur across the globe.

Reasons for Globalization

• Rapid reduction in time and distance due to technology advancements.
• Domestic markets are no longer as lucrative due to interlocking factors.
• Companies seek political and economic stability by going global.
• Access to technological and managerial expertise from other countries.
• Reduced transportation costs.
• Proximity to raw materials and markets for finished products.
• The World Trade Organization (WTO) stimulates cross-border trade.
• The UN and arbitration bodies facilitate country agreements.

Stages of Globalization

• Stage 1: Arm's length service activity by a domestic entity.
• The entity moves into new markets overseas via local dealers and distributors.
• Stage 2: The company/institution takes over these activities on its own.
• Stage 3: The domestic company/institution begins manufacturing, marketing, and sales in foreign markets.
• Stage 4: The company moves to a full insider position in supported markets.
• This includes R&D and engineering; headquarters mentality remains.
• Stage 5: The company moves towards a global mode of operation.
• Global localization occurs, serving local customer needs worldwide.
• Requires organizational transition and a system of values shared by global managers.

Merits of Globalization

• Open economies spur innovation with fresh ideas from abroad.
• Export jobs often pay more than other jobs.
• Faster productivity growth in specialized goods and services.

Demerits of Globalization

• Exploitation of underdeveloped countries.
• Widening of the rich-poor gap.
• Harmful effects on small industries and businesses.