Introduction to Global Business, MANA 1301, Spring 2025, University of Texas at Arlington, PDF

Introduction to Global Business MANA 1301 Spring 2025 University of Texas at Arlington...

Introduction to Global Business MANA 1301 Spring 2025 University of Texas at Arlington Dr. David Shurtleff Chapter 1- Part 2 The Rise of Globalization © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1  Section 1 Roadmap – Chapters 1- 4 Chapter 1 Chapter 2 Globalization Growth Trade & FDI Intl Trade Organizations Tariffs & NTB Barriers Benefits/drawbacks of Complexity of Trade globalization China/US Example Foundations of Global Trade Size/Scope Framework Complexity Chapter 3 Chapter 4 Regional Trade Intl Flow of Funds Agreements Currency Exchange Protect/Stabilize/ Promote trade Codify trade issues © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password- 3–2 protected website for classroom use.  Chapter Objectives 1. Explain characteristics of globalization – Global Connectedness 2. Identify current trends in globalization 3. 4 major reasons for the growth of economic globalization 4. Positive & negative impacts of globalization. © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1–3  Complexity of the World ~8 Billion people – all with individual personalities Geo-Political/Economic Societal/Cultural 197 countries ~6500 languages Numerous – Mandarin, Hindi, Spanish, geographies/climates French, Arabic, English = 50% ~4300 Religions Islands, deserts, jungles, forests, mountains, tropical/artic ~180 currencies Economic/political – Buddhism, Islam, Christianity, Hinduism, & Judaism – 75% structures Free market, command, mixed, democracy, communist, socialist, dictatorships Different work/life balances Corporate structures Different calendars, holidays, work schedules 45k stock exchange trade firms On-going conflicts Within & between nations  Global Business Business Global Connectness – “competing with everyone from everywhere for everything” © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–5 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  World’s 10 largest economies have 67% of world’s total GDP © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1–6  U.S. Imports 1970-2023 https://www.macrotrends.net/countries/USA/united-states/imports (World Bank) U.S. is importing more than ever! Connected to the world © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a 1–7 certain product or service or otherwise on a password-protected website for classroom use.  India & Brazil Imports 1970-2023 https://www.macrotrends.net/countries/USA/united-states/imports (World Bank) Trade Important to Countries India imports Brazil imports © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a 1–8 certain product or service or otherwise on a password-protected website for classroom use.  Is Globalization Important to Companies? © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–9 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Apple’s International Revenue – +60% © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–10 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Coca-Cola International Revenue - ~65% © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–11 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Globalization Important for Companies ~70% of Boeing’s Commercial Aircraft Revenue is International Example: Boeing 787 Dreamliner Aircraft © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed 1–12 with a certain product or service or otherwise on a password-protected website for classroom use.  Orders/Deliveries Boeing 787 Source:https://en.wikipedia.org/wiki/List_of_Boeing_787_orders_and_deliveries © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1–13  Boeing 787 Global Supply Chain Source: Boeing Co. ~65% of 787 sourced globally Global Suppliers = Global Customers © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–14 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  What Is Globalization? Globalization is the socioeconomic reform process of eliminating trade, investment, cultural, information technology, and political barriers across countries – “Eliminate Friction for trade” Many aspects of globalization – Political, social, cultural – Focus of this course is economic/business Goal = increased economic growth and geopolitical integration and interdependence among nations – Actions of one country impacts another © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–15 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Proven Record of Free Trade Among Nations Bahnsen, D. (2021) There’s No Free Lunch “The message from history is so blatantly obvious – that free trade causes mutual prosperity while protectionism causes poverty…There is not a single example of a country opening its borders to trade and ending up poorer.” Matt Ridley (British writer, former member of UK House, Oxford educated) Legitimate discussions around matters of: national security, intellectual property, national health and safety Global Trade leads to Prosperity © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–16 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Higher Global Trade Usually Means Higher GDP per Capita (Source: IMF) © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1–17  Limited Trade Example - Poverty of North Korea North Korea is one of the poorest countries in the world - autocratic ~+60% of population live in extreme poverty – GDP per capita ~$1500, one of the poorest in the world (do not report economic information) It is an isolated country – very little trade with anyone © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–18 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Globalization Trends 1. Center of economic gravity is shifting toward emerging economies – Shifting from North America and Europe – Shifting to China, SE Asia & India – BRIIC countries expanding 2. Supply chain failures (highlighted with COVID & geo-political events) leading to more local content (less globalization – deglobalization) – Higher prices for most consumers 3. More regional partnerships instead of “everyone trading with everyone” (Ch. 3) Globalization is not ending – it is changing!! © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–19 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  1. Trend - Shift to Asia Asia starts a new era as the world's new majority, accounting for more than half of the global total of many key metrics we use to measure the world  Asia is also where 13 of the world's 20 largest trade corridors by value are. © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1–21  Emerging Markets BRIIC = Brazil, Russia, India, Indonesia & China Bloc adds Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and UAE Expansion could lend global clout to BRICS Group leaves door open to further expansion © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with1–22 a certain product or service or otherwise on a password-protected website for classroom use. 2. Trend – Shortening Supply Chains Some companies have already decided to move some of their operations in order to cope with the ongoing deglobalization trend. In June, Lego said it would invest $1 billion and create 1,760 jobs over 10 years with its new factory in Virginia in order to shorten its supply chains for the key U.S. market.  Taiwan Semiconductor Manufacturing Company (TSMC) will build a third plant and begin production of the world's most advanced semiconductors in Phoenix by the end of the decade, the U.S. Commerce Department announced Monday morning. This brings TSMC's total Arizona investment to $65 billion — the largest foreign direct investment in a new project in U.S. history, Raimondo said. © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–24 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  U.S. “Re-shoring” of Jobs Increasing Reshoring is the process of returning the production and manufacturing of goods back to the company's original country. © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1–25  Walmart’s Re-shoring First, we’re announcing a new commitment: over the next ten years, Walmart will spend an additional $350 billion on items made, grown or assembled in the U.S. We estimate that this spend will support more than 750,000 new American jobs.1 We’ve identified six priority categories to focus on: plastics; textiles; small electrical appliances; food processing; pharmaceutical and medical supplies; and Goods Not For Resale (GNFR). Source: Investing in the Future of U.S. Manufacturing, Our Commitment to American Jobs (walmart.com) © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed 1–26 with a certain product or service or otherwise on a password-protected website for classroom use.  Impact of Globalization Trends Less Globalization = Higher Prices (Inflation) Fink wrote that the Russian invasion of Ukraine has “put an end to the globalization we have experienced over the last three decades.” He argued that companies and governments will be looking to reduce their dependencies on international trade in the coming years, leading many to onshore their operations. “This decoupling will inevitably create challenges for companies, including higher costs and margin pressures,” he said, adding that there will be an era of increasing inflationary pressures worldwide as global supply Throughout chains are modern remade.history, globalization has been a deflationary force. Increased trade and migration between nations have acted to reduce labor and materials costs for decades now, leading many critical consumer prices to fall. a future where there are “parallel economies” that each have their own technology platforms and supply chains, due to the current state of increased nationalism and onshoring worldwide. One of the benefits of globalization is that it creates competition amongst businesses,” he said. “As corporates compete with each other, they typically set the lowest possible price points which is a deflationary effect. De-globalization can have the opposite effect.” How Economically Connected is the World? Measuring Globalization Why would DHL care about Globalization? © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–28 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  How Economically Connected is the World? © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–29 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  DHL Global Connectedness Index Index showing no significant change in globalization Source:https://group.dhl.com/content/dam/deutschepostdhl/en/media-center/media-relations/documents/2024/dhl- global-connectedness-report-2024.pdf 1–30  Items to Note on DHL Index Interconnection between trade (economics) and geopolitics Trade between US/China decreased Europe still very connected Trade between EU & Russia decreased to world via trade © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–31 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Globalization Growth – “Trade Openness” Exponential Growth In last ~70+ years – “Hyperglobalism” © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1–32 Source: Trade and Globalization - Our World in Data  What are the Drivers/Restraints of Globalization? Source: Essay On Globalization and Business (economicsdiscussion.net) by Saha Constant “Tug of War” © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–33 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  What has caused growth in globalization? 1945 to current 1. Technology – Shipment of goods improved – ships & air travel – Logistics management – Digitization of information – flow of finance 2. Population growth – Countries cannot produce all the goods/services they need 3. Formation of global trade organizations – Desire post WWII promote world peace w/ economic trade - GATT (General Agreement Tariffs/ Trade) – Create interdependency among nations to promote peace – Similar to formation of United Nations – Mid 1990’s World Trade Organization (WTO) – Improve global trade efficiency – Align domestic policies with world trade policies 4. Business enterprise growth/cost efficiency desire – Free market growth – Desire for market growth/proximity to customers/cost efficiencies – Investment (FDI) – Multi-national corporations © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–34 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  1. Technology © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–35 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Civilizations & Technological Growth Slow Technology Advances in History Until Recently! © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with1–36 a certain product or service or otherwise on a password-protected website for classroom use.  Technological Improvements that have promoted Trade – Modern Acceleration Transportation technology – Sea shipping – Air freight – Computer/cloud data to facilitate goods tracking Communication/navigation technology – GPS Manufacturing technology Finance/payment technology © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–37 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Technology - Large Container Ship © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–38 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Technology Improvements in Goods Movement Singapore Port Sea Lanes for Shipping Huge Growth in Size of Container Ships! © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain1–39 product or service or otherwise on a password-protected website for classroom use.  Maritime Trade Increased ~5X in 40 years © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–40 e or in part, except for use as permittedSource:https://transportgeography.org/contents/chapter5/maritime-transportation/seaboard-trade-cargo-type/ in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  2. Population Growth © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–41 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Population Growth Created Demand for Globalization The world saw two significant population milestones. First, in November 2022, the global population officially hit eight billion people. Second, in April 2023, India surpassed China to become the world’s most populous country, according to UN estimates. © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–42 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use. Source: 7 countries hold half of world’s population as it nears 8 billion in 2022 | Pew Research Center 1–43 © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  World Population Growth Population growth significant In 20th & 21st centuries Growth driven by India & China © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–44 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use. More than 8 out of 10 people in the world will live in Asia or Africa by 2100 ~80% In Asia/ Africa © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a 1–45 license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  World Population Growth Africa Growth 2X Source: wpp2022_summary_of_results.pdf (un.org) © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1–46  World Population Growth Global demand for goods/services dramatically increased Faster Growth Rate © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–47 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use. Fertility Rates are Dropping Women today bear one child fewer, on average, than they did around 1990. More than half of all countries and areas globally have fertility below the replacement level of 2.1 live births per woman. 1–48  What has caused growth in globalization? 1945 to current 1. Technology – Shipment of goods improved – ships & air travel – Logistics management – Digitization of information – flow of finance 2. Population growth – Countries cannot produce all the goods/services they need 3. Formation of global trade organizations – Desire post WWII promote world peace w/ economic trade - GATT (General Agreement Tariffs/ Trade) – Create interdependency among nations to promote peace – Similar to formation of United Nations – Mid 1990’s World Trade Organization (WTO) – Improve global trade efficiency – Align domestic policies with world trade policies 4. Business enterprise growth/cost efficiency desire – Free market growth – Desire for market growth/proximity to customers/cost efficiencies – Investment (FDI) – Multi-national corporations © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–49 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  3. Formation of Global Trade Organizations Organize, Formalize, Standardize Trade © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–50 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Globalization Growth – “Trade Openness” Exponential Growth In last ~70 years Key events: World War I World War II © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–51 Source: Trade and Globalization - Our World in Data e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use. Intl Trade Organizations - History of Globalization Source:The Three Waves of Globalization – Nordregio By Anders Johnson IMF, World Bank, GATT/WTO Fourth Wave? 2020 AI Robots Autonomy Protectionism Nationalism De-coupling © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–52 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Globalization Growth – Cyclical – Tied to Political Events Wave 1 Wave 2 Wave 3 Great Depression Russian Spanish Flu World War I Communist Pandemic (500m infected) revolution World War II Technological Advances (Shipping) Uruguay Round Modern WTO Mass production NAFTA,EU Mass consumption Bretton Woods GATT Source: Trade and Globalization - Our World in Data © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–53 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  1918 Spanish Flu vs COVID.028% 2.8% World population 7.8B 1.8B Source:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8108277/ © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1–54  World War 1 (1914-1918) Germany, Austria, Ottoman empire vs. UK, France, Russia, Japan, U.S. ~16 million deaths – Modern weapons with ancient tactics Europe devastated German economy wrecked – Had to pay war reparations - $270B – 92 years to repay – 2010 (Treaty of Versailles) Led to rise of Nazi Germany – Economic turmoil created political void Shifted economic power from Europe to U.S. © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–55 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  World War 2 – Defining Moment Deadliest military conflict in history (1939-1945) – ~70 to 80 million people (combat & civilians) died Soviet Union & China lost ~ 20 million people each – ~50 nations involved – 3.4m tons – bombs dropped Complete devastation Warsaw Poland © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–56 Source: e or in part, except for use as permitted in a license distributed with a certain product ebsite for classroom use. Which or service Countries or otherwise Won World War on a password-protected w II? - Answers (mapsofworld.com)  Decline of European Wealth U.S. wanted a new approach less conflict – more economic growth © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–57 Source: e or in part, Finfacts Ireland: except for use From as permitted economic in a license heyday distributed of British with a certain productEmpire or service to EU andonBrexit or otherwise (finfacts-blog.com) a password-protected w ebsite for classroom use.  International Trade Organizations Bretton Woods International General Agreement World Monetary on Tariffs and Trade Bank Fund (IMF) (GATT) World Trade Organization (WTO) Impetus = desire for peace through trade & economic development (from tragedy of WWII) © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–58 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  World Economic Organizations The world economy is in crisis again. If we look back 80 years, we might be able to fix it  Michael Jacobs is professor of political economy at the University of Sheffield Thu 4 Jan 2024 10.00 EST The Guardian 2024 marks an important anniversary. Eighty years ago, in July 1944, a small town called Bretton Woods in New Hampshire, America, hosted a conference. Its purpose was to establish a new set of rules and institutions that could keep order over global capitalism after the disasters of the Great Depression and the second world war. It is not too much to say that Bretton Woods established the infrastructure of the modern global economy Results of Bretton Woods In 1944 the US produced more than half of the world’s manufactured output. Today it is around a sixth. International trade represented less than a quarter of global GDP; today it is more than half. China has grown from a largely feudal rural economy to an industrial powerhouse. © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.  Formation of Key International Institutions That Facilitate Globalization Currency Stabilization Economic Development Facilitate Trade Emergency Loans Long-term Loans Oversee Trade Agreements Intl Monetary Fund World Bank GATT/WTO (IMF) Formed 1944 Formed 1944 Formed 1948 HQ in Wash DC HQ in Wash DC (GATT) 190 member 189 member WTO 1995 countries countries HQ in Switzerland Purpose: Stability of Purpose: Initially – 164 member intl monetary system rebuild countries Lends to developing Europe/Japan; Purpose: Reduce nations, currency eliminate poverty & trade barriers monitoring, promote economic between countries promotes economic development (i.e., tariffs) data, assists w/ Lending Adjudicate trade trade policies disputes © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–60 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Key International Institutions That Facilitate Globalization International Monetary Fund’s role in global financial stability: – Provides a forum for cooperation on international monetary problems. – Facilitates international trade that promotes job creation, economic growth, and poverty reduction. – Promotes exchange rate stability and an open system of international payments. – Lends countries foreign exchange to help address balance of payment problems. – Emergency Loans Famine, weather crisis, medical crisis © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–61 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  MEXICO CITY, Jan 23 (Reuters) - The International Monetary Fund's (IMF) executive board approved $105 million to help Haiti address severe food insecurity, the institution said on Monday, as the Caribbean country faces widespread shortages amid a humanitarian crisis. The payment, under the IMF's Food Shock Window program, is set to address "urgent balance of payment needs related to the global food crisis", the fund said in a statement. © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–62 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  IMF Support to Ukraine IMF board completes Ukraine loan review, allowing $890 million withdrawal By David Lawder and Andrea Shalal WASHINGTON, June 29 (Reuters) - The International Monetary June 29, 2023 Reuters Fund's executive board on Thursday completed its first review of Ukraine's $15.6 billion loan program, allowing Kyiv to immediately withdraw $890 million for budget support as it mounts a major offensive against Russia's invasion. The board's approval brings Ukraine's withdrawals under the program launched on March 31 to around $3.6 billion so far. The Guardian 12/20/24 © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–63 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  World Bank Mission Source: Investopedia Two main goals: 1. Reduce poverty 2. Long-term economic development Roads, dams, rail, airports, schools Low/No interest loans to countries How does World Bank raise funds to loan? Issue bonds Private bank/financial institutions Donations © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–64 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  World Bank Loan Summary 1,387.5 billion © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1–65 World Bank Lending © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1–66 Source:https://thedocs.worldbank.org/en/doc/a60d0e2b975a3b94bc5cfbaa8e1cb269-0090012023/related/WBAR23-App-FY23-Lending-Presentation.pdf  Globalization and Extreme Poverty © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–68 Source: e or inhttps://www.vox.com/future-perfect/2019/2/12/18215534/bill-gates-global-poverty-chart part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use. © 2017 Cengage LearningSource:What Is the and University of Texas Role ofAllthe at Arlington. IMF Rights and the Reserved. MayWorld Bank? not be copied, (saylordotorg.github.io) scanned, or duplicated, in whol 1–69 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Short-term Long-term Overlap/cooperation between IMF & World Bank Source: Imf & world bank (slideshare.net) © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–70 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  WTO Major Functions: WTO promotes global trade by: – Administering trade agreements – Acting as a forum for trade negotiations – Settling trade disputes – Reviewing national trade policies – Providing developing countries technical assistance/training programs – Cooperating with the IMF and the World Bank Member countries abide by WTO agreements National Policy/ Legislative WTO Approval © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–71 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use. The World Trade Organization Origins = Bretton Woods during World War II The WTO began trading in 1948 under the General Agreement on Tariffs and Trade (GATT). – Goal: Promote world peace through economic interdependency – Liberalize trade – lowering/removing trade barriers such as tariffs, quotas, and subsidies – reduce trade “friction” Updated in 1995 to form WTO (replaced GATT) – modern era of trade – Goal: Promote global economic efficiencies – Alignment of domestic trade policies with world economic efficiencies Creates tension between national sovereignty & world trade © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–72 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  WTO Usage © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–73 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  WTO Publications/World Trade Data Publishes Global Trade Information © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–74 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  The “So What” of Globalization What impact has it really had? Good & Not so Good © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–75 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  What impact has globalization had? Growth of multiple country economies Lifted countries out of poverty/raised living standards More choices for consumers – pricing power Improved cultural awareness Created “multi-polar” world economy – Dominated by U.S., China, EU Decoupling – Countries growing based on their own strengths – independent economically – Less reliance on other country’s economy – China/U.S.economies Better institutional structures – transparent, accountable Some regions left behind – Latin America, Africa (emerging) © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–76 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Example: Globalization Impact on South Korea ROK Export Growth ROK now world’s USD in Millions 10th largest exporter © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1–77  Globalization and Multipolar World Economy World GDP by Region Source: World Bank Africa Oceania 3% 2% Top 5 Countries= ~50% of world total – US, China, India, Japan, and Germany North America Asia 27% 36% Multipolar World Latin America Economy 7% NA, Asia, Europe Europe 25% © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–78 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Globalization Trend – Decoupling/De-risking De-coupling – separation from reliance on another country for goods/services De-risking – do not become overly dependent on another country for critical items Strategic Autonomy similar term © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–79 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Impact of Globalization – Decoupling Product Decoupling Example Decoupling = separation of previously linked systems so that they may operate independently Taiwan Manufactures ~2/3rds of the world’s semiconductor chips Countries moving to “decouple” from reliance on Taiwan © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–80 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Strategic Autonomy = Decoupling Wary of being left behind, Europe has grasped onto the notion of “strategic autonomy” to help it compete technologically and economically. Here it is putting money behind constructing homegrown industries and regional supply chains in strategic areas such as cloud computing, artificial intelligence, green hydrogen, semiconductors, and satellite communications. Source: O'Neil, Shannon K.. The Globalization Myth : Why Regions Matter, Yale University Press, 2022. © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–81 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Economic impact of Decoupling Trend in Globalization Globalization is slowly being replaced by protectionism – is this good or bad? Why? Higher consumer prices – inflationary Less consumer choices Reduces economic efficiencies – higher cost to produce microchips in U.S. instead of Taiwan (55% higher labor costs) Exclusionary and does not promote economic cooperation – use as a political weapon – Less global security? More government directed (political) decisions instead of market decisions – More government spending, higher debt and higher taxes Source: The Economist, Zero-sum, January 14, 2023 and The Economist, Protectionist Turns, January 14, 2023 © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1–82  Global Economic “Connectedness” We live in a highly interconnected world. Trade-Offs to Economic Cultural Globalization Exchange “There are no solutions, there are only trade-offs” Access to -Thomas Sowell Resources Environmental Cheaper Concerns Prices Source https://www.mckinsey.com/mgi/our-research/the-complication-of-concentration-in-global-trade https://fastercapital.com/topics/the-importance-of-global-trade-in-a-connected-world.html © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with1–83 a certain product or service or otherwise on a password-protected website for classroom use.  Myth of Globalization/Negative Impacts Is the world safer/more peaceful with globalization? – Why/Why not? Potential negative impacts: – Job loss/income stagnation – Environmental exploitation – Over reliance on foreign production – national security There are always winners and losers/prosperous and more prosperous – Difference makers: Leadership Education Technological advancement Political stability Business climate © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whol 1–84 e or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected w ebsite for classroom use.  Chapter 1 Summary 3 major forces – accelerating – impact on global business Definition of globalization Trends of globalization – Decoupling/reshoring – inflationary 4 Reasons that lead to increase in globalization Key international institutions – influence global business Growth/Decoupling/multi-polar definitions & examples Negative aspects of globalization © 2017 Cengage Learning and University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. 1–85  Take-home Assignment #2 1/21/25 Assignment – De-coupling Semiconductors due to Geo-political Risks Points - 10 points Due Date – 1/28/25 – provide hard-copy, written response (due in class only) Instructions: – Read the following article on semiconductor production and answer the following questions (access to article based on either link below): 1. Provide reasons for the passage of the U.S. CHIPS Act of 2022? 2. Describe the term “techno-nationalism” 3. What are the implications of government intervention in free markets (i.e. industrial policy)? Published in EM-DPRG240035 1..16 (uta.edu) Digital Policy, Semiconductor production, geopolitics a Regulation, and nd the CHIP SACT of 2022: a theoretical analysis - University of Texas at Arlington Governance (uta.edu) May 2024 – Minimum of 400 typed words total – no references required – Provide word count on document – Proper heading – name, date, and section number required © 2017 Cengage Learning and The University of Texas at Arlington. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use and with written permission from professor from UTA. 2–86