Globalization Chapter 1 PDF

Ch.1 Globalization Merging of distinct and separate national markets into one huge global marketplace ​ falling barriers to cross-border trade ​ benefit small and large companies ​ difference between national markets ​ products that serve universal needs are global ex.oil Sourcing good...

Ch.1 Globalization Merging of distinct and separate national markets into one huge global marketplace ​ falling barriers to cross-border trade ​ benefit small and large companies ​ difference between national markets ​ products that serve universal needs are global ex.oil Sourcing goods to take advantage of differences in cost and quality of production of factors of production -labor,energy,lands,capital Outsourcing was confined to manufacturing tech had advanced outsourcing today for service activities ​ Knowledge produces outsourcing…communication ​ Outsourcing-uses products/services from outside of their nation Robert Reich suggests ‘’global products’’ Restrictions… ​ formal/informal barriers to trade ​ barriers to foreign direct investment ​ transportation costs ​ political,eco risk ​ coordinate globally dispersed supply chain Emergence of Global Institutions Institutions help manage,regulate,and police global marketplace -GATT,General Agreement on Tariffs and Trade WTO,World Trade Org ​ policies world trading system,nation,states adhere to the rules,multinational agreements,98% world trade were WTOA members ​ Policies,world trading system ​ Ensures nation-states adhere to the rules ​ Multinational agreements among members ​ 164 nations,98% of world trade were WTO members IMF,International Monetary Fund ​ Maintain order in the international monetary system ​ Lender of last resort ​ Return for loans,nations-states do adopt specific economic policies to establish stable economy World Bank ​ Economic development ​ Low-interest loans to cash-strapped govs in poor nations,infrascturure investments United Stations,(UN) ​ peace ,internatinal cooperation and security ​ 193 members ​ charter=security,friendly relations,solve intel. Problem,harmonize actions of nations Group of Twenty (G20) ​ Finance ministers,central bank governors of 19 economies ​ Represen. From EU Union and Eu Central Bank Drivers of Globalization ​ Declining Trade and Invetsments Barriers ​ 1920-30’s:barriers to intel. Trade and foreign direct investment ❖​ Intel. Trade-firm exports goods or services to consumers in another country ❖​ (FDI),Foreign direct investments:firm invests resources in buss activities outside its home country ​ GATT,lowered barriers, ❖​ Uruguay Round extended GATT and established WTO Drivers of Globalization Declining trade and investment barriers continue -between 1960 and 2020,value of world eco. increased 9 times,values of intel. Goods increased 19.7 times ​ Trade in goods and services,value of foreign direct investments bene growing than world output ○​ More firms disperser production process to different locations around the globe ○​ Economies of the world’s nation-states are becoming more intertwined ○​ World has become significantly wealthier in past 20yrs Drivers of Globalization Role of tech change Communications ​ Develop microprocessor most important innovation since WWII ​ Moore’s law predicts,power of microprocessor tech doubles,costs of production falls in half every 18 months The Internet ​ More than half of world’s population uses the internet ​ Global e-commerce sales close to $4 trillion ​ Internet acts as an equalizer Transportation tech ​ Commercial jets,superfreighters,containerization have all ‘’shrunk the globe’’ ​ Locating production in geographically separate locations has become more economical  ​ Globalization of markets:cultural distance has been reduced and brought convergence of consumer tastes and preferences Changing Demographics of Global Ecocomy Changing World output and world trade picture ​ 1960’s-U.S 38.3% of world output ​ 2020:U.S. 24.7% world output Shows faster economic growth of other economies,like China and Brazil ​ China and BRIC countries grow more rapidly ​ Developing nations may account for more than 60% of world economies activity by 2030 =========-=======-=======-=======-===== 1/27 Changing foreign direct investment picture As barriers to the free flow of goods and services fell,non-U.S. firms increasingly invested across national borders ​ Desire to disperse production activities to optimal locations,build direct presence in foreign markets ​ Outward stock of foreign direct investment (FDI)-cumulative value of foreign investments by firms in nations outside nation’s borders Multinational enterprise MNE business has productive activities in two or more countries ​ 2003,38,8% of 2,0000 multinationals were U.S. firms ​ 2019,28.8% of top 2k global firms were U.S multinationals,drop of 202 firms Nature of Multinational enterprise Rise of mini-multinationals ​ Growth in the number of medium and small sized businesses ​ Internet is lowering barriers that smaller firms faced in international trade Anti-globalization Debate 1999,protests at WTO meeting in Seattle ​ Protestors show up at major meetings of global institutions ​ Protestors believe globalization causes detrimental effects on living standards,wage rates,and environment (fears may be exaggerated) Globalization,Jobs and Income Critics argue…. ​ Falling trade barriers ​ Losing jobs ​ Services are being outsourced ​