Globalization of Economic Relations PDF

Globalization of Economic Relations Prepared By: Ken M. Villamartin, MPA Globalization of Economic Relations Prepared By: Ken M. Villamartin, MPA Intended Learning Outcome: Define economic globalization Identify the actors that facilitate economic globalization  Economic Globali...

Globalization of Economic Relations Prepared By: Ken M. Villamartin, MPA Globalization of Economic Relations Prepared By: Ken M. Villamartin, MPA Intended Learning Outcome: Define economic globalization Identify the actors that facilitate economic globalization  Economic Globalization ✓Economic globalization refers to the increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, flow of international capital and wide and rapid spread of technologies. ✓It refers on continuing expansion and mutual integration of market frontiers, and is an irreversible trend for the economic development in the whole world at the turn of the millennium. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Trends in Economic Globalization Emerging Markets ✓Shift in Economic Power - Emerging economies, particularly in Asia (China, India) and Africa, are experiencing rapid growth, contributing significantly to global economic output. ✓Investment Destinations - These markets are becoming attractive destinations for foreign direct investment (FDI), driven by their large, young populations and growing middle class. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Trends in Economic Globalization Global Supply Chain ✓Complex Networks - Production processes are increasingly spread across multiple countries, with components sourced from various locations before final assembly. ✓Just-In-Time Production - Businesses adopt lean manufacturing processes, reducing inventory costs but increasing reliance on smooth, uninterrupted supply chains. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Trends in Economic Globalization Technological Advancements ✓Digital Economy - The rise of the internet, e-commerce, and digital platforms facilitates global trade and investment, enabling businesses to reach international markets more easily. ✓Automation and AI - Technological advancements in automation, artificial intelligence, and robotics are transforming industries and labor markets, increasing productivity but also raising concerns about job displacement. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Trends in Economic Globalization Trade Agreements and Regional Integration ✓New Trade Pacts - Comprehensive trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP) aim to reduce trade barriers and enhance economic cooperation. ✓Regional Blocs - Economic integration within regions (e.g., the European Union, ASEAN, African Continental Free Trade Area) promotes intra-regional trade and investment. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Trends in Economic Globalization Global Financial Integration ✓Cross-Border Capital Flows - Increased movement of capital across borders, including foreign direct investment, portfolio investment, and remittances. ✓Global Financial Markets - Integration of financial markets enables faster and larger capital flows, but also increases the risk of contagion from financial crises. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Trends in Economic Globalization Sustainability and Green Economy ✓Environmental Concerns - Growing emphasis on sustainable development and green technologies as businesses and governments respond to climate change and environmental degradation. ✓Corporate Social Responsibility - Increased focus on ethical business practices and social responsibility, driven by consumer preferences and regulatory pressures. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Trends in Economic Globalization Trade Protectionism and Geopolitical Tensions ✓Protectionist Policies - Rise in protectionist measures, such as tariffs and trade barriers, particularly highlighted by trade disputes between major economies (e.g., US-China trade war). ✓Geopolitical Risks - Political tensions and instability can disrupt global trade and investment, with businesses needing to navigate complex geopolitical landscapes. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Trends in Economic Globalization Global Health Crises ✓Pandemic Impact - The COVID-19 pandemic highlighted vulnerabilities in global supply chains and led to a rethinking of globalization, with some companies reshoring or diversifying their supply sources. ✓Healthcare Investment - Increased global focus on health security and investment in healthcare infrastructure and research. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Trends in Economic Globalization Labor Mobility and Migration ✓Global Workforce - Increased mobility of labor across borders, driven by demand for skilled workers in technology, healthcare, and other sectors. ✓Remittances - Significant economic impact of remittances sent by migrant workers to their home countries. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Trends in Economic Globalization Digital Currencies and Fintech ✓Cryptocurrencies: Growth of digital currencies like Bitcoin and the exploration of central bank digital currencies (CBDCs) by various countries. ✓Fintech Innovation: Advancements in financial technology (fintech) are transforming banking, payments, and financial services, enhancing financial inclusion and cross-border transactions. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Trends in Economic Globalization Global Value Chains (GVCs) ✓Regionalization of Production - Shift towards more regionalized production networks to mitigate risks associated with long global supply chains. ✓Value-Added Trade - Focus on the value added at each stage of production, rather than just gross trade flows, to better understand economic contributions. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Trends in Economic Globalization Consumer Market Integration ✓Global Brands - Proliferation of global brands and products, driven by digital marketing and international distribution networks. ✓Cultural Exchange - Increased cross-cultural exchange and influence, impacting consumer preferences and lifestyles. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Risks in Economic Globalization Economic Vulnerability and Dependency Supply Chain Disruptions: Global supply chains can be fragile, as seen during the COVID-19 pandemic. Disruptions in one part of the world can cause significant delays and shortages elsewhere. Dependency on Foreign Markets: Countries and businesses that heavily rely on foreign markets and suppliers may face significant risks if there are economic or political issues in those markets https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Risks in Economic Globalization Financial Instability Capital Flight: Sudden outflows of capital can destabilize economies, particularly in emerging markets. Investors might rapidly withdraw funds in response to economic or political instability. Currency Fluctuations: Exchange rate volatility can impact trade and investment, creating uncertainty for businesses operating internationally. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Risks in Economic Globalization Income Inequality Domestic Inequality: Globalization can lead to significant income disparities within countries. While some sectors and regions prosper, others may decline, leading to social and economic tensions. Global Inequality: Differences between wealthy and poor countries can be exacerbated, with benefits of globalization not evenly distributed. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Risks in Economic Globalization Job Displacement and Labor Market Issues Outsourcing: Jobs may be outsourced to countries with lower labor costs, leading to job losses and wage stagnation in higher-cost countries. Precarious Employment: The rise of the gig economy and informal work can lead to unstable and insecure employment conditions. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Risks in Economic Globalization Environmental Degradation Resource Exploitation: Increased economic activity can lead to overexploitation of natural resources, deforestation, pollution, and loss of biodiversity. Climate Change: Globalization-driven industrialization and transportation contribute significantly to greenhouse gas emissions and climate change. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Risks in Economic Globalization Cultural Homogenization Loss of Local Cultures: Global brands and media can overshadow local cultures, leading to cultural homogenization and loss of traditional practices and languages. Consumerism: Global marketing can drive consumerism and materialism, potentially impacting social values and lifestyles. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Risks in Economic Globalization Political Risks and Geopolitical Tensions Trade Wars: Trade disputes between major economies, such as the US-China trade war, can disrupt global trade and economic stability. Regulatory Risks: Differences in regulations and standards across countries can create compliance challenges and uncertainties for businesses. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Risks in Economic Globalization Health Risks Pandemics: Increased global travel and trade can facilitate the rapid spread of infectious diseases, as evidenced by the COVID-19 pandemic. Food Safety: Global food supply chains can complicate food safety and quality control, potentially leading to health risks. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Risks in Economic Globalization Cybersecurity Threats Cyber Attacks: As businesses and financial systems become more interconnected, the risk of cyberattacks and data breaches increases. Intellectual Property Theft: Global operations can make companies more vulnerable to intellectual property theft and industrial espionage. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Risks in Economic Globalization Regulatory Arbitrage Tax Avoidance: Multinational corporations may exploit differences in tax laws to minimize their tax liabilities, depriving countries of vital revenue. Labor and Environmental Standards: Companies might relocate to countries with lax labor and environmental regulations to reduce costs, contributing to poor working conditions and environmental damage. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Risks in Economic Globalization Economic Crises Transmission Contagion Effect: Financial crises can quickly spread from one country to another due to interconnected financial systems, as seen during the 2008 global financial crisis. Systemic Risk: Large, interconnected global banks and financial institutions can pose systemic risks to the global economy. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Mitigating Risks ✓Diversification: Companies and countries can reduce dependency on single markets or suppliers by diversifying their trade and investment partners. ✓Regulation and Oversight: Strengthening financial regulations, improving labor and environmental standards, and ensuring fair trade practices can mitigate some risks. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Mitigating Risks ✓Resilience Planning: Developing robust supply chain strategies and contingency plans can help manage disruptions. ✓International Cooperation: Enhanced cooperation and dialogue between countries can address global challenges such as climate change, cyber threats, and health pandemics. ✓Social Safety Nets: Implementing strong social safety nets and retraining programs can help mitigate the negative impacts on workers displaced by globalization. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/CDP-bp-2000-1.pdf  Reframing Internationalization ❖Reframing internationalization involves rethinking and redesigning the approach to global engagement and cooperation, considering the evolving dynamics of globalization, technology, cultural exchange, and geopolitical shifts. ❖Internationalization – is the intentional process of integrating an international, intercultural or global dimension into the purpose, functions and delivery of post-secondary education, in order to enhance the quality of education and research for all students and staff, and to make a meaningful contribution to society. (Knight 2024) (de Wit et al., 2015, p. 29) https://journals.sfu.ca/cjhe/index.php/cjhe/article/view/185272/pdf  Key Aspects to Consider Inclusive Globalization Equitable Access: Ensure that international opportunities are accessible to a diverse range of participants, including those from underrepresented and marginalized groups. Digital and Virtual Exchange Leveraging Technology: Use digital platforms to facilitate international collaborations, virtual exchanges, and online learning. https://journals.sfu.ca/cjhe/index.php/cjhe/article/view/185272/pdf  Key Aspects to Consider Cultural Competency and Sensitivity Cultural Exchange: Encourage deep cultural exchanges that go beyond surface-level interactions to foster genuine understanding and respect. Interdisciplinary and Cross-Sector Collaboration Broad Partnerships: Build collaborations across different sectors, including academia, industry, government, and non- profits. https://journals.sfu.ca/cjhe/index.php/cjhe/article/view/185272/pdf  Key Aspects to Consider Resilience and Adaptability Flexible Models: Develop flexible models of international engagement that can adapt to changing global circumstances, such as political changes, pandemics, and environmental crises. Local-Global Connection Glocalization: Blend global perspectives with local contexts to make internationalization more relevant and impactful at the local level. https://journals.sfu.ca/cjhe/index.php/cjhe/article/view/185272/pdf  Key Aspects to Consider Sustainable Development Goals (SDGs) Alignment with SDGs: Align international activities with the United Nations Sustainable Development Goals to address global challenges such as poverty, inequality, and climate change. Policy and Governance Inclusive Policies: Develop inclusive policies that support internationalization while considering the diverse needs and perspectives of all stakeholders. https://journals.sfu.ca/cjhe/index.php/cjhe/article/view/185272/pdf  Globalization versus Internationalization https://keydifferences.com/difference-between-internationalization-and-globalization.html  International Trade Theory and Policy CLASSICAL THEORY: THE EARLY BEGINNING OF A THEORY OF FREE TRADE 1776 and 1826 - Adam Smith’s (1986 ) Wealth of Nations and David Ricardo’s Principles of Economics (1951) Wealth of nation – it addresses how nations accumulate and distribute wealth. https://tinyurl.com/yxwvc63s  International Trade Theory and Policy Role of Demand in Trade Theory - In trade theory, demand plays a crucial role in determining the patterns and benefits of international trade. THEORY OF OVERLAPPING DEMAND: NEW ROLE OF DEMAND IN TRADE THEORY - The theory of overlapping demand, introduced by Swedish economist Staffan Burenstam Linder in 1961, provides a nuanced perspective on the role of demand in international trade. This theory suggests that the structure of domestic demand significantly influences trade patterns, particularly for manufactured goods. https://tinyurl.com/yxwvc63s  International Trade Theory and Policy ❖New Trade Theory (NTT), developed in the late 20th century by economists such as Paul Krugman, reshapes the traditional free trade doctrine by introducing concepts that address the limitations of classical trade theories. ❖New Trade Theory restructures the free trade doctrine by integrating more realistic assumptions about market structures, economies of scale, product differentiation, and the role of government policy. It extends beyond the classical theories' focus on comparative advantage by considering the complexities of modern economies, thereby offering a richer and more flexible framework for understanding and facilitating international trade. https://tinyurl.com/yxwvc63s  GROUP Presentation How do different actors, such as: Multinational corporations International financial institutions National governments influence the process and outcomes of economic globalization What are the implications of their actions for both developed and developing economies?