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    Chapter 1 Pbs3233

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    Atikah Izzati
    Globalization refers to the increasing integration of economies and societies around the world through cross-border trade and investment. Key drivers of globalization include declining trade barriers and technological advances in communication and transportation. While supporters argue that globalization increases economic growth and lowers prices, critics contend that it can lead to job losses in some countries and allow firms to avoid environmental and labor regulations. There is an ongoing debate about both the benefits and challenges of increasing global economic integration.

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    Chapter 1 Pbs3233

    Uploaded by

    Atikah Izzati
    60 views22 pages
    Globalization refers to the increasing integration of economies and societies around the world through cross-border trade and investment. Key drivers of globalization include declining trade barriers and technological advances in communication and transportation. While supporters argue that globalization increases economic growth and lowers prices, critics contend that it can lead to job losses in some countries and allow firms to avoid environmental and labor regulations. There is an ongoing debate about both the benefits and challenges of increasing global economic integration.

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    Globalization refers to the increasing integration of economies and societies around the world through cross-border trade and investment. Key drivers of globalization include declining trade barriers and technological advances in communication and transportation. While supporters argue that globalization increases economic growth and lowers prices, critics contend that it can lead to job losses in some countries and allow firms to avoid environmental and labor regulations. There is an ongoing debate about both the benefits and challenges of increasing global economic integration.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    60 views22 pages

    Chapter 1 Pbs3233

    Uploaded by

    Atikah Izzati
    Globalization refers to the increasing integration of economies and societies around the world through cross-border trade and investment. Key drivers of globalization include declining trade barriers and technological advances in communication and transportation. While supporters argue that globalization increases economic growth and lowers prices, critics contend that it can lead to job losses in some countries and allow firms to avoid environmental and labor regulations. There is an ongoing debate about both the benefits and challenges of increasing global economic integration.

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    © All Rights Reserved
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    of 22

    Chapter 1

    Globalization
    GLOBALIZATION

    What is Globalization
    globalization debates

    GLOBALIZATION

    The changing
    Drivers of demographics
    globalization of global
    economy
    What is globalization
    • The world is moving away from self-contained (complete) national
    economies toward an interdependent, integrated global economic
    system.

    • Globalization refer to the shift toward a more integrated and


    interdependent world economy.

    • Globalization can describe an ongoing process in which regional


    economies, societies and culture become integrated with an
    interdependent on one another.
    • Globalization has several facets:
    Globalization of markets Globalization of production
    - Refers to the merging of historically - Refer to the sourcing of goods and
    distinct and separate national markets services from location around the glob
    into one huge global marketplace. to take advantage of national
    differences in the cost and quality of
    - Falling barriers to cross – border trade factors of production ( such as labor,
    have made it easier to sell energy, land, and capital).
    internationally.
    - By doing this, company hope to lower
    - Example : Coca-Cola Soft drinks, IKEA, their overall cost structure or improve
    Starbucks the quality or functionality of their
    product offering, thereby allowing them
    to compete more effectively.
    - Example: Boeing 777.
    Why Do We Need
    Global Institutions?
    • Institutions
    • help manage, regulate, and police the global marketplace
    • promote the establishment of multinational treaties to govern the
    global business system
    • Examples include
    • the General Agreement on Tariffs and Trade (GATT)
    • the World Trade Organization (WTO)
    • the International Monetary Fund (IMF)
    • the World Bank
    • the United Nations (UN)
    5
    What Do Global
    Institutions Do?
    • The World Trade Organization (like its predecessor GATT)
    • polices the world trading system
    • makes sure that nation-states adhere to the rules laid down in trade treaties
    • promotes lower barriers to trade and investment
    • The International Monetary Fund (1944) maintains order in the international
    monetary system
    • The World Bank (1944) promotes economic development
    • The United Nations (1945)
    • maintains international peace and security
    • develops friendly relations among nations
    • cooperates in solving international problems and in promoting respect for human
    rights
    • is a center for harmonizing the actions of nations

    6
    Drivers of Globalization
    • There have two (2) macro factors underlie the trend toward greater
    globalization:
    Declining trade • The advanced Industrial nations of the west committed themselves after
    WWII, to removing barriers to the free flow of goods, services and capital
    and investment between nation.
    • since 1950, average tariffs have fallen significantly and are now at 4 percent
    barrier countries have opened their markets to FDI

    The role of • Since the end of WWII, the world seen major advance in communication,
    processing and transportation technology, including the explosive
    Technological emergence of Internet and World Wide Web.
    • microprocessors and telecommunications
    change
    The changing Demographic of the global
    economics.
    The changing world output and world trade picture.

    The changing FDI picture

    The changing nature of multinational enterprise

    The changing world order

    The global economy of the Twenty-First Century


    What Does Globalization
    Mean For Firms?

    • Lower barriers to trade and investment mean firms can


     view the world, rather than a single country, as their market
     base production in the optimal location for that activity
    • Technological change means
     lower transportation costs - firms can disperse production to economical, geographically separate
    locations
     lower information processing and communication costs - firms can create and manage globally
    dispersed production systems
     low cost global communications networks - help create an electronic global marketplace
     low-cost transportation - help create global markets
     global communication networks and global media - create a worldwide culture, and a global
    market for consumer products
    The globalization Debate
    • Anti globalization Protest
    • Globalization, Jobs and income
    • Globalization, labor policies and the environment
    • Globalization and national sovereignty
    • Globalization and world poor
    The globalization Debate (cont.’)
    • Supporters believe that increased trade and cross-border investment mean
     lower prices for goods and services
     greater economic growth
     higher consumer income, and more jobs
    • Critics worry that globalization will cause
     job losses
     environmental degradation
     the cultural imperialism of global media and MNEs
    • Anti-globalization protesters now regularly show up at most major meetings
    of global institutions
    The globalization Debate (cont.’)
    • Critics argue that falling barriers to trade are destroying manufacturing jobs in
    advanced countries
    • Supporters contend that the benefits of this trend outweigh the costs
    - countries will specialize in what they do most efficiently and trade for other
    goods—and all countries will benefit
    • Critics argue that firms avoid costly efforts to adhere to labor and environmental
    regulations by moving production to countries where such regulations do not
    exist, or are not enforced
    • Supporters claim that tougher environmental and labor standards are associated
    with economic progress
    - as countries get richer from free trade, they implement tougher environmental
    and labor regulations
    The globalization Debate (cont.’)
    • Is the gap between rich nations and poor nations is getting wider?
    • Critics believe that if globalization was beneficial there should not be a
    divergence between rich and poor nations
    • Supporters claim that the best way for the poor nations to improve their
    situation is to
     reduce barriers to trade and investment
     implement economic policies based on free market economies
     receive debt forgiveness for debts incurred under totalitarian regimes
    Review Question
    The shift toward a more integrated and
    interdependent world economy is referred to
    as

    a) economic integration
    b) economic interdependency
    c) globalization
    d) internationalization
    1-14 14
    Review Question

    The merging of historically distinct and


    separate national markets into one huge
    global marketplace is known as

    a) global market facilitation


    b) cross-border trade
    c) supranational market integration
    d) the globalization of markets
    1-15 15
    Review Question
    Firms that are involved in international
    business tend to be

    a) large
    b) small
    c) medium-sized
    d) large, small, and medium-sized

    1-16 16
    Review Question
    Which is not a factor of production?

    a) trade
    b) land
    c) capital
    d) energy

    1-17 17
    Review Question
    The sourcing of good and services from
    around the world to take advantage of national
    differences in the cost and quality of factors of
    production is called

    a) economies of scale
    b) the globalization of production
    c) global integration
    d) global sourcing

    1-18 18
    Review Question
    Which organization is responsible for policing
    the world trading system?

    a) the International Monetary Fund


    b) the United Nations
    c) the World Trade Organization
    d) the World Bank

    1-19 19
    Review Question
    What is the single most important innovation
    to the globalization of markets and
    production?

    a) advances in transportation technology


    b) the development of the microprocessor
    c) advances in communication
    d) the Internet
    1-20 20
    Review Question
    Which of the following trends is true?

    a) the United States is accounting for a greater percentage of world


    trade than ever before
    b) the United States is accounting for a greater percentage of foreign
    direct investment than ever before
    c) the share of world trade accounted for by developing countries is
    rising
    d) the share of foreign direct investment by developing countries is
    declining
    1-21 21
    Review Question
    Which of these is not a concern of anti-globalization
    protesters?

    a) globalization raises consumer income


    b) globalization contributes to environmental degradation
    c) globalization is causing a loss of manufacturing jobs in developing
    countries
    d) globalization implies a loss of national sovereignty
    1-22 22

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