Globalization

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Globalization
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What Is globalization?

• Globalization is the process by which the world
  is becoming increasingly interconnected as a
  result of
• increased contact between people and nations
  throughout the world through various forms of
  cooperation and exchange such as
• trade
• cultural exchange
• political cooperation across national borders
• science
• etc.
• Globalization is the result of
• Technology which make it possible for people,
  goods, money and information and ideas to travel
  the world much faster than ever before
• and the liberalization (1) of world markets,
  making it much easier to trade across national
  boundaries
• Globalization has been taking place for hundreds
  of years, but has speeded up enormously over the
  last half-century

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Manfred Stegers Globalization

• The often repeated truism that 'globalization
  the process leads to more globalization the
  condition' does not allow us to draw meaningful
  analytical distinctions between causes and
  effects. Hence, I suggest that we use the term
  globality to signify a social condition
  characterized by the existence of global
  economic, political, cultural, and environmental
  interconnections and flows that make many of the
  currently existing borders and boundaries
  irrelevant.
• The term globalization should be used to refer to
  a set of social processes that are thought to
  transform our present social condition into one
  of globality. At its core, then, globalization is
  about shifting forms of human contact.

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Stegers Definition

• Globalization refers to a multidimensional set of
  social processes that create, multiply, stretch,
  and intensify worldwide social interdependencies
  and exchanges while at the same time fostering in
  people a growing awareness of deepening
  connections between the local and the distant.

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Definition by Dr. Nayef R.F. Al-Rodhan

• Globalization is a process that encompasses the
  causes, course, and consequences of transnational
  and transcultural integration of human and
  non-human activities.

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Factors Influencing globalization

• Factors influencing globalization include
• Communications
• Cable TV, personal computers, telephony and the
  Internet have created a global village, tying the
  world closer together.
• Businesses in the western world can have a call
  centre in India answering calls from western
  customers.
• Transportation
• Has become cheap and quick.
• People, especially in the western civilization,
  travel all over the world
• People from other countries can travel to the
  west to seek better-paid jobs.
• Businesses can more easily ship products and raw
  materials all over the world - making products
  and services from all over the globe available to
  customers.
• Trade liberalisation
• Governments around the world have relaxed laws
  restricting trade and foreign investment
• Countries in the developing world have opened up
  their countries to western businesses and
  investment
• Some governments offer grants and tax incentives
  to persuade foreign companies to invest in their
  country.
• The idea is that there should be no restrictions
  on trade between countries is known as free trade
  or free market capitalism.
• Free trade involves a minimum of government
  intervention to regulate trade such as taxes on
  imported goods and services, quotas on imported
  goods and services, and subsidies
• Protectionist trade policies involve government
  intervention in the market by regulating prices
  on goods and services and supply restrictions.
  Such government interventions generally increase
  the cost of goods and services to both consumers
  and producers. Interventions include subsidies,
  taxes on goods and services, and other laws
  regulating the economic market and investments
  by, for example, domestic and foreign companies
• Although globalization probably is helping to
  create more wealth in developing countries it
  is not helping to close the
• gap between the world's poorest countries and the
  world's richest.

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Multinational Corporations (MNC) or
Transnational Corporations

• Foreign investment in another country
• Globalization has resulted in many businesses
  setting up or buying services in other countries.
  . . when a foreign company invests in a
  country, perhaps by building a factory or a shop.
  
• Multinational corporations or transnational
  corporations
• Companies that operate in several countries are
  called multinational corporations (MNCs) or
  transnational corporations (TNCs)
• These companies are in constant competition with
  one another to expand into new markets and
  increase their profits
• McDonald's, the US fast food chain is a large
  MNC
• McDonalds has nearly 30,000 restaurants in 119
  countries
• Brand names like Nike, Kellogg's, Microsoft,
  Sony, Adidas are recognised almost everywhere in
  the world (see next slide)
• Most MNCs come from developed countries
• The majority of MNCs come from more economically
  developed countries (MEDC) such as the US and UK.
  
• Multinational corporations invest in other MEDCs
  - the US car company Ford, for example, makes
  large numbers of cars in the UK.
• But MNCs also invest in less economically
  developed countries - for example the British DIY
  store BQ now has stores in China.

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Multinational Corporations

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Factors Attracting MNCs to a Country

• Cheap raw materials
• Cheap labour supply
• Good transport
• Access to market, where the goods are sold
• Friendly government policies
• Countries
• India, South America, Asia in general

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Positive Impacts of Globalization

• Improved standard of living
• Investment by MNCs helps countries by providing
  new jobs and skills for local people.
• More wealth to local economies
• MNCs bring wealth / foreign currency to local
  economies when they buy local resources, products
  and services - providing resources for education,
  health and infrastructure.
• Cultural exchange and contact
• There is far more mixing of people and cultures
  from all over the world, enabling more sharing of
  ideas, experiences, and lifestyles.
• People can experience foods and other products
  not previously available in their countries.
• In this way globalization may diminish cultural
  barriers between people, and make people more
  open-minded to other cultures and knowledgeable.
• Greater awareness
• Globalization can help make people aware of
  events in far-away parts of the world.
• For example, people in Norway were quickly aware
  of the impact of the 2004 Tsunami tidal wave on
  countries in South East Asia, and were therefore
  able to send help rapidly.
• Global cooperation/aid
• It may help make people more aware of global
  issues such as
• Global warming
• Poverty

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Negative Impacts of Globalization

• However not all people think that globalization
  is such a great idea. Critics include many
  different groups such as
• environmentalists, anti-poverty campaigners and
  trade-unionists.
• Some of the negative impacts they point to are
• Exploitation of developing countries
  globalization operates mostly in the interests of
  the richest countries which continue to dominate
  world trade, and at the expense of developing
  countries - whose role in the world market is
  mostly to provide the North and West with cheap
  labour and raw materials.
• Unemployment and ousting of local businesses
  There are no guarantees that the wealth from
  inward investment will benefit the local
  community. Often, profits are sent back to the
  MEDC where the MNC is based. Multinational
  companies, with their massive economies of scale,
  may drive local companies out of business. If it
  becomes cheaper to operate in another country the
  MNC might close down the factory and make local
  people redundant.
• Violation of international laws Lack of strictly
  enforced international laws means that MNCs may
  operate in a way that would not be allowed in an
  MEDC - for example polluting the environment,
  running risks with safety or imposing poor
  working conditions and low wages on local
  workers.
• A threat to cultural diversity globalization is
  viewed by many as a threat to the world's
  cultural diversity - drowning out local
  economies, traditions and languages and
  re-casting the whole world in the mould of the
  capitalist North and West. An example is that a
  Hollywood film is far more likely to be
  successful worldwide than one made in India or
  China, which also have thriving film industries.
• Anti-globalization campaigners sometimes try to
  draw people's attention to these points by
  demonstrating against the
• World Trade Organisation, an inter-governmental
  organization which promotes the free-flow of
  trade around the
• world.

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International Organizations Aiding Economic
Globalization

• International business is aided by
• a number of international
• organizations
• World Trade Organization (WTO)
• The International Monetary Fund (IMF)
• World Bank
• These international organizations help smooth the
  way for international business

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Anti-Globalization Movement

• Globalization has set off hostile reactions among
  many people around the world
• These people are often referred to as the
  anti-globalization movement
• This is a misleading term, however, as most of
  these people are not against bringing the peoples
  of the world closer together. On the contrary
  these work hard to unite people from all over the
  world to
• Oppose the effects of an international economic
  system which they believe is destructive

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Fears Held by Anti-Globalization Critics

• Local cultures and languages are destroyed by an
  international corporate consumer culture which
  often uses English
• The un-ending and explosive economic growth is
  badly damaging the ecology of the planet and
  using up resources at the expense of local
  populations and future generations
• The gap between the rich and poor nations is
  widening because international companies force
  weaker and poorer nations to accept trade
  conditions that favour the rich
• That WTO, IMF and the World Bank create trade
  conditions that benefit rich countries at the
  expense of individuals in the poorer countries
• Cheap labor
• Child labor
• Long working hours
• Bad working conditions

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Defenders of Globalization

• Defenders of globalization argue
• that
• Since 1985 the number of people living on less
  than 1 dollar a day has been halved
• Life expectancy in the developing wolrd has
  doubled since WWII
• In 1960, 56 of the worlds population lived in
  nations with less than 2200 calories of food per
  day. Today it is only 10
• Between 1950 and 1999, the number of people in
  the world who can read and write increased from
  52 to 80
• Differences in income in the world have been
  reduced over the past decades

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The Financial Crisis Now What?

• Economic globalization to blame?
• More restrictions put on trade between nations?
• Protectionism
• Increased subsidies on locally produced
  commodities?
• Increased taxes on imported commodities?
• Restrictions on imported commodities?
• How will this affect developing countries?
• The level of consumption in both developed and
  developing countries reduced
• Businesses facing bankruptcy
• Increased unemployment around the world
• This is happening at this very moment in
• Norway, Iceland, USA, and Asia many other
  countries

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