Globalization

1
Globalization

• Andriosopoulos Kostas
• Bhuta Viral
• Kuoh Ndoumbe
• Mattuchio Todd
• Middleton Patrick
• Pagani Brett
• Walsh Sean

2
Definition

• Globalization is seen primarily as an economic
  phenomenon involving increasing interaction and
  integration of national economic systems through
  the growth in international trade investment
  and capital flows.
• Increase in cross border social cultural and
  technological exchange.

3
Factors of Globalization

• The existence of a global infrastructure
• Changes in Transportation and Communication
• Reduction in Trade Barriers
• International Division of Labor
• Internationalization of Finance
• New Technology Systems
• Growth of Consumer Markets

4
Key Players

• Businesses
• Transnational Banks and Corporations
• WTO - World Trade Organization
• Entrepreneurs

5
Key Issues

• Has globalization reduced jobs and wages in the
  US
• Who gains and who loses from this process
• What is the effect of globalization on the
  environment

6
GLOBALIZATION EU

• The EU consisting of 25 countries is now the
  largest market of the world (450 mil. people of
  high educational level).
• Integration was a reaction mechanism towards
  economic decline.
• EUs market center is moving to the North and
  brings to the economy a strong agricultural
  factor.

7
GLOBALIZATION EU

• Competition for new investment attraction between
  the old and new members will increase.
• Industrial activity is moving to the Balkans and
  Eastern Europe.
• For example German Siemens announced the
  transfer of 1/3 of its IT department (10000
  jobs) to Eastern Europe.

8
GLOBALIZATION EU

• European productivity will be boosted in response
  to lower labor costs and continuing
  reconstruction of enterprises.
• Jobs will be lost in South European countries
  like Greece Portugal and Spain.
• Demographic structure of East and Central Europe
  tends to become the same as Western Europes.
• Immigration movements will lead the recipient EU
  countries (mostly the old ones) to higher
  unemployment lower wage growth but a slightly
  lower inflation rate.

9
(No Transcript)
10
(No Transcript)
11
Globalization Africa

• Less then 1.5 of world trade but 1/3 of the
  WTO membership
• Sub-Saharan Africa trade growth of 39 while
  world trade has grown 85
• Exports concentrated around primary resources
• South Africa and Nigeria account for half the
  continents total trade and more than half of
  its GDP.

12
Globalization Africa

• A few positives
• Regional integration
• Outsourcing telecommunications accounting
• But many negatives.
• - Unsupportive investment climate (customs
  corruption telecoms )
• - Low productivity of labor force
• - Exchange rate unfavorable to exports.

13
East Asian Development

• GDP growth led by strong exporting
• Rapid growth fueled by large foreign direct
  investment
• Highly leveraged corporations
• Large dependence on FDI leaves them vulnerable to
  supply shock and credit crises
• Advanced countries v. developing countries
• The advanced Asian countries mutually benefit
  from increased incomes and higher GDP in China
• They also fear China will compete for market
  share in major export markets

14
Globalization China

• Low wages large population
• Rapid growth fueled by strong exporting and large
  foreign direct investment
• Income per capita has increased sevenfold since
  1978
• Changes in transportation and infrastructure
• In 1995 60 of transportation in Shanghai
  consisted solely of biking and walking.
• In 1949 more than one third of the counties were
  not accessible by road. Now all counties and
  towns are accessible by road

15
Globalization China

• Changes in communication
• In 1978 there were no mobile telecommunications
  in China. By 1998 there were 43.65 million
  users of mobile telecommunications technology in
  China
• Rampant pollution a byproduct of the rapid growth
  in China
• In Shangba Village dubbed cancer village
  widespread pollution from mining has turned the
  rivers to a rust red color. Villagers have no
  clean water to drink.

16
Macro-economic Consequences

• International Trade Openness World Poverty
• International Trade Openness Inequality
• Is Globalization Causing A Race To The Bottom
  In Environmental Standards

17
Globalization and Poverty

• Poverty is affected by the pace of increase in
  the total output of goods and services in the
  society.
• The income of the poor rises proportionally with
  the growth rate of overall per-capita income in a
  country. (Dollar and Kraay 2000)

18
Globalization and Poverty
19
Globalization and Poverty

• Efficient use of resources
• Increased competition
• Spread of technology and ideas
• Increasing the ratio of trade to GDP by 1 point
  raises per-capita income by between 0.5-2.

20
Globalization and Inequality

• No simple association between trade openness and
  inequality.
• Limited knowledge of the factors affecting income
  distribution.
• Rapid changes in rural urban
• Equivocal evidence.

21
Globalization and Inequality

• Inequality between countries
• Contrary Evidence
• Gap between the rich and the poor countries has
  doubled
• Evidence that liberalizing poor countries grow
  faster than the rich ones.

22
 Share of Global Income Going to Richest 20 and
Poorest 20 of World Population
23
Evolution of GNP in the major regions of the
world
Increasing the ratio of trade to GDP by 1 point
raises per-capita income by between 0.5-2.
24
East Asia the largest and most rapid reduction
in poverty in history
25
Globalization and the environment

• Pollution due to industrialization and rapid
  urbanization
• Shrinking forests cultivable land and natural
  resources
• Increased energy consumption and carbon-dioxide
  emissions

26
Globalization and the environment

• Incentive to adopt better policies
• Access to latest technology
• Increasing consumer demand for greener imports
• Environmental policies becoming an integral part
  of economic development
• Steel-production in open economies 17 less
  pollution-intensive than in closed economies

27
Globalization and the environment

• Harmful emissions have an inverted U curve
  relation with income

28
Pollution in China