The Expansion of Economic Globalization

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The Expansion of Economic Globalization

• International Agreements and Organizations
• Chapter 11

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Chapter 11 Focus

• We will look at the factors that contribute to
  the ongoing expansion of economic globalization
• Section 1 International Organizations
  Agreements
• Section 2 TNCs
• Section 3 Technology

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World Trade Organization

• Works to improve trade relations among the
  countries of the world, especially by removing
  tariffs and other barriers to trade.
• Is the only international organization dealing
  with global rules of trading.
• WTOs job
• to settle trade disputes between countries
• It also organizes trade negotiations and meetings
• If member nations are found guilty of trade
  violations, those members could face trade
  sanctions or expulsion from the group

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Group of Eight (G8)

• Previously known as G7 until Russia joined in
  1998.
• G8 leaders meet every year to discuss economic
  and foreign policies.
• A very powerful group it is able to influence
  official global intuitions.
• For example, G8 countries have nearly 50 of the
  vote in the World Bank and International Monetary
  fund
• Are huge supporters of economic globalization

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• Because of this, the G8 is often accused of being
  elitest and unconcerned about the effects of
  world trade on poorer nations
• Protests are common during G8 summits by
  anti-globalization activists
• It is not surprising that security is extremely
  tight during these summits
• Others maintain that the G8 has been instrumental
  in aiding less developed countries.

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• China, India, African and Latin American
  countries not part of the G8
• Many protesters feel these countries should be
  included
• Reasons fastest growing economies, fastest
  growing populations.

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G8 Strengths and Critics
Strengths Has power to assist developing
countries Campaigns in fighting disease
(HIV/AIDS), program development,
debt-relief Criticisms Represent the interests
of the elite Mainland Asia, Africa, Oceania,
Latin America, and South America are not
represented Summits are often the site for
violent demonstrations http//www.youtube.com/wat
ch?v784lay9401U
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La Francophonie

• Focus of economic development is devoted
  specifically to French-speaking citizens
• Canadas status as a wealthy citizen makes one of
  the organizations big players and an original.
  
• Government intends to accelerate economic
  integration of less developed Francophone nations
  it wants to help these countries in their
  struggle to gain some of the benefits of becoming
  part of the global economic system

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CIDA

• Canadian International Development Agency
• Government controlled responsible for providing
  aid efforts to less developed countries
• CIDA has contributed money/aid to countries that
  have experienced natural disasters
  earthquakes/hurricanes
• Mandate is to support sustainable development in
  developing countries in order to reduce poverty
  contribute to a more secure, equitable, and
  prosperous world.
• CIDA sponsors medical personal, farmers,
  teachers, technicians, etc. to help people in
  poorer countries find lasting solutions to their
  problems
• Also promotes human rights, democracy and good
  governing practices in less developed nations

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Chapter 11 Section 2

• TNCs - Transnational Corporations

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TNCs

• In order to expand their businesses, many
  companies set up operations in foreign countries.
• TNCs have grown rapidly since the 1950s.
• Today there are more than 40 000 TNCs in the
  world, with some 250 000 subsidiaries - companies
  controlled by a parent company

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TNC Decision Making

• TNC Decision Making is a complex matter
• Important financial decisions are made by the
  head office, such as research and product
  development
• Decisions regarding marketing and distribution
  are left to the individual subsidiaries.

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Impact of TNCs on Global Economy

• Different opinions about this issue
• TNCs can help to reduce poverty in less developed
  countries by
• Bringing wealth into a country through employment
  and investment
• Passing on expertise in their field and
  increasing a countrys human capital (knowledge,
  skills talents that workers have)
• Paying taxes to the host countrys government

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Impact of TNCs on Global Economy

• Different opinions about this issue
• TNCs can do harm in less developed countries b/c
  they do not reduce poverty or encourage
  production.
• Employing managers from other countries but
  employing manual labor from local communities and
  paying them low wages.
• Using capital-intensive production, where most
  work is done by machinery instead of
  labour-intensive production, where most work is
  done by hand.
• Ignoring human rights issues no unions and
  child workers are sometimes exploited

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Impact of TNCs on Global Economy

• The expansion of TNCs also has a significant
  impact on more developed countries.
• Job losses have occurred
• Entire industries moved offshore
• More developed countries have lost market share
  to less developed countries that can produce
  certain goods cheaper.

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GMG General Motors Corporation

• The worlds largest automobile manufacturer and
  global industry sales leader since 1931.
• Canadas largest automaker is General Motors of
  Canada, a subsidiary of GMC.
• GM employs approx. 20 000 people at their 4
  assembly plants
• The company makes more than one million vehicles
  annually.
• Half of these are exported, mostly to the US

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GMG General Motors Corporation

• Over the past few years, GMC and the other North
  American automakers Ford and Chrysler, have
  been losing ground to Japanese manufacturers such
  as Toyota, Honda, and Nissan.
• As a result, GMC announced plans in November 2005
  to save US2.5 billion dollars/year by cutting 30
  000 jobs in NA and nearly 3,900 jobs at three of
  its Canadian plants.

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GMG Loss

• But Why?
• Rising labour costs soaring health care bills
  in the US had cut into profits
• Employees of GMCs head office were angry that
  Canadians were going to suffer job losses because
  of problems south of the border.
• Employees pointed out that the two GM Canada
  plants operation in Ontario were among the most
  efficient in North America. They believed that
  cuts to these two plants did not make sense.

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Chapter 11, Section 3

• Telecommunications and
• Transportation Technologies

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Telecommunications

• Advances in telecommunications allow people
  around the world to communicate instantly or to
  witness the same event at the same time.
• When a conflict or disaster strikes a country or
  region, people throughout the world hear about it
  or witness the events via communications
  satellites.
• This can have an almost immediate effect on the
  global economy.

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Telecommunications

• When the World Trade Centre was attacked on
  September 11, 2001, stock markets around the
  world quickly experienced a sharp decline.

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• Developments in telecommunications over the past
  25 years have revolutionized the business world.
• For example
• 1. The use of ATM machines and Internet banking
  has dramatically reduced costs for the banking
  industry.
• 2. Computers allow businesses to process,
  share, and store huge amounts of information on a
  disk or a computer chip.
• 3. Stocks, bonds, and other securities can be
  traded around the clock and around the world as a
  result of innovations in telecommunications.
• 4. The Internet, fax machines, cellphones, and
  satellites allow people to communicate instantly
  with their employers and customers from almost
  anywhere.
• 5. When people in Canada want to order certain
  products or get advice about a problem with an
  electronic device, they can phone, email, or fax
  a call centre that might be located in a foreign
  country.

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Transportation

• The growth of international trade and the
  globalization of production go hand in hand with
  improvements in international transportation
  systems.
• With these advances, more passengers and freight
  can be transported more quickly and efficiently.
• Today, trade can occur between parts of the world
  that previously had little or no access to
  international transportation systems.

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Transportation
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• Improvements in transportation systems have also
  allowed companies to set up production in any
  number of foreign factories.
• For example, Caterpillar CAT tractor
  manufacturing companys headquarters is in
  Illinois.
• Different parts for the tractors are manufactured
  in several countries engines in Japan,
  transmissions in the US, winches in Brazil, and
  axles in Belgium.
• The parts are shipping to an Ontario plant, where
  they are assembled into tractors. The completed
  tractors are then sold to countries around the
  world.

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