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Globalization

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Title: Globalization


1
Globalization
2
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

3
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.

4
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.

5
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.

6
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.

7
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.

8
Multinational Corporations


9
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

10
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

11
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.

12
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

13
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

14
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

15
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

16
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

17
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