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Globalization and the Economy
Globalization and the Economy
What is Globalization? What is Globalization?
The shift toward a more integrated and interdependent world economy
Two components:The globalization of marketsThe globalization of production
The shift toward a more integrated and interdependent world economy
Two components:The globalization of marketsThe globalization of production
Globalization of Production
Globalization of Production
Vizio flat panel TV is designed in a small office in California assembled in Mexico From
panels made in South Koreaelectronic components made in Chinamicroprocessors made in the U.S.
Vizio flat panel TV is designed in a small office in California assembled in Mexico From
panels made in South Koreaelectronic components made in Chinamicroprocessors made in the U.S.
Not just manufacturing…Not just manufacturing…
Globalization of production has historically been about manufacturing
Increasingly companies are using modern communications to outsource service activities to low-cost nations
Globalization of production has historically been about manufacturing
Increasingly companies are using modern communications to outsource service activities to low-cost nations
Globalization of markets Globalization of markets
In the past, each country had its own companies in many industries and its own products
In the past, each country had its own companies in many industries and its own products
Today everyone knows…Today everyone knows…
Nintendo Starbucks Coca-Cola Ikea McDonald’s Samsung
Nintendo Starbucks Coca-Cola Ikea McDonald’s Samsung
But the most global markets are for standard
goods
But the most global markets are for standard
goodsAluminum WheatMicroprocessorsAircraft
For many consumer end-products, huge differences still exist among national marketsEntertainment, food, clothing
Aluminum WheatMicroprocessorsAircraft
For many consumer end-products, huge differences still exist among national marketsEntertainment, food, clothing
Drivers of GlobalizationDrivers of Globalization
Two factors underlie globalization“Decline in barriers to the free flow of
goods, services, and capital” that has occurred since the end of World War II
Technological change
Two factors underlie globalization“Decline in barriers to the free flow of
goods, services, and capital” that has occurred since the end of World War II
Technological change
Declining Trade and Investment BarriersDeclining Trade and Investment Barriers
During the 1920s and ‘30s, many of nations erected formidable barriers to international trade and foreign direct investment
Advanced industrial nations of the West committed themselves after World War II to removing barriers to the free flow of goods, services, and capital between nations.
During the 1920s and ‘30s, many of nations erected formidable barriers to international trade and foreign direct investment
Advanced industrial nations of the West committed themselves after World War II to removing barriers to the free flow of goods, services, and capital between nations.
Average Tariff Rates on Manufactured ProductsAverage Tariff Rates on Manufactured Products
1913 1950 1990 2002
France 21 % 18 % 5.9 % 4.0 %
Germany
20 % 26 % 5.9 % 4.0 %
Italy 18 % 25 % 5.9 % 4.0 %
Japan 30 % -- 5.3 % 3.8 %
Holland 5 % 1 % 5.9 % 4.0 %
Sweden 20 % 9 % 4.4 % 4.0 %
UK -- 4% 5.9 % 4.0 %
US 44 % 14 % 4.8 % 4.0 %
Affects of Lowering Trade Barriers
Affects of Lowering Trade Barriers
The Role of TechnologyThe Role of Technology
Lowering of trade barriers made globalization possible;
Technology has made it a transforming movement
Lowering of trade barriers made globalization possible;
Technology has made it a transforming movement
Internet Usage GrowthInternet Usage Growth
Globalization is acceleration of trends of
the last 10,000 years
Globalization is acceleration of trends of
the last 10,000 years People lived for 250,000 years in
hunter-gatherer bands Rise of agriculture 10,000 years ago led
to rise of empires and nation-states Science and ‘enlightenment’ after 1680
produced global trade and empires Free trade and tech after 1980
produced globalization
People lived for 250,000 years in hunter-gatherer bands
Rise of agriculture 10,000 years ago led to rise of empires and nation-states
Science and ‘enlightenment’ after 1680 produced global trade and empires
Free trade and tech after 1980 produced globalization
The Emergence of Global Institutions
The Emergence of Global Institutions
Notable global institutions include the World Trade Organization (WTO)
which is responsible for policing the world trading system and ensuring that nations adhere to the rules established in WTO treaties In 2008, 151 nations accounting for 97% of
world trade were members of the WTO the International Monetary Fund (IMF)
which maintains order in the international monetary system
Notable global institutions include the World Trade Organization (WTO)
which is responsible for policing the world trading system and ensuring that nations adhere to the rules established in WTO treaties In 2008, 151 nations accounting for 97% of
world trade were members of the WTO the International Monetary Fund (IMF)
which maintains order in the international monetary system
The Changing Roles of Countriesin
the Global Economy
The Changing Roles of Countriesin
the Global EconomyIn the 1960s: The U.S. dominated the world economy
and the world trade picture U.S. multinationals dominated the
international business scene About half the world-- the centrally
planned economies of the communist world-- was off limits to Western international business
Today, much of this has changed.
In the 1960s: The U.S. dominated the world economy
and the world trade picture U.S. multinationals dominated the
international business scene About half the world-- the centrally
planned economies of the communist world-- was off limits to Western international business
Today, much of this has changed.
The Changing World Output and World Trade Picture
The Changing World Output and World Trade Picture
In the early 1960s, the U.S. was the world's dominant industrial power accounting for about 40.3% of world manufacturing output
By 2007, the U.S. accounted for only 20.7%
Other developed nations experienced a similar decline
In the early 1960s, the U.S. was the world's dominant industrial power accounting for about 40.3% of world manufacturing output
By 2007, the U.S. accounted for only 20.7%
Other developed nations experienced a similar decline
The Changing Nature of the Multinational Enterprise
The Changing Nature of the Multinational Enterprise
Since the 1960s, there has been a rise in non-U.S.
multinationals there has been a rise in mini-
multinationals
Since the 1960s, there has been a rise in non-U.S.
multinationals there has been a rise in mini-
multinationals
The Globalization DebateThe Globalization Debate
ProLower prices for goods
and servicesEconomic growth Increase in consumer
incomeCreates jobs (for many)Countries specialize in
production of goods and services that are produced most efficiently
ProLower prices for goods
and servicesEconomic growth Increase in consumer
incomeCreates jobs (for many)Countries specialize in
production of goods and services that are produced most efficiently
ConDestroys manufacturing
jobs in wealthy nationsWage rates of unskilled
in advanced countries decline
Companies move to countries with fewer labor and environment regulations
Loss of sovereigntyHomogenized cultures
ConDestroys manufacturing
jobs in wealthy nationsWage rates of unskilled
in advanced countries decline
Companies move to countries with fewer labor and environment regulations
Loss of sovereigntyHomogenized cultures
Managing an international business is
different
Managing an international business is
different Countries are different International transactions involve converting
money into different currencies Range of problems in an international
business is wider and problems are more complex
International business must cope with different, conflicting government rules and systems
Different strategic approaches required
Countries are different International transactions involve converting
money into different currencies Range of problems in an international
business is wider and problems are more complex
International business must cope with different, conflicting government rules and systems
Different strategic approaches required
Key termsKey terms
An international business – any business with international sales, sourcing, or investment
A multinational business – any business with productive activities in 2 or more countries
A global business – a business that takes a global approach to production and sourcing (Coca-Cola, Intel)
An international business – any business with international sales, sourcing, or investment
A multinational business – any business with productive activities in 2 or more countries
A global business – a business that takes a global approach to production and sourcing (Coca-Cola, Intel)
The Emergence of Global Institutions
The Emergence of Global Institutions
the World Bank which promotes economic development
the United Nations (UN) which maintains international peace and security, develops friendly relations among nations, cooperates in solving international problems and promotes respect for human rights, and is a center for harmonizing the actions of nations
the World Bank which promotes economic development
the United Nations (UN) which maintains international peace and security, develops friendly relations among nations, cooperates in solving international problems and promotes respect for human rights, and is a center for harmonizing the actions of nations
Globalization and the Family
Globalization and the Family
What is your definition of a family? What is your definition of a family?
A Working Definition of Family
A Working Definition of Family
. . family as a collection of people, bound together in a committed relationship, for the purpose of maximizing their joint benefit in their interaction with each other and the outside world. What constitutes the joint benefit of the family is determined by the family members through joint decision-making or “bargaining” within the context of social norms.
. . family as a collection of people, bound together in a committed relationship, for the purpose of maximizing their joint benefit in their interaction with each other and the outside world. What constitutes the joint benefit of the family is determined by the family members through joint decision-making or “bargaining” within the context of social norms.
Global Economy and the Family
Global Economy and the Family
Globalization of the economy tends to encourage individualism and mobility, in direct opposition to the collectivity and stability necessary for successful family relationships.
Globalization of the economy tends to encourage individualism and mobility, in direct opposition to the collectivity and stability necessary for successful family relationships.
Globalization and the Family
Globalization and the Family
Globalization is one of the key factors in the disruption of the family.
In the United States, Europe, and Japan, marriage rates are declining, birth and fertility rates are falling, real wages are flat or declining, and hours worked outside the home are rising.
Globalization is one of the key factors in the disruption of the family.
In the United States, Europe, and Japan, marriage rates are declining, birth and fertility rates are falling, real wages are flat or declining, and hours worked outside the home are rising.
What are the Costs and Benefits
Associated with Families?
What are the Costs and Benefits
Associated with Families?
Underinvestment in Families
Underinvestment in Families the pressing day-to-day needs of survival
government policies promoting market participation over home participation,
workplace training and career-building that occurs during prime relationship-forming and childbearing years,
workplace practices that needlessly disadvantage people in relationships or parents with children,
failure of governments to treat children as a public good.
the pressing day-to-day needs of survival government policies promoting market
participation over home participation, workplace training and career-building
that occurs during prime relationship-forming and childbearing years,
workplace practices that needlessly disadvantage people in relationships or parents with children,
failure of governments to treat children as a public good.
How Do We Solve the Problem of
Underinvestment in Families?
How Do We Solve the Problem of
Underinvestment in Families?
Gotham’s study focuses on how global forces interconnect with local actions to facilitate the growth of urban tourism.
Gotham’s study focuses on how global forces interconnect with local actions to facilitate the growth of urban tourism.
LocalizationLocalization
“localization” implies that local actors and organizations can harness the ‘local’ to produce unique products, establish locally specific social ties and networks, and build and enhance place distinctiveness by using different themes, symbols and motifs.
“localization” implies that local actors and organizations can harness the ‘local’ to produce unique products, establish locally specific social ties and networks, and build and enhance place distinctiveness by using different themes, symbols and motifs.
While Mardi Gras is a local celebration, it is also a marketing slogan to stimulate consumer demand for corporate products Bacardi rum, Southern Comfort, Coors
beer, Kool cigarettes and other companies
While Mardi Gras is a local celebration, it is also a marketing slogan to stimulate consumer demand for corporate products Bacardi rum, Southern Comfort, Coors
beer, Kool cigarettes and other companies
Local businesses and organizations are attempting to export Mardi Gras products, as well as float building styles and techniques to other regions of the world, thus encouraging the ‘globalization of the local’. Localization is evident in efforts by local groups to use tourism to enhance place distinctiveness, maintain old Mardi Gras traditions and create new traditions.
Local businesses and organizations are attempting to export Mardi Gras products, as well as float building styles and techniques to other regions of the world, thus encouraging the ‘globalization of the local’. Localization is evident in efforts by local groups to use tourism to enhance place distinctiveness, maintain old Mardi Gras traditions and create new traditions.
Ritzer suggests that ‘one of the best examples’ of the ‘globalization of nothing’ is in the realm of tourism which involves the global production of non-places (Disneyland), non-things (mass-manufactured souvenirs) and non-people (clerks at souvenir shops). According to Ritzer, tourism is about the production of ‘nothing’ which refers to a ‘social form that is generally centrally conceived, controlled, and comparatively devoid of distinctive content
Ritzer suggests that ‘one of the best examples’ of the ‘globalization of nothing’ is in the realm of tourism which involves the global production of non-places (Disneyland), non-things (mass-manufactured souvenirs) and non-people (clerks at souvenir shops). According to Ritzer, tourism is about the production of ‘nothing’ which refers to a ‘social form that is generally centrally conceived, controlled, and comparatively devoid of distinctive content
A handful of factories in China produce most of the Mardi Gras beads imported to the United States.
bead industry sells US $500 million of beads each year worldwide
A handful of factories in China produce most of the Mardi Gras beads imported to the United States.
bead industry sells US $500 million of beads each year worldwide
Mardi Gras beads illustrate the nexus of
the global and the local. Beads produced in China are
transported to New Orleans where disrobement and gifts of beads are components of a ceremonial exchange where ‘doing deviance’ becomes a tourist site of entertainment
Mardi Gras beads illustrate the nexus of
the global and the local. Beads produced in China are
transported to New Orleans where disrobement and gifts of beads are components of a ceremonial exchange where ‘doing deviance’ becomes a tourist site of entertainment
Mardi Gras Parade FloatMardi Gras Parade Float
In recent years, nonlocal businesses have begun organizing special Carnival travel packages for employees, customers and business prospects that culminate with riding in a parade. The idea is that Mardi Gras can be a site for corporate entertaining that can foment or strengthen business relationships, establish networks and cultivate profit opportunities
In recent years, nonlocal businesses have begun organizing special Carnival travel packages for employees, customers and business prospects that culminate with riding in a parade. The idea is that Mardi Gras can be a site for corporate entertaining that can foment or strengthen business relationships, establish networks and cultivate profit opportunities
