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The Global Economy andGlobalization Processes

Dr Kawal Gill

Associate ProfessorDepartment of Commerce

SGGSCC

Pitam Pura

University of Delhi

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What is Globalization?Processes by which movements ofproducts, people, companies, money andinformation grow in quantity and indeepening ties across national borders

Interconnectedness is evident particularlyin finance and high-tech dimensions

Despite economic integration includinggrowing trade, national markets persist inpresenting differing cultural environmentswhich businesses must take into account

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Internationalization vs.

GlobalizationInternationalization processes: extensions ofeconomic activities across national borders;

growing quantitatively.Globalization processes: both geographicalextension as in internationalization and thequalitatively different functional integration of

internationally dispersed activities.

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Different Facets of Globalisation

Globalisation of Markets: refers to managing ofhistorically distinct and separate national markets into ahuge global market.

Globalisation of Production: refers to the sourcing ofgoods and services across the globe to take advantageof national differences in the cost and quality of factors

of production.

Emergence of Global institutions: IMF and World Bankin 1944, United Nations in 1945 and WTO in 1995.

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GLOBALIZATION VIEWPOINTS

Hyperglobalists Transformationalists

Globalization Viewpoints

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Hyper globalists

An extreme view that believes in:

the emergence of a globalcosmopolitan corporate culture

the decline of nation states

the increasing power of TNCs

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Transformationalists

View globalization as a complex, uneven

process

A multidimensional view: includes

economic processes alongside regionaland cultural issues

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Elements of Globalization

Eonomi globali!ation

"#lt#ral globali!ationPolitial globali!ation

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Globalization of the business corporation

Globalization of supply

Globalization of demand

Economic Globalization

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Cultural Globalization

A process of cultural homogeneity of the

global economy. Cultural globalization is

characterized by:

Culturalhomogenization: uniformity andsimilarity in global products and processes

Culturalheterogeneity: local differences

Culturalhybridization: adaptation of the globalto local conditions, meaning reattribution and

re-contextualization

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Political Globalization

The emergence and domination of global

and regional institutions and trans-

governmental networks such as:IMF

The World Bank

WTO

UNCTAD

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Drivers of Globalization

Inreasingompetition

Globalgo$ernane

Te%nologial&e$elopments

Eonomifores

Politialfores

'(IVE(S

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The Role of technological change

Microprocessor and Telecommunication

The Internet and the World Wide Web

Transportation Technology

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The Changing Demographics of Global

EconomyThe changing world output and world

trade picture

The changing FDI picture

The changing nature of Multinational

EnterpriseThe Changing World Order

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The pros and cons of globalization

Pros Promotes economic growththrough FDI

Increases overall well-being

Offers consumer choice

Price competition benefitsconsumers

Fosters technologicalinnovation

FDI provides employmentand skills training

Cons

FDI mainly benefits theinvesting company and itsshareholders rather thanthe host society

Environmental degradationin host countries

Leads to global inequalitiesbetween and within nations

TNCs become morepowerful than governments

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Hidden Face of Globalization Part I

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Hidden Face of Globalization Part II

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Negative Effects of Globalization

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Thanks

Any Questions?