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Globalisation: Shift toward more INTEGRATED & INTERDEPENDENT world…
Globalisation: Shift toward more INTEGRATED & INTERDEPENDENT world economy
Global market
↓ trade barriers: easier to sell globally
consumer tastes & preference changing on GLOBAL NORM
Firm promote TREND by offering SAME basic pdt globally
take ad of national diff in COST & QUALITY of factors of production: source goods & services worldwide (eg. land labor, capital)
2 Drivers:
↓ barriers to trade & investment
benefit to firm
view WORLD as market: not only 1 country
move production base to OPTIMAL location
Technological changes: internet, transportation tech, telecommunications
Benefit to firm
↓ & LOW transport cost = can distribute production to diff locations & create global market
↓ info processing & communication costs: can crate & manage globally distributed production systems
LOW global communications network: create electronic global marketplace, worldwide culture & global market
Affect: JENWM
Job & income
Supporters: countries specialise in what they do MOST efficiently & trade for other goods = all benefit
Critics: ↓ barriers to trade = destroy manu jobs in advanced countries
Environmental & labor regulations
Supporters: tougher envt & labor standards = economic PROGRESS
Critics: firms move production to other countries to AVOID cost of following envt & labor regulations
National sovereignty: shift of economic power from govt to supranational org(WTO, UN)
Supporters: power of org is LIMITED to what country agree to give
Critics: unelected BUREAUCRATS have power to impose policies on democratically elected govt of country
World's poor:
Supporters: best way to improve situation is to
↓ barriers to trade & investment
have economic policies based no FREE market economies
get debt FORGIVENESS that are incurred under TOTALITARIAN govt
Critics: if globalisation is beneficial then shouldnt have diff between rich & poor countries
Managers:
Range of prob: WIDER & MORE COMPLEX
need find ways to work within LIMITS imposed by govt in international TRADE & INVESTMENT system
international transactions: need CONVERT money into diff currencies
4 trend of global economy (change demo)
Changing world output & trade pic:
share of world output a/c for by developED countries: dropping
share of world output a/c for by developING countries: rising & expected to be >60% by 2020
Changing Foreign Direct Investment(FDI) pic:
share of FDI a/c for by developED countries: dropping
share of FDI a/c for by developING countries: rising
Changing nature of multinational enterprise(MNE):
MNE: any biz that have productive activities in 2/more countries
↑ in non-US & mini MNE
Changing world order: ↑ former communist countries in Europe & Asia
promote DEMOCRATIC politics & FREE market economies
NEW oppor. for IB
growing UNREST in some countries
China & Latin America also moving towards FREE market reforms = ↑ global COMPETITION
Interdependent global economy
Supporters: believe ↑ trade & cross border investment
↑ economic growth
↑ consumer income & jobs
↓ prices for goods & services
Critics: worry that globalisation will cause
job losses
environmental DEGRADATION
CULTURAL IMPERIALISM(growth) of global media & MNE