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pros and cons of globalization

 

 

 

“Globalisation, advantages & disadvantages!”
1. Globalisation

  1. Globalisation
    Definition:
    An economic phenomenon?
    A social phenomenon?
    A cultural phenomenon?
    The movement towards the expansion of economic and social ties between countries through the spread of corporate institutions and the capitalist philosophy that leads to the shrinking of the world in economic terms.

  2. Globalisation
    Globalisation could involve all these things!

  3. Integration of Economies
    The increasing reliance of economies on each other
    The opportunities to be able to buy and sell in any country in the world
    The opportunities for labour and capital to locate anywhere in the world
    The growth of global markets in finance

Stock Markets are now accessible from anywhere in the world!
Copyright: edrod, stock.xchng

  1. Integration of Economies
    Made possible by:
    Technology
    Communication networks
    Internet access
    Growth of economic cooperation – trading blocs (EU, NAFTA, etc.)
    Collapse of ‘communism’
    Movement to free trade

  2. Trade versus Aid?
    Benefits of Trade:
    Increased choice
    Greater potential for growth
    Increase international economies of scale
    Greater employment opportunities
    Trade has led to massive increases in wealth for many countries.
    Copyright: budgetstock, stock.xchng

  3. Trade versus Aid?
    Disadvantages of trade:
    Increase in gap between the rich and the poor
    Dominance of global trade by the rich, northern hemisphere countries
    Lack of opportunities for the poor to be able to have access to markets
    Exploitation of workers and growers
    How far does trade help children like these?
    Copyright: clesio, stock.xchng

  4. Corporate Expansion
    Multi-national or trans-national corporations (MNCs or TNCs) – businesses with a headquarters in one country but with business operations in a number of others.
    No matter where you go in the world, certain businesses will always have a presence.
    Copyright: mkeky, stock.xchng

  5. Corporate Expansion

Characteristics:
Expanding revenue
Lowering costs
Sourcing raw materials
Controlling key supplies
Control of processing
Global economies of scale
Controlling supplies may be one reason for global expansion.
Copyright: rsvstks, stock.xchng

  1. Corporate Domination
    Key Issues:
    Damage to the environment?
    Exploitation of labour?
    Monopoly power
    Economic degradation
    Non-renewable resources
    Damage to cultures
    Shell and Nike’s activities have come under severe criticism in some quarters.
    Copyright: Homsel, stock.xchng

  2. Other Issues:
    Accountability of Global businesses?
    Increased gap between rich and poor fuels potential terrorist reaction
    Ethical responsibility of business?
    Efforts to remove trade barriers
    There are plenty of people who believe that globalisation is a negative development, protests at the G8 summits, pollution, poverty and concern over GM crops are just some of the issues.
    Copyright: stock.xchng
    “Globalization of world economy ppt”

  3. Globalization of the World
  • World wide integration and deepening of economic activities
  • I ntegrated production and consumption systems
  • F acilitated by IT revolution, liberalization and deregulation
  • U nprecedented mobility of goods, services, capital and people
  • E vents all over the world strongly interdependent

What is Globalization?
3.

  • “… (the) integration of national economies into the international economy through trade, direct foreign investment…short-term capital flows, international flows of workers and humanity generally, and flows of technology…” (Bhagwati, In Defense of
  • Globalization, p. 3)

Definition
4.

  • Internationalization (trade & investment)
  • Liberalization (freeing markets)
  • Universalization (cultural interchange)…or…
  • Westernization (Western cultural dominance)
  • “ Deterritorialization” (compression of time and space)

Globalization Encompasses
5.

  • 1. Globalization of consumption : The nation in which a product was made becomes independent of the nationality of the consumer.

Globalization -Two types
6.

  • 2. Globalization of production/ownership:
  • The nationality of the owner and controller of productive assets is independent of the nation housing them. For example, Canada’s assets are owned by foreigners at the same proportion as foreigners own all world assets. Consequently, only about 3% of Canadian assets would be owned by Canadians. Similarly, Canadian based firms would have roughly 97% of their total assets overseas.

Globalization -Two types
7. Globalization Example Airbus Consortium
8.

  • Jointly owned by companies from 4 countries:
  • France
  • German
  • Britain and
  • Spain.
  • Wings from Britain,
  • Fuselage and tail from Germany,
  • Doors from Spain,
  • Cockpit and final assembly in France.

9.

  • 1,500 suppliers in 27 countries.
  • More than 35 percent of components for the consortium’s aircraft are supplied from over 500 American companies.
  • Numerous suppliers also are located in the Asia-Pacific.
  • Singapore Technologies Aerospace produces wing ribs and passenger doors for the A320, and engine mounts and thrust reverser doors for the A340.
  • India’s Hindustan Aeronautics Limited also builds A320 passenger doors.
  1. Globalisation Globalisation could involve all these things!
  2. Integration of Economies
  • The increasing reliance of economies on each other
  • The opportunities to be able to buy and sell in any country in the world
  • The opportunities for labour and capital to locate anywhere in the world
  • The growth of global markets in finance

Stock Markets are now accessible from anywhere in the world!
12. Integration of Economies

  • Made possible by:
    • Technology
    • Communication networks
    • Internet access
    • Growth of economic cooperation – trading blocs (EU, NAFTA, etc.)
    • Collapse of ‘communism’
    • Movement to free trade
  1. Trade versus Aid?
  • Benefits of Trade:
    • Increased choice
    • Greater potential for growth
    • Increase international economies of scale
    • Greater employment opportunities

Trade has led to massive increases in wealth for many countries.
14. Trade versus Aid?

  • Disadvantages of trade:
    • Increase in gap between the rich and the poor
    • Dominance of global trade by the rich, northern hemisphere countries
    • Lack of opportunities for the poor to be able to have access to markets
    • Exploitation of workers and growers

How far does trade help children like these?
15. Corporate Expansion

  • Multi-national or trans-national corporations (MNCs or TNCs) – businesses with a headquarters in one country but with business operations in a number of others.

No matter where you go in the world, certain businesses will always have a presence.
16. Corporate Expansion

  • Characteristics:
    • Expanding revenue
    • Lowering costs
    • Sourcing raw materials
    • Controlling key supplies
    • Control of processing
    • Global economies of scale

Controlling supplies may be one reason for global expansion.
17. Corporate Domination

  • Key Issues:
    • Damage to the environment?
    • Exploitation of labour?
    • Monopoly power
    • Economic degradation
    • Non-renewable resources
    • Damage to cultures

Shell and Nike’s activities have come under severe criticism in some quarters.
18. Global Telecommunications
20. Manufacturing Design
21. Globalization In India
22. China in late 1980’s
23. China in 2005
24. India in late 1980’s
25. India in the present day
26. WHAT DO THE PREVIOUS FOUR IMAGES TELL US?

  • India in 1980
  • Ahead of China esp. in free enterprise and per capita earnings
  • India in 2005
  • Full of vigour but political system still trapped in clanship management of the Nation instead of taking charge of enterprise
  • China in 1980
  • Still struggling with Communist Egalitarian past and lack of enterprise
  • China in 2005
  • Government took charge of enterprise in late 1980’s, transforming China into a modern industrial nation which increased per capita income by a factor of 5
  1. We have everything by globalization, we have nothing by globalization.
  2. Globalization and its impact in the Indian economy
  3. What is globalisation?
  • Spread of; manufacturing, services, markets, culture, lifestyle, capital, technology and ideas across national boundaries and around the world.
  • Also the integration of these geographically dispersed economic and social activities.
  • Huge impacts on people and nations. The whole world is affected by globalisation

31.

  • Globalization in India has allowed companies to increase their base of operations, expand their workforce with minimal investments, and provide new services to a broad range of consumers.

Globalization in India
32.

  • One of the major forces of globalization in India has been in the growth of outsourced IT and business process outsourcing (BPO) services.
  1. Effects of Globalization in India
  2. Effects of Globalization? Whether Positive or Negative
  • Access to television grew from 10% of the urban population (1991) to 75% of the urban population (1999).
  • Cable television and foreign movies became widely available for the first time and have acted as a catalyst in bulldozing the cultural boundaries.
  • All these technologies have changed perceptions and dreams of ordinary people.
  • Unmarried boys and girls are sharing same apartment and staying away from their parents.
  • Indian youths leaving education in mid-way and joining MNC’s

Cultural Changes In India
37.

  • There has been a increase in the violence, particularly against women.
  • Scientific and technological innovations have made life quite comfortable, fast and enjoyable.
  • More availability of cheap and filthy material (CD’s or DVD’s of Hollywood movies, porn movies, sex toys, foreign channels like MTV) in the name of liberalization.
  • In India, land-line or basic phone was a prestige symbol few years back but now you find people riding bicycle with a mobile in hand, talking or listening music or even clicking cameras of their phones targeting pretty girls or ladies.

Cultural Changes In India
38.

  • Society has become more open compared to its earlier conservative look due to exposure to other cultures through DTH or cable network.
  • This has contributed to dating, celebration of friendship days/valentine day, and resulted to rising number of call girls and make them more prone to sexually transmitted diseases.
  • People are less worried for government jobs as MNC’s and private or public sector are offering more lucrative jobs.

Cultural Changes In India
39.

  • Extension of internet facilities even to rural areas.
  • In place of old cinema halls, multiplex theatre are coming up.
  • Old restaurants are now replaced by Mc. Donalds. Fast food and Chinese dishes have replaced juice corners and Parathas.
  • More inflow of money has aggravated deep rooted problem of corruption?
  • More scandals and scams compared tp pre-globalization era.
  • Girls being blackmailed by their ex-boy friends using MMS
  • Ban on TV channels for showing sex and violence violating all norms
  • Girls being raped in moving vehicles
  • There is deterioration in social values as evident from less respect for ladies, older people

Cultural Changes In India
40. Indian Economy under Globalization

  • Key Elements
  • Economy opened up to imports of goods, services and capital
  • Privatization vigorously pursued
  • Deregulation accelerated
  1. India: Fastest Growing Free Market Democracy
  2. Fastest GDP growth of 9.4 percent in 2006-07, since last 18 years Growth in sectors (2006-07): Industry: 10.9% Services: 11% Agriculture: 2.7% The Indian economy has witnessed an unprecedented growth…. Booming Indian services and industry sector are providing the required impetus to the economic growth 4% 8.5% 7.5% 8.4% 9.4%
  3. India’s Export and Import
  4. India’s FDI
  5. USD 12.1 billion Tata Steel buys Corus Plc USD 6 billion Hindalco acquired Novelis Inc. USD 1.58 billion Essar Steel acquired Algoma Steel USD 1.6 billion Suzlon Energy Ltd. acquires REpower USD 730 million Videocon Industries acquired Daewoo Electronics Corporation Limited
  6. Some facts about India
  • Huge country, large numbers, big territory: Billion plus people over 2.5 million square kilometers
  • Diverse languages, ethnicities, religions
  • Caste and other pre-capitalist relations

47.

  • 72 % live in rural areas (2001)
  • 73 % of rural labour force in agriculture and allied activities. ( Males 66.5 %, Females 83.6 %) ( 2004-05 )
  • As of 2004-05, estimated employment was 457 million, of which 70 million were regularly employed, 130 million casual and 257 million self-employed
  • 86.32 % of the employed were in the unorganized sector, rest in organized sector

India’s Working People
48.

  • A country of savers has become spenders.
  • Greater employment opportunities for the masses.
  • Companies and government have changed the way they do business to cut the red tapisum.
  • The rupee has gained on the dollars so it is less advantage for Indians to live overseas and send money back home.

Economic Changes
49.

  • The rate of growth of the GDP of India has been on the increase from 5.6 % during 1980-90 to 7% in the 1993-2001 period.
  • In the last four years, the annual growth rate of the GDP was impressive at 7.5% (2003-04), 8.5% (2004-05),9% (2005-06) and 9.2% (2006-07).
  • The foreign exchange reserves were $ 39 bn (2000-01), $107 bn (2003-04),$145 bn (2005-06) and $180 bn (in February 2007).

The Bright Side of Globalization
50.

  • India’s trade deficit during 1990-1991 to 2006-2007 ranged between 3.6% to 6.9% of GDP.
  • The fluctuation in Foreign portfolio Investment were much sharper then FDI, The FPI rate decreases by 36% from period 1990-00 and again shows upward growth rate in period 00-07 was 22.1%.
  • FDI (net) shows a gradual upward growth from $97 million in 1990-1991 to $3272 million in 2000-2001 and again rising and touching the peak of $8779 million in 2006-2007.

51.

  • Share in world exports raise from 0.52% in 1990 to 1% in 2007. In the rate of growth of per capita income there has been a sharp acceleration in the growth of per capita income, almost doubling to an average of 7.2% p.a. (2003-04 to 2007-08).

52.

  • Industrialisation did not take place as per expectation.
  • Share of agriculture in the GDP went down drastically to 24 per cent and further to 22 per cent in 2006-07.
  • The number of rural landless families increased from 35 per cent in 1987 to 45 per cent in 1999, further to 55 per cent in 2005.

Darker Side of Globalisation
53.

  • Corruption, lack of efficiency in work and ineffective management became the common features of public sector. Decreased FDI: The data of FDI shows 50% (approx) gradual upward growth from 90-00. The FDI growth decreased by 20% from period 2000-07.

54.

  • Our progress in education has been slow and superficial , without depth and quality, to compete the international standards. People depending on agriculture in India is about 60% where as the same for U.K. Is 2% and U.S. Is 2%.
  1. Growing Indian Economy
  2. 2010 GDP – USD 1.36 trillion GDP growth rate – 9% Services contribution – 60-65% Balance of Trade – Negative balance should increase with surging imports versus exports Investment goal – USD 370 billion 2008 GDP – USD 1.16 trillion GDP growth rate – 9.5% Services contribution – 60% Balance of Trade – Negative balance should increase with surging imports versus exports Investment goal – USD 305 billion 2006 GDP – USD 590 billion GDP growth rate – 9% Services contribution – 54% Balance of Trade – USD (-)46.2 billion Investment goal – USD 250 billion
  • To conclude the benefits of economic reforms on the Indian economy would get achieved, only if the negative impacts are settled or neutralized. Hence, along with globalisation and restructuring the economy, efforts.

Conclusion
58. Indian Economy Opportunities Unlimited
59. Thank You

 

“Globalization”

  1. 1. Globalizati onInternational Marketing 4th assignmentGlobalizationBy:Mohamed Khalifa IbrahimESLSCA – MBA – 28 May 2011
  2. 2. What is globalization? • Is it the integration of economic, political, and cultural systems across the globe? • Or is it Americanization of world culture and United States dominance of world affairs? Or perhaps, the “McDonaldization,” of the world • Is globalization a force for economic growth, prosperity, and democratic freedom? • Or is it a force for environmental devastation, exploitation of the developing world, and suppression of human rights?
  3. 3. Which is the real world?
  4. 4. DefinitionDefinitions are categorized to three main frames 1. The positive frame points to the potential gains and benefits of globalization. 2. The neutral frame portrays globalization as a natural, evolutionary, and largely inevitable development. This discourse, which is associated with the financial community, avoids making moral judgments. 3. The negative frame points out the increasing potential for economic crisis, the threat to the livelihoods of workers, and the growing income inequality caused by globalization. This frame also includes discourse which is primarily concerned with the negative impact of globalization in the third World.
  5. 5. Definition ” Globalization is a widely-used term that can be defined in a number of different ways, but when used in an economic context, it refers to the reduction and removal of barriers between national borders in order to facilitate the flow of goods, capital, services and labor. United Nations Economic and Social Commission for Western Asia “ESCWA” “Globalization refers to the growing economic interdependence of countries worldwide through the increasing volume and variety of cross border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology.” International Monetary Fund Globalization is the acceleration and intensification of interaction and integration among the people, companies, and governments of different nations. The American Forum for Global Education “Globalization is a process that encompasses the causes, course, and consequences of transnational and transcultural integration of human and non- human activities.” Geneva Centre for Security Policy
  6. 6. Definition“Globalization can be defined as a set of economic, social, technological, politicaland cultural structures and processes arising from the changing character of theproduction, consumption and trade of goods and assets that comprise the base ofthe international political economy.” United Nations Educational, Scientific and Cultural Organization (UNESCO)“Globalization – the growing integration of economies and societies around theworld.” The World Bank Group “Globalization refers above all to a dynamic and multidimensional process ofeconomic integration whereby national resources become more and moreinternationally mobile while national economies become increasinglyinterdependent.” The Organization for Economic Co-operation and Development (OECD)
  7. 7. Definition “The inexorable integration of markets, nation-states and technologies to a degree never witnessed before – in a way that is enabling individuals, corporations and nation-states to reach around the world farther, faster, deeper and cheaper than ever before, and in a way that is also producing a powerful backlash from those brutalized or left behind by this new system… Globalization means the spread of free-market capitalism to virtually every country in the world.” Thomas Friedman, The Lexus and the Olive Tree
  8. 8. Globalization encompasses • Internationalization (trade & investment) • Liberalization (freeing markets) • Universalization (cultural interchange) • Westernization (Western cultural dominance)Sources of Globalization • Internationalization of Economic Activity (Trade & Finance) • Global Liberalization (Domestic and International ) • Technological Changes (IT Revolution in speed and Cost) • Improvements in Transportation (Containerized Shipping) • Globalized Production Structures (Stateless Corporations) Pro Anti groups are globalization Globalization Globalization1 2 is relentless 3 fighting 4 has facts to is inevitable physically only back up that it is a good thing.
  9. 9. Effect of Globalization • Industrial – emergence of worldwide production markets and broader access to a range of foreign products for consumers and companies. Particularly movement of material and goods between and within national boundaries. International trade in manufactured goods has increased more than 100 times (from $95 billion to $12 trillion) since 1955. Chinas trade with Africa rose sevenfold during 2000–07 alone. • Financial – emergence of worldwide financial markets and better access to external financing for borrowers. By the early part of the 21st century more than $1.5 trillion in national currencies were traded daily to support the expanded levels of trade and investment. • Economic – realization of a global common market, based on the freedom of exchange of goods and capital. • Job Market – competition in a global job market. In the past, the economic fate of workers was tied to the fate of national economies. With the advent of the information age and improvements in communication, this is no longer the case.
  10. 10. Effect of GlobalizationPolitical – some use “globalization” to mean the creation of a world governmentwhich regulates the relationships among governments and guarantees the rightsarising from social and economic globalization. Politically, the United States hasenjoyed a position of power among the world powers, in part because of itsstrong and wealthy economy.Cultural – growth of cross-cultural contacts; advent of new categories ofconsciousness and identities which embodies cultural diffusion, the desire toincrease ones standard of living and enjoy foreign products and ideas, adoptnew technology and practices, and participate in a “world culture”.Social – development of the system of non-governmental organizations as mainagents of global public policy, including humanitarian aid and developmentalefforts.
  11. 11. Effect of GlobalizationTechnical – Development of a Global Information System, globaltelecommunications infrastructure and greater trans-border data flow, using suchtechnologies as the Internet, communication satellites, submarine fiber opticcable, and wireless telephones. Increase in the number of standards appliedglobally; e.g., copyright laws, patents and world trade agreements.Legal/Ethical – The creation of the international criminal court and internationaljustice movements. Crime importation and raising awareness of global crime-fighting efforts and cooperation. The emergence of Global administrative law.Religious – The spread and increased interrelations of various religious groups,ideas, and practices and their ideas of the meanings and values of particularspaces and the anti-islam movements in the west.
  12. 12. Pro-globalizationTheories suggest that globalization leads to efficient use ofresources and benefits all who are involved.According to libertarians, globalization will help the whole worldto deal with crises like unemployment and poverty. It will help usto raise the global economy only when the involved power blockshave mutual trust and respect for each other’s opinion.Globalization and democracy should go hand in hand. It shouldbe pure business with no colonialist designs. The way we havedeveloped in the last 10 years, globalization seems to have givenus good returns.Globalization has made the life of the third world citizencompletely a different story. There are so many foreigncompanies that have made way to Orient and have made Indiaa brand name all over the world.
  13. 13. Pro-globalizationThe pros of Globalization are many and they are as follows: Now there is a worldwide market for the companies and for the people there is more access to products of different countries. There is a steady cash flow into the developing countries, which gradually decrease the dollar difference. Due to the presence of a worldwide market, there is an increase in the production sector and there are lots of options for the companies now. Gradually there is a world power that is being created instead of compartmentalized power sectors. Politics is merging and decisions that are being taken, are actually beneficial for people allover the world. There is more influx of information between two countries, which do not have anything in common between them.
  14. 14. Pro-globalization There is cultural intermingling and each other is trying to know about the other’s cultural preferences and in the process of doing so, we are actually coming across things that we like and in the course of time adopt it. Since we share financial interests, corporate and governments are trying to sort out ecological problems for each other. Socially we have become more open and tolerant towards each other and they who live in the other part of the world are not aliens as we always thought. There are examples like now Indian girls work in call centers and work nights, which was a taboo even two years back. We are celebrating Valentine’s Day, watching the Idol series, Fear factor, the Indian version Big Brother. There is a lot of technological development that we have undergone over the years. There are fewer brain drains since Asians are working in their own country though for a foreign company but are earning foreign exchange for their country.
  15. 15. Anti- Globalization There are cons which are as follows: It is true that Europeans are losing jobs and that is posing a problem for them since the companies are outsourcing work to the Asian countries since the cost of labor is low and profits the company considerably. There is immense pressure on the employed Europeans who are always under the threat of the business being outsourced. Corporates are building up units in other countries equally well equipped as they have done at their own country, thus transferring the quality to other countries. There are some experts who think that globalization; along with the positive aspects is also leading to the incursion of negatives like communicable diseases and social degeneration.
  16. 16. Anti- Globalization There is also a threat of corporates ruling the world because there is a lot of power, which is invested in them due to globalization. For nations that are at the receiver’s end are also giving up the reins in the ends of a foreign company which might again lead to a sophisticated form of colonization. Millions of others fear losing their jobs, especially at those companies operating under competitive pressure. Workers face pay-cut demands from employers, which often threaten to export jobs. Service and white-collar jobs are increasingly vulnerable to operations moving offshore. U.S. employees can lose their comparative advantage when companies build advanced factories in low-wage countries, making them as productive as those at home.
  17. 17. Thank you
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