IB Topic 1

• Globalization means "the shift towards a more interconnected and interdependent world", covering all aspects of global politics, economics, and culture
• Globalization is historically supported by conquest, ancient trade routes, and colonial explorations
• Globalization is all about connections
• In the business context, globalization refers to "the shift towards a more integrated and interdependent world economy"
• National economies are no longer self-contained and isolated
• Nations are moving towards a world in which barriers to trade are declining
• Perceived distance is shrinking due to advancements in transportation and communication
• Material culture is looking similar across the world
• National economies are merging into an integrated global economic system
• Volume of goods, services, and investment crossing national borders have expanded faster than world output
• Businesses can expand revenue and reduce costs
• Industries have transformed from manufacturing to service-oriented
• Industries have become more efficient by creating anxiety in non-efficient workers
• Facets of globalization include globalization of markets and globalization of production
• Globalization of markets refers to "the merging of historically distinct and separate national markets into one huge global marketplace"
• Globalization of markets has resulted in the creation of regional trade blocs and convergence of consumer taste and preferences
• Globalizing one's markets does not mean losing the distinctiveness of one's national market
• Globalization of production refers to "the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production"
• Globalization of production encourages outsourcing to more efficient manufacturers abroad
• Drivers of globalization include declining barriers to trade and investment, and advancements in technology
• Beggar-thy-neighbour policies were commonly used in the early days to improve one's own economy at the expense of other countries
• Communication technology advancements include higher power and lower cost microprocessors, wireless technology, and fiber optics
• The global internet has unified the world, blurred national distinctions, and created a platform for trade between suppliers and buyers
• Transportation technology advancements include commercial jets, super freighters, and containerization
• Implications of technology advancements include lower cost of information processing, lower freight costs, and enablement of electronic marketplaces
• The 20th century was the American century, with the U.S. economy peaking between 1960-1969
• In the 21st century, Asia's economy is rising, with China overtaking Japan in 2009
• Removal of national trade barriers has led to the rise of Asia as an economic powerhouse and the emergence of new economies
• Governments seek to improve their economies through membership in global institutions like the United Nations and G20
• Global institutions manage, regulate, and police the marketplace, and promote multinational treaties for governing the global business system
• The World Trade Organization facilitates trade and manages trading relationships between member nations
• The International Monetary Fund maintains order in the monetary system and acts as a lender-of-last-resort for countries with severe economic and financial problems
• The World Bank promotes economic development by giving low-interest loans to poor governments
• The United Nations fosters peace, international cooperation, and harmonizing the actions of nations
• The G20 was established to launch a coordinated policy response to financial crises across nations
• The globalization debate includes discussions on globalization and jobs, income, labor, environment, national sovereignty, and world poverty
• Managing an international business is different from managing a domestic business due to various factors