Contemporary

• Globalization


  The spread of the flow of financial products, goods, technology, information, and jobs across national borders and cultures
• Globalization


  • It is a social, cultural, political, and legal phenomenon
  • It consists of three interrelated factors: (1) Proximity (2) Location (3) Attitude
• Proximity


  Closer access of the people in sharing information and having interaction
• Location


  Transnational management where companies or organizations are operating across borders
• Attitude


  Open attitude and willingness in management and participation to various transactions internationally
• The development and innovation in transportation, information and communication technology, sciences, and technological advancements have made the world smaller for all of us
• Nowadays, it is easy for us to be updated on the news about other countries through different media especially via internet
• Travels and tourism have also become easier with the modern transportation
• Consequently, people are have connected themselves to one another politically, economically and socio-culturally across borders
• The word globalization was first used

  1930
• The term "Globalization" entered the dictionary in the Merriam-Webster Third New International Dictionary


  1961
• The term "Globalization" became even more popular, when it was often used in books about Social Change Theory


  1990's
• Early history of globalization

  • Sumeria and Indus Valley - system of trade/exchange of goods
  • India, Egypt, Greece and Rome - trading with other countries
• Medieval Empire


  • Jews and Muslims - travelling around the world to trade/exchange goods
  • This is also known as "age of discovery" - Christopher Colombus at Vasco De Gama
• Pre Modern- Modern Period/Industrialization

  • General Agreements on Tariffs and Trade (GATT)
  • World Trade Organization (WTO)
• Modern Era


  • Development of commerce
  • Abolition of taxes and tariffs
  • Infrastructure development
  • Multinational corporations
  • Cultural exchanges and traditions
• Interrelated sectors driving globalization

  • Geography
  • Culture
  • Technology
  • Military
  • Ecology
  • Politics
  • Economy
• Kinds of globalization - "multiple globalizations"

  • Ethnoscape - global movement of people
  • Mediascape - flow of culture
  • Technoscape - circulation of mechanical goods and software
  • Financescape - global circulation of money
  • Ideoscape - political ideas move around
• Positive effects of globalization

  • Access to new cultures
  • Spread of technology and innovation
  • Lower costs for products
  • Higher standards of living across the globe
  • Access to new markets
  • Access to new talent
• Negative effects of globalization

  • Causes environmental damage
  • Causes fluctuation of prices
  • Job insecurity
• Challenges in globalization


  • International recruiting
  • Managing employee immigration
  • Incurring tariffs and export fees
  • Payroll and compliance challenges
  • Loss of cultural identity
  • Foreign worker exploitation
  • Global expansion difficulties
  • Immigration challenges and local job loss
• Economic globalization


  The increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, flow of international capital and wide and rapid spread of technologies
• Economic globalization reflects the continuing expansion and mutual integration of market frontiers, and is an irreversible trend for the economic development in the whole world at the turn of the millennium
• Multinational corporation


  A company that does business in a select few countries around the world and operates facilities such as warehouses or distribution centres in at least one foreign country
• Interconnected dimensions of economic globalization

  • Globalization of goods and services
  • Globalization of financial and capital markets
  • Globalization of technology and communication goods and services
  • Globalization of production
• International trade


  An exchange involving a good or service conducted between at least two different countries
• Import


  A good or service brought into the domestic country
• Export


  A good or service sold to a foreign country
• Types of international trade

  • Export trade - selling of goods and services out of the country
  • Import trade - goods and services flowing into the country
  • Entrepot trade - importing goods from one country & exporting it to another country after adding some value to it
• Needs of international trade

  • Price - if foreign companies can produce goods and services more cheaply
  • Quality - if the companies abroad can offer good and services of superior quality
  • Availability - if it's impossible to produce a product domestically
  • Demand - if demand for product/services is more in country than what it can domestically produce
• Advantages of international trade

  • Comparative advantage
  • Economies of scale, competition
  • Transfer of technology
  • More job creation
• Disadvantages of international trade

  • Over-dependence
  • Unfair to new companies
  • A threat to national security
  • Pressure on natural resources
• Tariffs


  A tax or duties paid for a particular class of imports or exports
• Bretton Woods System


  A set of unified rules and policies that provided the framework necessary to create fixed international currency exchange rates
• The Bretton Woods System called for the newly created IMF to determine the fixed rate of exchange for every represented country, which assumed the responsibility of upholding the exchange rate
• Backing currency by the gold standard started to become a serious problem throughout the late 1960s, leading to the collapse of the Bretton Woods system by 1973
• International Monetary Fund (IMF)

  Its fundamental mission is to ensure the stability of the international monetary system
• The responsibility of upholding the exchange rate, with incredibly narrow margins above and below. Countries struggling to stay within the window of the fixed exchange rate could petition the IMF for a rate adjustment, which all allied countries would then be responsible for following
• Backing currency by the gold standard started to become a serious problem throughout the late 1960s
• By 1971, the issue was so bad that US President Richard Nixon gave notification that the ability to convert the dollar to gold was being suspended "temporarily." The move was inevitably the final straw for the system and the agreement that outlined it