globalization

• International Business The exchange of goods and services among individuals and business in multiple countries. It encompasses all commercial activities that take place to promote the transfer of goods, services, resources, people, ideas, and technologies across nationalboundaries
• Globalization Refers to the shift toward a more integrated and interdependent worldeconomy
• Globalization of markets – refers to the merging of historically distinct and separate national markets into one huge global marketplace.
• 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
• General Agreement on Tariffs and Trade (GAAT) - signed on October 30, 1947, by 23 countries, was a legal agreement minimizing barriers to international trade by eliminating or reducing quotas, tariffs, and subsidies while preserving significant regulations. The GATT was intended to boost economic recovery afterWorld War II through reconstructing and liberalizing global trade
• World Trade Organization (WTO) – primarily responsible for policing the world trading system and making sure nation-states adhere to the rules laid down in trade treaties signed by WTO member states.
• international Monetary Fund – established to maintain order in the international monetary system.
• World Bank – set up to promote economic development
• United Nations – established to preserve peace through internationalcooperation and collective security
• Group of Twenty (G20) – established to formulate a coordinated policy response to financial crises in developing nations
• 1. Declining trade and investment barriersInternational Trade – occurs when a firm exports goods or services to consumers in another country.Foreign Direct Investment (FDI) – occurs when a firm invests resources in business activities outside its home country
• 2. Technological ChangeMicroprocessors and telecommunications – The single most importantinnovation has been the development of the microprocessor, whichenabled the explosive growth of high-power, low-cost computing vastlyincreasing the amount of information that individuals and firms canprocess
• The internet and World Wide Web – The rapid growth of the World WideWeb is the latest expression of this development. In 1990, fewer than 1million users were connected to the internet.
• transportation Technology – In addition to the developments incommunication technology, several major innovations in transportationtechnology has occurred since World War II. In economic terms, themost important are probably the development of commercial jet aircraft and super-freighters and the introduction of containerization, which simplifies transshipment from one mode of transport to another.
• Implications for Globalization of Production – As transportation costsassociated with the globalization of production have declined, dispersalof production to geographically separate locations became moreeconomical. These developments make it possible for a firm to create and then manage a globally dispersed production system, further facilitating the globalization of production. A worldwide communications network has become essential for many international business
• Implications for the Globalization of Markets - technological innovations have facilitated the globalization of markets. Low-cost global communications networks such as the World Wide Web are helping to create electronic global marketplaces. As noted above, low-cost transportation has made shipping products worldwide more economical, thereby helping create global markets.worldwide
• Trends in the Changing Demographics of the Global Economy - 1.The changing world output and world trade picture2. The changing foreign direct investment picture3. The changing nature of the multinational enterprise4. The changing world order
• Advantages of Globalization-1.Increases economic growth2. Makes production more affordable.3. Promotes Working Together.4. Brings opportunities to poorer countries.
• Disadvantages of Globalization-1.Unequal economic growth.2. Lack of local businesses.3. Increases potential global recessions.4. Exploits cheaper labor markets.5. Causes job displacement