1. Globalization

2. Globalization is the process of interaction and
integration among the people, companies and
governments of different nations, a process
driven by international trade and investment
and aided by information technology.

3. Globalization is the flow across national
boundaries of goods and services, capital,
people, technology, ideas, and culture.

4. More evidence of Globalization
• World trade increased about 20x since 1950 while
• Global production has increased about 6.5x
• Between ’90 and ’00 FDI increased 5x, trade by 2x
and world output by 0.2x
• By 2000:
– 60,000 parent companies operated away from home
markets through 820,000 subsidiaries/affiliates
– Produced US$14 trillion in global sales, twice the value of
global exports
– US, Japanese, Western European companies the major
investors in Europe, Asia, and North America

5. Examples of Globalization
• The Internet
• Selling local products in the global market
• Attending lectures by a British professor teaching in
an American University via a web-conference in NUS
• Wearing Made in China clothes
• Driving Made in Japan cars

6. Key Driving Forces of Globalization
1) Developments in 2) Transnational
transportation and Companies
communications

7. 1) Developments in transportation and
communications
– Improvements in transport technology has
“shrunk” the world
– 19th century steam engine  20th century jet
engine,
– Faster and more convenient communication
– People all over the globe can communicate via
telephone, e-mail, fax, video conferencing, etc
• Internet has transferred the way people communicate, do
business, obtain information and purchase goods and services

8. 2) Transnational Companies
• TNCs set up operations in different parts of
the world:
– Sourcing for new markets
– Lowering cost of production
– Production of different parts for products and
assembly done in a variety of countries

9. Impact of Globalization
1) Economic Impact
2) Social Impact
3) Environmental Impact

10. 1) Economic Impact
• Widening Income Gap Between the Rich and
the Poor
– The rich developed countries prosper with
better opportunities while the poor developing
countries face economic uncertainties like
retrenchment
– Widening income gap can lead to social
problems, increasing tension between the rich
and the poor

11. Of the largest 100 economies in the world, 52
are now corporations; only 48 are countries.
Mitsubishi is the 22nd largest economy in the
world. General Motors is 26th. Ford is 31st.
All are larger than Denmark, Thailand, South
Africa, Saudi Arabia, Norway, Malaysia, and
Chile.
Institute for Policy Studies, Top 200: The Rise
of Corporate Global Power, 2000

12. 2) Social Impact
• Increased Awareness of Foreign Culture
– Travel, the Internet, mass media (products of globalisation allow
you to learn more about foreign culture
• Loss of Local Culture
– Global (Western) brands dominate consumer markets in developing
countries
– Creation of homogenous culture across the world
– Spread of pop culture and erosion or loss of local culture
– Negative influence of youth
– Enforced beliefs

15. 3) Environmental Impact
• Depletion of natural resources by TNCs
• Concern over profits vs. protection of the environment
• Lack of funds to implement environmental protection
• Environmental Degradation
– Deforestation and Related Problems
– Global Warming
– Environmental Management

19. Globalization Quiz

20. Globalization has led to a rapid
increase in which of the following?
A. water stress
B. international trade
C. transboundary pollution
D. population density

21. Which term describes a business that
has operations all over the world?
A. trade bloc
B.common market
C.micro-enterprise
D.multinational corporation (your answer)

22. A company in Mexico ships fruit to the
United States for sale without paying
tariffs. This is an example of which of
the following?
A. free trade
B. vertical trade
C. subsistence agriculture
D. comparative advantage

23. China looks to Japan for foreign
investment and technology. Japanese
consumers buy many goods made in
China. The result is which of the
following?
A. ethnic diversity
B. sustainable development
C. supranational cooperation
D. economic interdependence

24. Which best describes why factories
have been moved to Asian countries in
the last 50 years?
A.low labor costs in developing countries (your
answer)
B.workers are faster than American workers
C.Asian countries have better materials to work
with
D.there are more people to work in factories