2 - Chapter1 - Globalization.pdf

8/10/2019 2 - Chapter1 - Globalization.pdf

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INTERNATIONAL BUSINESS

Pham To Mai

University of Economics and Law

National University of HCMC


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Chapter I

GLOB LIZ TION


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PTM Globalization 07-Sep-14

Globalization

Trade and investment barriers aredisappearing.

Perceived distances are shrinking due toadvances in transportation andtelecommunications.

Material culture is beginning to looksimilar.

National economies merging into an

interdependent global economic system.


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What is Globalization?

The shift toward amore integrated andinterdependent world

economy.

Markets

Production


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Globalization & Businesses

OpportunitiesIncreased revenueopportunity throughglobal sales

Reduced costs byproducing in lowcost countries.

Facilitated globalexpansion byfavorable politicaland economic trends

Challengesincreased competitionand decreased prices indomestic markets

Foreign competition injobs

Different nations =different problems

Global planning may beeasy, but globalexecution is not


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Drivers of Globalization

Declining Trade andInvestment Barriers

The Role of Technological

Change


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Impact of GATT Tariff Rates

0

5

10

15

20

25

30

35

40

45

50

1913 1950 1990 2000

France

GermanyItaly

Japan

Holland

Sweden

BritainUnited States

Average Tariff Rates on Manufactured Products % of Value


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National FDI Regulatory Changes(2000-2010)

2000 2002 2004 2006 2008 2009 2010

Number of countries

that introduce change

70 72 103 91 54 50 74

Number of regulatorychanges, in which: 150 246 270 177 106 102 149

- More favourable 147 234 234 142 83 71 101

- Percentage of morefavourable changes intotal

98 95.1 86.7 80.2 78.3 69.6 67.8

Source: UNCTAD, World Investment Report 2011


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International Investment Agreements concluded,2010

Forms ofAgreements

BIT DTT Others

Signed in theyear

54 113 11

Cummulativenumber atthe end ofthe year

2,807 2,976 309

Source: UNCTAD, World Investment Report 2011


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Technological Change in Transportation

Commercial jet aircraft

Supper freighters

Containerizations


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The Shrinking Globe1500-1840

1850-1930

1950s

1960s

Best average speed ofhorse-drawn coaches and

sailing ships, 10mph.

Steam locomotives average 65mph.Steamships average 36mph.

Propeller aircraft300-400 mph.

Jet passenger aircraft500-700mph.


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Globalization - Pros

Lower prices for goods and services.

Economic growth stimulation.Increase in consumer income.

Creates jobs.Countries specialize in production of goodsand services that are produced mostefficiently.

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Globalization - ConsDestroys manufacturing jobs and lowers wagerates of unskilled workers in wealthy, advanced

countries.Companies move to countries with fewer laborand environment regulations.

Loss of national sovereignty.Increases gap between rich and poor nations

Deteriorates national culture

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Globalization and National Sovereignty

WTOEU

UN

WTO

Founded 1994

153 members

Police GATT trading system

Supranational organizations arelimited to powers granted by

member countries and serve thecollective interests of its members.Power is derived from theorganizations ability to sway

members to action.

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Globalization and the Worlds PoorCritics argue that globalization has not helpedpoor.

1870:per capitaincome of 17 richest nations was2.4x that of all other countries.1990: it was 4.5x larger.

Other factors may have influenced the gap.

Totalitarian governments.Economic policies that destroyed wealth creation.Little protection of property rights.Expanding populations.

War.

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Implicationfor International Businesses

IBs & MNCs are blamed for transferringnegative effects of globalization aroundthe world IBs & MNCs become targetsfor antiglobalization protesters

Be conscious of business ethics andCorporate Social Responsibility (CSR) indoing business abroad

Documents

2 - Chapter1 - Globalization.pdf