What is meant by globalisation? What is the exact definition of globalisation?

Author:Vikram Jain

Globalisation can be defined as "integration of a country's economy with world economy, where goods and services as well as capital move across the border, where a country's financial markets are affected by fluctuations in the global market."

Globalization is a term that is used to describe the changing world order in which various aspects of a nation that include the economic, social, political, cultural andenvironmental factorsare viewed as being part of a globalcommunity andnot restricted in their scope.

The term came to be used to describe the phenomenon of global flux in whichtradeas represented by capital and material can move freely across the world with lesser restrictions with respect to national boundaries.

Globalization though it has been essentially connoted witheconomic issuessynonymous with multinational companies(MNC) and their policies that directly or indirectly affect populations across the world has also consequently ushered in an era of change with respect to social and cultural matters inducing a competitive spirit in world culture for the better or worse according to the social fabric of various communities and their flexibility and adaptability.

Knowledge, with respect to developments in science and technology isperceivedto be the driving force behind globalization and continues to be the decisive factor what with the outsourcingtrends ofseveral MNCs to offshore destinations in recent times.

Globalization has often been seen as being a subtle factor that tries to undermine welfare policies of governments across the world and individual choice and being elitist in nature but it has also unconsciously forced democratic nations to be more affirmative and inclusive with respect to the betterment of all sections of societies and also to address vital issues like the conservation of the environment.

Types of GlobalizationFinancial globalization Interconnection of the worlds financial systems e.g. stock markets More of a connection between large cities than of nations Example: What happens in Asian markets affects the North American markets.Economic Globalization A worldwide economic system that permits easy movement of goods, production, capital, and resources (free trade facilitates this) Example: NAFTA, EU, Multinational corporationsTechnological Globalization Connection between nations through technology such as television, radio, telephones, internet, etc. Was traditionally available only to the rich but is now far more available to the poor. Much less infrastructure is needed now.Political Globalization countries are attempting to adopt similar political policies and styles of government in order to facilitate other forms of globalization e.g. move to secular governments, free trade agreements, etcCultural Globalization Merging or watering down of the worlds cultures e.g. food, entertainment, language, etc. Heavily criticized as destructive of local culture e.g. The Simpsons is shown in over 200 countries in the world.Ecological Globalization seeing the Earth as a single ecosystem rather than a collection of separate ecological systems because so many problems are global in nature e.g. International treaties to deal with environmental issues like biodiversity, climate change or the ozone layer, wildlife reserves that span several countriesSociological Globalization A growing belief that we are all global citizens and should all be held to the same standards and have the same rights e.g. the growing international ideas that capital punishment is immoral and that women should have all the same rights as men.

Negative Effects of Globalization

Globalization is a very controversial issue today. Globalization is the buzzword of today. Economies of the world are being increasingly integrated as new technology and communication has brought people together. We often hear the phrase that the 'world has become a global village' - which itself signifies how much has changed in the world in the past few decades.

The Negative Effects of GlobalizationIn order to cut down costs, many firms in developed nations have outsourced their manufacturing and white-collar jobs to Third-World countries like India and China, where the cost of labor is low. The most prominent among these have been jobs in the customer service field as many developing nations have a large English-speaking population - ready to work at one-fifth of what someone in developed world may call 'low-pay'. This has caused a lot of resentment among the people of developed countries, and companies have been accused of taking their jobs away. Another problem is that many Americans are not satisfied with the level of customer service that they are subjected to, and this has caused a lot of animosity among people and has added to the dissent that people already have against outsourcing.There are various schools of thought which argue that globalization has led to an increase in activities such as child labor and slavery. In countries with little or no accountability, corporations employing children can work smoothly by bribing the officials, which may result in an increase in illegal activities. Critics opine that globalization has resulted in a fiercely-competitive global market, and unethical practices in business are a by-product of this.Globalization may have inadvertently helped terrorists and criminals. At the heart of globalization is an idea that humans, materials, food etc. be allowed to travel freely across borders, but 9/11 was a ghastly reminder that people with evil intentions can use it as an opportunity and cause damage.

It is not only the developed nations that are complaining about its negative effects, people in developing nations - where most of the industries have been set up, have their own set of reasons against globalization. They often complain that their cities have been reduced to garbage-dumps where all the industrial waste is accumulated and pollution levels are sky-high.Fast food chains like McDonalds and KFC are spreading fast in the developing world. People are consuming more junk food which has an adverse impact on their health. Apart from the health concerns, there is something else that globalization has been criticized for, and it is the accusation that it has opened floodgates for restaurants and eateries which are insensitive to the religious beliefs of the host nation. For example, a lawsuit had to be filed against McDonalds in India, after it was accused of serving beef in their burgers.

While the rich are getting richer, the poor are struggling for a square meal. If the current Occupy Wall Street protests are a reminder of how angry people are with the current set-up, then those who govern us should take notice, and work towards alleviating poverty. Ideally, globalization should have resulted in creation of wealth and prosperity, but corporate greed and corrupt government has ensured that money is not distributed equally.When the first-known case of AIDS came up in America, only few would have traced its origin to Sub-Saharan Africa. Globalization bought people from various countries together, and this is perhaps the reason that a virus from a jungle was transported to almost every country in the world.Environmental degradation is an issue which has been debated ferociously in various international meetings, and it has to be accepted that globalization is one of the most important factors that has aggravated the situation. The amount of raw materials needed to run industries and factories is taking a toll on the natural reserves of planet earth, and pollution has severely impacted the quality of air that we need so very much for our survival.As we mentioned in the beginning of the article that like everything else, globalization has its own share of kudos and brickbats. We have reached a stage since our evolution that discarding the concept of globalization may not be possible at all, therefore, the strategy should be to find solutions to the threats it poses to us so that we can work towards a better, fulfilling future.

Read more at Buzzle: http://www.buzzle.com/articles/negative-effects-of-globalization.html

What is meant by trade barriers with definition?Trade barriersare government-induced restrictions oninternational trade.[1]The barriers can take many forms, including the following: Tariffs Non-tariff barriers to trade Import licenses Export licenses Import quotas Subsidies Voluntary Export Restraints Local content requirements Embargo Currency devaluation[2] Trade restrictionMost trade barriers work on the same principle: the imposition of some sort ofcoston trade that raises the price of the tradedproducts. If two or more nations repeatedly use trade barriers against each other, then atrade warresults.Economists generally agree that trade barriers are detrimental and decrease overalleconomic efficiency, this can be explained by thetheory of comparative advantage. In theory,free tradeinvolves the removal of all such barriers, except perhaps those considered necessary for health or national security. In practice, however, even those countries promoting free trade heavily subsidize certain industries, such asagricultureandsteel.Trade barriers are often criticized for the effect they have on the developing world. Because rich-country players call most of the shots and set trade policies, goods such as crops that developing countries are best at producing still face high barriers. Trade barriers such as taxes on food imports or subsidies for farmers in developed economies lead to overproduction and dumping on world markets, thus lowering prices and hurting poor-country farmers. Tariffs also tend to be anti-poor, with low rates for raw commodities and high rates for labor-intensive processed goods. TheCommitment to Development Indexmeasures the effect that rich country trade policies actually have on the developing world.Another negative aspect of trade barriers is that it would cause a limited choice of products and would therefore force customers to pay higher prices and accept inferior quality.[3][edit]Examples of free trade areas North American Free Trade Agreement(NAFTA) South Asia Free Trade Agreement(SAFTA) European Free Trade Association European Union(EU) Union of South American Nations New West Partnership(An internal free-trade zone in Canada between Alberta, British Columbia, and Saskatchewan) Gulf Cooperation Council common market

Tariff & non tariff barriers to trade Presentation Transcript 1. Tariff & Non- Tariff barriers to Trade Unit 3 Chapter 1 2. Introduction: International Trade policies deals with the policies of the national governments relating to exports of various goods and services in various countries either on equal terms and conditions or on discriminatory terms and conditions. Trade policies also aim at protecting the domestic industry from the competition of the advanced countries through imposing quotas and build competencies by providing subsidies. 3. Instruments of Trade Policy: Broadly classified into.. Tariff Non-Tariff 4. Tariff Barriers What are tariff barriers? Refers to the tax imposed on the goods when they enter or leave the national frontier or boundary. What is the purpose of tariffs? To protect the domestic industry by increasing the cost of imported goods. Example : GoI imposed tariffs to protect domestic automobile industry, sugar industry, cement industry and steel industry. 5. Types of Tariffs: On the basis of Purpose: Revenue Tariff: To provide state with the revenue. Levied on luxury goods. Protective Tariff: To maintain and encourage those branches of home industry protected by the duties. 6. On the Basis of Origin and Destination: Ad Valorem Duty: Levied as the percentage of the total value of the imported common duty. Specific Duty: Levied per physical unit of the imported commodity. Compound Duty: Levied a percentage ad valorem duty plus a specific duty on each unit of the commodity. Eg. 1 lac + 10% of the price. 7. On the Basis of Country-wise Discrimination: Single Column Tariff: A uniform rate of duty is imposed on all similar commodities irrespective of the country from which they are imported. Double Column Tariff: Two different rates of duty have been imposed. Triple Column Tariff: Two or more tariff rates are levied on each category of commodity. 8. Who Gain from Tariff? Government of the importing country earns in the form of the revenue. Industries of the importing country would find market for their products as the imported goods will be expensive. Jobs in the domestic markets are saved. Business for the ancillary industry, servicing, market intermediation etc. is also protected. 9. Who are adversely affected? Consumers Industries of the exporting country. 10. Other Impacts of Tariff Barriers Tariff Barriers tend to Increase : Inflationary pressures Special interests privileges Government control and political considerations in economic matters. Tariff Barriers tend to Weaken : Balance-of-payments positions Supply-and-demand patterns International relations (they can start trade wars) Tariff Barriers tend to Restrict : Manufacturer supply sources Choices available to consumers Competition 11. Non- Tariff Barriers Non-Tariff measures include all measures, other than tariffs, the effect of which is to restrict imports, or to significantly distort trade. 12. Different Types of Non-Tariff Barriers: (1) Specific Limitations on Trade: Quotas Import Licensing requirements Proportion restrictions of foreign to domestic goods (local content requirements) 13. (2) Customs and Administrative Entry Procedures: Valuation systems Antidumping practices Documentation requirements Fees (3) Government Participation in Trade: Government procurement policies Export subsidies Countervailing duties Domestic assistance programs 14. (5) Others: Voluntary export restraints Monetary Barriers (4) Charges on imports: Prior import deposit subsidies Administrative fees Special supplementary duties Import credit discriminations Border taxes 15. Impact of NTBs: Have emerged as potent Protectionist tool. It being less transparent, its difficult to identify and quantify its impact.

How Do Tariffs Affect Prices?Tariffs increase the prices of imported goods. Because of this, domestic producers are not forced to reduce their prices from increased competition, and domestic consumers are left paying higher prices as a result. Tariffs also reduce efficiencies by allowing companies that would not exist in a more competitive market to remain open.

Figure 1 illustrates the effects of world trade without the presence of a tariff. In the graph, DS means domestic supply and DD means domestic demand. The price of goods at home is found at price P, while the world price is found at P*. At a lower price, domestic consumers will consume Qw worth of goods, but because the home country can only produce up to Qd, it must import Qw-Qd worth of goods.

Figure 1. Price without the influence of a tariff

When a tariff or other price-increasing policy is put in place, the effect is to increase prices and limit the volume of imports. In Figure 2, price increases from the non-tariff P* to P'. Because price has increased, more domestic companies are willing to produce the good, so Qd moves right. This also shifts Qw left. The overall effect is a reduction in imports, increased domestic production and higher consumer prices. (To learn more about the movement of equilibrium due to changes in supply and demand, readUnderstanding Supply-Side Economics.)

Figure 2. Price under the effects of a tariff

Tariffs and Modern TradeThe role tariffs play in international trade has declined in modern times. One of the primary reasons for the decline is the introduction of international organizations designed to improve free trade, such as theWorld Trade Organization(WTO). Such organizations make it more difficult for a country to levy tariffs and taxes on imported goods, and can reduce the likelihood of retaliatory taxes. Because of this, countries have shifted tonon-tariff barriers, such as quotas and export restraints. Organizations like the WTO attempt to reduce production and consumption distortions created by tariffs. These distortions are the result of domestic producers making goods due to inflated prices, and consumers purchasing fewer goods because prices have increased. (To learn about the WTO's efforts, readWhat Is The World Trade Organization?)

Since the 1930s, many developed countries have reduced tariffs and trade barriers, which has improved global integration and brought aboutglobalization. Multilateral agreements between governments increase the likelihood of tariff reduction, while enforcement on binding agreements reduces uncertainty.

The Bottom LineFree trade benefits consumers through increased choice and reduced prices, but because the global economy brings with it uncertainty, many governments impose tariffs and other trade barriers to protect industry. There is a delicate balance between the pursuit of efficiencies and the government's need to ensure low unemployment.

Definition of 'Bilateral Trade'The exchange of goods between two countries. Bilateral trade agreements give preference to certain countries in commercial relationships, facilitating trade and investment between the home country and the foreign country by reducing or eliminating tariffs, import quotas, export restraints and other trade barriers. Bilateral trade agreements can also help minimize trade deficits.

Bilateral tradeBilateral tradeor clearing trade is trade exclusively between two states, particularly,barter tradebased on bilateral deals between governments, and without usinghard currencyfor payment. Bilateral trade agreements often aim to keep trade deficits at minimum by keeping a clearing account where deficit would accumulate.TheSoviet Unionconducted bilateral trade with two nations,IndiaandFinland. On the Soviet side, the trade was nationalized, but on the other side, also private capitalists negotiated deals. Relationships with politicians in charge of foreign policy were especially important for such businessmen. The framework limited the traded goods to those manufactured domestically and as such, constituted a subsidy to domestic industry.Bilateral trade was highly popular within Finnish business circles, as it allowed the commission of very large orders, additionally with less stringent requirements for sophistication or quality, if compared to Western markets. The Soviet side was motivated to participate in clearing trade because the arrangement essentially provided cheapcredit. The option was to sell obligations to the international market, and pay interest in hard currency. Capital, such asicebreakers,train carriagesorconsumer goods, could be obtained from Finland, and the cost would simply become clearing account deficit, eventually to be paid back as e.g.crude oil, or as orders such asnuclear power plants(LoviisaI and II).Clearing trade was at its busiest up to the 1970s, but began to lose its momentum in the 1980s. In the last of its years, the Soviet Union's debt began accumulating on an alarming rate into clearing accounts. As a result, the Soviet Union started to pay the deficits with oil, a good with littlevalue addedand easily exchangeable tohard currency, which militated against the principle of bilateral trade. With the dissolution of the Soviet Union, this form of trade has mostly disappeared. Bilateral trade is a manifestation ofbilateralism; in contrast, multilateralism and in particular multilateral trade agreements became more important.Strategic goods, such asnuclear technology, are still traded bilaterally rather than in a multilateral open market.

What is "Multilateral trade"?Definition: Multilateral trade agreements are between many nations at one time. For this reason, they are very complicated to negotiate, but are very powerful once all parties sign the agreement. The primary benefit of multilateral agreements is that all nations get treated equally, and so it levels the playing field, especially for poorer nations that are less competitive by nature.

Examples: The Doha round of trade agreements is a multilateral trade agreement between all 149 members of the World Trade Organization.

The World Bank and The International Monetary FundThe IMF and World Bank have been empowered by the governments which control it (led by the U.S., the U.K., Japan, Germany, France, Canada, and Italy -- the "Group of 7," which holds over 40% of the votes on their boards) with imposing economic austerity policies in the countries of the so-called "Third World" or "global South." Once Southern countries build up large external debts, as most have, they cannot get credit or cash anywhere else and are forced to go to these international institutions and accept whatever conditions are demanded of them. None of the countries has emerged from their debt problems; indeed most countries now have much higher levels of debt than when they first accepted IMF/World Bank "assistance."Through loans, often to governments whose constituents suffer the most under the global economy, and "structural adjustment" policies, the World Bank (WB) International Monetary Fund (IMF) has kept most nations of the global south in poverty.Conditions on accepting loans ensure open market access for corporations while cutting social spending on programs such as education, health care and production credits for poor farmers.Created after World War II to help avoid Great Depression-like economic disasters, the World Bank and the IMF are the world's largest public lenders, with the Bank managing a total portfolio of $200 billion and the Fund supplying member governments with money to overcome short-term credit crunches.But when the IMF and the WB lend money to debtor countries, the money comes with strings attached. These strings come in the form of policy prescriptions called "structural adjustment policies." These policiesor SAPs, as they are sometimes calledrequire debtor governments to open their economies to penetration by foreign corporations, allowing access to the country's workers and environment at bargain basement prices.Structural adjustment policies mean across-the-board privatization of public utilities and publicly owned industries. They mean the slashing of government budgets, leading to cutbacks in spending on health care and education. They mean focusing resources on growing export crops for industrial countries rather than supporting family farms and growing food for local communities. And, as their imposition in country after country in Latin America, Africa, and Asia has shown, they lead to deeper inequality and environmental destruction.The Origins of the IMF and World Bank

The World Bank and International Monetary Fund (IMF) were created at the end of World War II by the U.S. and British governments. During the war the business classes of Europe were either supporting the Nazis, getting their banks and factories bombed into oblivion or they fled Europe with all the money they could carry. On the other hand, socialists, communists and anarchists had high credibility because they were the leaders of the Resistance to Nazi occupation. In order to prevent leftists from coming to power in western Europe, it was crucial to U.S. and British elites to get the business classes back into power. This required international institutions that would promote capitalist policies and strengthen the power of the corporate sector.The World Bank focused on making loans to governments in order to rebuild railroads, highways, bridges, ports and other "infrastructure", i.e., the parts of the economy that are not profitable for private companies to build so they are left to the public sector (the taxpayers). After an initial focus on western Europe the World Bank shifted its lending toward the third world.The IMF was established to smooth world commerce by reducing foreign exchange restrictions and using its reserve of funds to lend to countries experiencing temporary balance of payments problems so they could continue trading without interruption. This pump-priming of the world market would benefit all trading nations, especially the biggest traders, the U.S. and England.The unwritten goal of the IMF and World Bank was to integrate the elites of all countries into the capitalist world system of rewards and punishments. The billions of dollars controlled by the IMF and World Bank have helped to create greater allegiance of national elites to the elites of other countries than they have to their own national majorities. When the World Bank and IMF lend money to debtor countries the money comes with strings attached. The policy prescriptions are usually referred to as "structural adjustment" and they require that debtor governments open their economies up to penetration by foreign corporations, allowing them access to the workers and natural resources of the country at bargain basement prices.. Other policies imposed under structural adjustment include: allowing foreign corporations to repatriate profits, balancing the government budget (often by cutting social spending), selling off publicly owned assets ("privatization") and devaluing the currency.Many grassroots groups in the Third World talk about the recolonization of their countries as they steadily lose control over their own land, factories and services.

Differance between Domestic Business and International Business:

S.NoDomestic BusinessInternational Business

1.The Domestic Business Follow the marketing PrinciplesIt is extension of Domestic Business and Marketing Principles remain same.

2.No such difference. In a large countries languages likeIndia, we have many languages.Difference is customs, cultural factors

3.Selling Procedures remain unalteredConduct and selling procedure changes

4.No such changes are necessaryWorking environment and management practices change to suit local conditions.

5.These have little or no impact on Domestic trade.Will have to face restrictions in trade practices, licenses and government rules.

6.Short Distances, quick business is possible.Long Distances and hence more transaction time.

7.Currency, interest rates, taxation, inflation and economy have little or no impact on Domestic Trade.Currency, interest rates, taxation, inflation and economy have impact on trade.

8.No such experience or exposure.MNCs have perfected principles, procedures and practices at international level

9.No such advantage once plant is built it cannot be easily shifted.MNCs take advantage of location economies wherever cheaper resources available.

10.It is possible to get this benefit through collaborators.Large companies enjoy benefits of experience curve

11.Cost Advantage by automation, new methods etc.High Volume cost advantage.

12.No such advantageGlobal Standardization

13.No such advantageGlobal business seeks to create new values and global brand image.

14.No such advantage and get competition from some spurious or SSI Unit who get patronage of Government.Can Shift production bases to different countries whenever there are problems in taxes or markets