BRANDON JONES CHRISTINA GALLANT CHELSEY WOODS CLAIRE COULTER JP AMICK CARLOS GARCIA CHRIS SPECK CORTLAND FONDON

Paradoxes of Culture and Globalization

Globalization and Culture

Risk and uncertainty

What is the difference between risk and uncertainty?

Why is the distinction between these two concepts relevant in a globalizing world?

CAN GLOBAL ECONOMIC INTEGRATION OCCUR WITHOUT POLITICAL AND CULTURAL INTEGRATION?

Paradox 9.1

Paradox 9.1

Naisbitt theory Desire economic integration 1,000 nations

Will cultural and political integration occur? Merge The changing of culture

IS GLOBALIZATION A MYTH?

Paradox 9.2

Is globalization a myth?

http://youtu.be/DOmCJprl5hY

The term globalization developed just 30 years ago.

Alan Rugman (2005)

Database of the 500 largest multinational enterprises (MNEs) 120 operate exclusively in home nations

320 operate at least 50% of sales in home regions

25 operate in bi-regional with more than 20% of sales in at least 2 parts of a triad and less than 50% in home nations.

… Cont’d

Database of the 500 largest multinational enterprises (MNEs) 11 operate with more than 50% of sales in a triad

region other than their own.

9 operate global in a sense that they have sales of 20% or more in each of the regions of the triad but less than 50% in any one region.

Alan Rugman

He suggest the idea of regionalization rather than globalization.

Countries want to eliminate costs and risk.

Westley (2006)

Disagreed with Rugman’s theory.

He said that Rugman’s test were too specific. Ex. General Electic 46% globalized.

Increasing Interdependence

Progression of Globalization

Since 1992 trade has more than doubled with developing nations China: 10% of all world trade

Technological Changes

Rapid growth

Globalization Index

1) Belgium : 92.9515) Spain: 85.7127) U.S.: 78.8042) Russia: 68.9163) China: 62.6871) Mexico: 60.92181) Myanmar:20.69

BAE Systems: Is highly globalized. One of the largest military contractors

Conclusion

Both a myth and a reality Depends on:

One’s own point of view Data used to justify it

IS GLOBALIZATION AN OLD OR NEW PHENOMENA?

Paradox 9.3

Paradox 9.3

• Rome practiced globalization emphasizing colonization and mercantilism beginning around 1500 A.D.

• Between 1870-1914 international trade and increased contact among developing nations rose drastically.

• International trade as a percentage of GNP among developed nations during 1870-1914 compares very favorably to the current situation.

• Only within the past few years has the current percentage become larger than that during this previous period, and even this change is debatable.

4 Critical Elements of Globalization

Globalization of the corporation’s:

Capital base

Corporate mind-set

Supply chain

Market presence

Capital Base

Today, corporations can easily transfer capital electronically across borders in a matter of minutes.

This makes it possible for them to be very flexible financially and increases their ability to respond quickly to both opportunities and threats.

Corporate Mind-Set

Increasing tendency for corporations to see themselves as global corporations.

Some even explicitly commit to this focus in their advertising and mission statements.

Supply Chain

Supply chain courses have become a corner stone of the business curriculum.

Global corporations are particularly vulnerable in the area of global supply chains, given the scale and scope of their influence.

Market Presence

The world is “flat”.

“Border-less world”.

Globalization in Perspective

Globalization 1.0 (1491-1800)- nations increased trade with one another because of developments such as steam power and the industrial revolution.

Globalization 2.0 (1800-2000)- multinational corporations became the dominant vehicle for enhancing global trade and interdependence among nations.

Globalization 3.0 (current)- it’s possible to link individuals directly and globally.

IS THERE A REASONABLE PROBABILITY THAT A GLOBAL FINANCIAL COLLAPSE WILL OCCUR AND UNDERMINE GLOBALIZATION?

Paradox 9.4

Uncertainty

Analysts do not or cannot know enough to make reasonable probabilistic predictions thus they can neither accept or reject a hypothesis

Paradoxes 9.4 and 9.5

Laced with uncertainty Outcomes

Paradox 9.4

Previous financial crises: Bond market crisis (early 1990s) East Asian financial crisis (1997-1998) Collapse of banking system in Russia (late 1990s)

Paradox 9.4

International Monetary Fund has identified 64 banking crises between 1970-1999

Financial Crisis of 2008 “Global Financial Crisis” Collapse of large financial institutions Government bailouts Downturn in stocks globally

Paradox 9.4

Factors that can undermine globalization: Reactions against unlimited immigration

United States, Mexico, Canada (Paradox 9.1) International trade

There is at least a reasonable probability that a global financial crisis will take place that will undermine globalization Embrace and Prepare

DOES GLOBALIZATION ENCOURAGE NATIONALISM?

Paradox 9.5

Paradox 9.5

Does globalization encourage nationalism?

Martin Gannon’s story Wuhan University in China Western Multinationals were:

Taking advantage of the Chinese Not respecting them in negotiations Putting many of the Chinese firms out of business

Paradox 9.5

Almost all citizens across the world identify primarily with their ethnic and national cultures Globalization threatens such identification Winners and losers

Globalization may not directly lead to an extreme version of nationalism

Both globalization and nationalism are increasing at a comparable pace Critical that nationalism be contained to some extent if

globalization is to succeed

ARE NATIONS BECOMING SIMULTANEOUSLY MORE AND LESS POWERFUL BECAUSE OF GLOBALIZATION?

Paradox 9.6

Trade Organizations

WTO and EU destroying national sovereignty General Electrics purchase of Whirlpool Centralized interest rate for all EU countries

Nation’s Power

Nations control United States war in Iraq France stopped Yahoo from selling Nazi trinkets China censorship of Google

More or Less Power?

Loss of power Corporate expansion across borders More trade rules More criticism when acting unilaterally

Gain of power Economic resources

CAN ONE NATION DOMINATE THE GLOBAL ECONOMY AND POLITICAL SYSTEM?

Paradox 9.7

National Domination

Past Ancient Rome Soviet Union before collapse in 1990 Japan 1980s

Present United States

Future China and India

Is it Possible?

Politically Yes Armed Forces

Economically No Trade Organizations

Uncertainty

Scarce resources

War

IS GLOBALIZATION DOOMED?

Paradox 9.8

Globalization in the Past

Globalization was developing until WWI. International trade & communication across

cultures/nationsFive Factors that led to WWI

Overstretch of national governments Power rivalry Unstable alliance system Sponsored terrorism Terrorist hostility toward capitalism

Globalization resumed after WWII

Then Now

Power, Great BritainRivalries-between

alliancesUnstable alliances-

European alliancesBolshevism early

20th century

Power, United States

Rivalries-ChinaUnstable alliances-

war in Iraq raised questions in EU

Rise of Muslim extremism

Comparing

2 Differences

The growth of democracy today compared to the past.

The decrease of wars today compared to the large amount of wars in the past.

http://www.youtube.com/watch?v=oEY11yrqIkE

DOES GLOBALIZATION INCREASE PROSPERITY AND INEQUALITY SIMULTANEOUSLY?

Paradox 9.9

Paradox 9.9

Nations actively involved in global economic activities have consistently increased their wealth per capita. Yet nearly half the population lives on less than

$2/day; 16 % less than $1/day

• Rising inequalities from nations participating in globalization. Compensation of CEOs and the average worker

… Cont’d

• Martin Wolf suggests the data only shows a correlation, and other factors other than globalization explain the rising inequalities.

• Separation of community into two groups, haves and have-nots, is problematic

• Rise of the middle class critical for the emergence of capitalism

… Cont’d

If social mobility is lessened significantly, the size of the middle class will shrink.

Rising wealth and inequality can create unstable and uncertain conditions could undermine positive features of globalization.

This uncertainty may be the greatest threat to globalization

WHO ARE THE WINNERS AND LOSERS IN A GLOBALIZING WORLD?

Paradox 9.10

Paradox 9.10

Globalization related to rising prosperity, even with widening income gaps between social groups. Macro level, everyone is a winner

Clear losers; peoples jobs exported People’s jobs exported Shrinkage of Amazon forests, deforestation, global

warming, etcWinners and losers in globalizing worldEthic and moral responsibility to create safety

nets for losers

IS INCREASED EDUCATION THE ANTIDOTE FOR OUTSOURCING?

Paradox 9.11

Decline of White Collar Jobs

Historically during a recession blue collar jobs were effected before white collar jobs.

2000 – 2004 a decrease in white collar jobs by 5% compared to the increase in blue collar jobs.

The decrease in salaries for college graduates is thought to be due to globalization.

White collar jobs are being easily outsourced to developing countries that require lower pay for the same jobs.

Arguments Against Outsourcing

Current level of outsourcing when compared to total employment is insignificant

The percentage of work affected is approximately equivalent to 2 weeks of national income per year

The gains associated with the creation of new jobs outstrip any job losses

Solutions

Reorient education to emphasize tasks that cannot easily be transmitted over communication systems in other nations

Train for personal service jobs

Develop soft skills and creativity to separate from routine work

…Cont’d

The classical idea of a difference between high school diploma and college diploma is not the solution

Investment in education is still important but education to develop personal service skills