Globalisation Term 4 Yr 11 Assessment NWRI Presentations 9_10/11/09 Yr 12 Assessment WRI Due: 4th November 2009

Globalisation:

An economic phenomenon? A social phenomenon?

A cultural phenomenon?

Of the world's 6 billion people, 1.2 billion live in extreme poverty

Earning roughly US $1 a day or less. Just under 3 billion people live on $2 a day or less.

Industrialized countries, with 19 per cent of the world's population, account for 71% of global trade in goods and services.

The world's 200 richest people more than doubled their net worth in the four years before 1998, to more than $1 trillion.
The assets of the top three billionaires total more than the combined GNP of all the least developed countries with their 600 million people.

The countries of the world are exporting ten times the amount they did in 1950 More people are travelling than ever before, with 590 million going abroad in 1996, compared to about 260 million in 1980. More people are making international telephone calls than ever before, and are paying less. A three minute phone call from New York to London cost $245 in 1930in 1990 it cost just $3.

 With

the Internet and telecommunications, sales and technical representatives based in India can answer customer questions in the United States. Back-office insurance jobs can be located thousands of miles from company headquarters, in different parts of the country, in different countries, and on different continents.

Many see globalisation as a primarily economic phenomenon, involving the increasing interaction, or integration, of national economic systems through the growth in international trade, investment and capital flows.

However, one can also point to a rapid increase in cross-border social, cultural and technological exchange as part of the phenomenon of globalisation. The sociologist, Anthony Giddens, defines globalisation as a decoupling of space and time, emphasising that with instantaneous communications, knowledge and culture can be shared around the world simultaneously.

Integration of Economies The increasing reliance of economies on each other The opportunities to be able to buy and sell in any country in the world The opportunities for labour and capital to locate anywhere in the world The growth of global markets in finance

Made possible by:

Technology Communication networks Internet access Growth of economic cooperation trading blocs (EU, NAFTA, etc.) Collapse of communism Movement to free trade

Benefits of Trade:
Increased choice Greater potential for growth Increase international economies of scale Greater employment opportunities

Disadvantages of trade: Increase in gap between the rich and the poor Dominance of global trade by the rich, northern hemisphere countries Lack of opportunities for the poor to be able to have access to markets Exploitation of workers and growers

Corporate Expansion

Multi-national or trans-national corporations (MNCs or TNCs) headquarters in one country but business operations in a number of others.

Corporate expansion

Characteristics:

Expanding revenue Lowering costs Sourcing raw materials Controlling key supplies Control of processing Global economies of scale

Key Issues: - Damage to the environment? -Exploitation of labour? - Monopoly power - Economic degradation - Non-renewable resources - Damage to cultures

Corporate domination

Accountability of Global businesses? Increased gap between rich and poor fuels potential terrorist reaction Ethical responsibility of business? Efforts to remove trade barriers

Other issues

Who fears Globalisation? Labor Unions fear that a new trade agreement would provide an incentive for companies to move their jobs abroad. Environmentalists fear that global trade agreements would undercut domestic environmental safeguards. And nationalists, fear that further globalization would diminish national sovereignty, and possibly lead to a loss of freedom, liberty or rights.

The drivers of globalisation

Market drivers Per capita income converging among industrialised nations Convergence of lifestyles and tastes Organisations beginning to behave as global customers Increasing travel creating global consumers Growth of global and regional channels Establishment of world brands Push to develop global advertising Government drivers Reduction of tariff barriers Reduction of non-tariff barriers Creation of blocs Decline in role of governments as producers and customers Privatisation in previously state-dominated economies Shift to open market economies from closed communist systems in eastern Europe Increasing participation of China and India in the global economy Other drivers Revolution in information and communication Competitive drivers Continuing increases in the level of world trade Increased ownership of corporations by foreign acquirors Rise of new competitors intent upon becoming global competitors Growth of global networks making countries interdependent in particular industries More companies becoming globally centred rather than nationally centred Increased formation of global strategic alliances Globalisation of financial markets Improvements in business travel Cost drivers Continuing push for economies of scale Accelerating technological innovation Advances in transportation Emergence of newly industrialised countries with productive capability and low labour costs. Increasing cost of product development relative to market life