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Module QU 1.

1
Learning Unit 1

Globalisation & Competitiveness

(The implications at the national, local and individual level)

International Training Centre of the ILO, 2007


What is globalisation?
There are lots of definitions of
GLOBALISATION :

an economic phenomenon which


involves the increasing interaction
or integration of national economic
systems;

...a rapid increase in cross-border


social, cultural and technological
exchange as part of globalization;

a greater movement of people,


goods, capital and ideas;

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When did globalisation begin?
Indeed, globalisation is not a new
phenomenon.

There is no agreed starting point, but


these key historical records help to
understand globalisation:

late 19th century : big expansion in


world trade and investments

18751925: establishment of the


International dateline and world time
zones;

post 2nd world war: development of


multinational companies;

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When did globalisation begin? (2)
18001950: process of
independence of colonies;

1947-1993: General Agreement on


Tariffs and Trade signed by 23
countries;

1955: Asian-African Bandung


Conference promotes Afro-Asian
cooperation to oppose to colonialist
approaches;

1989: fall of the Berlin wall;

1990s: development of the Internet

1994: creation of the WTO;

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Features of globalisation

The most important channels of


global integration are

International Capital
trade flows

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Features of globalisation (2)

Foreign direct investments and therefore


international trade and capital flows are
influenced by

size of national market of target


country;

expected growth in market size of


target country;

ability to repatriate capital and remit


profit;

productivity and work habits of


workers

infrastructure.

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Why does ICTs have an impact on
globalisation?

ICTs are important to


communicate

data and valuable


information

which is collected and


translated to feed into
organisational processes
and for crucial decision
making.
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E-commerce & E-business

With Internet, the number of


opportunities arising enabling
firms to succeed financially has
increased a lot.

Increase in competition between


international firms.

The consumers benefit increase,


too: the prices set on Internet are
often lower than prices set in retail
stores.

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E-commerce & E-business (2)

E-commerce (B2C) is an
electronic exchange of information
at any stage of the supply chain,
which relates to the electronic
trading of goods and services.

E- business (B2B) is an
electronic exchange of information
with regard to business activities
both internal and external to an
organisation

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Advantages of globalisation

Globalisation
brings lots of advantages

- Faster economic growth;

- Improvements in living standards


and reduction of poverty;

- Increase in foreign direct


investments;

- Development of an environmental
awareness and accountability;

- Increase of the interdependence


between different countries;

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Advantages of globalisation (2)

- Creation of global institutions like


the WTO;

- Improvements in technologies
which reduce costs and prices of
products;

- Voluntary adoption by global


companies of workplace standards
in developing countries;

- Greater respect for cultural


identities and for diversity.

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Disadvantages of globalisation
Globalisation
brings lots of disadvantages, too

- Social and economic costs;

- Living standards of some poor countries


drop further behind the richest countries;

- Wider spread of human, animal and plant


diseases like HIV/AIDS, SARS and bird flu.

- Increasing interdependence of countries


makes them more vulnerable to economic
problems

- Industries exploit inadequate


environmental codes and corrupt behaviour
in developing countries

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Disadvantages of globalisation (2)
- The major economic powers have a major
influence in the global institution (like the
WTO);

- Modern communications have increased


the demand for migration to richer
countries;

- Technological improvements destroy


traditional agricultural communities and
allow cheap imports of manufactured
goods;

- Brain drain of skilled workers to


developed countries;

- Indigenous and national cultures and


languages can be eroded by the globalised
culture.
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Different points of view on globalisation

Different people have taken almost completely


opposite views about globalisation over the past
few years.

There are three different perspective on


globalisation:

1.The liberal or integrative view

2.The radical view

3.The economic nationalist view

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Different points of view on globalisation

1. The liberal or integrative view :


- global networks of trade, investment and
technology transfer are beneficial ;
- globalisation contributes to the overall
efficiency and growth of the world economy and
to the material welfare of people.

2. The radical view :


- globalisation consequences can be felt
everywhere;
- the global marketplace is indifferent to national
borders;
- globalisation is not necessary good if it is not
accompanied by democratic political linkages
among communities and citizens.

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Different points of view on globalisation

3. The economic nationalist view :


- the world is not a trans-national collection
of investors and traders seeking wealth
through efficiency, but it is nation-states
competing for power and wealth ;
- economic and industrial development are
important to a states power.

Look at:
a) The Guidance Note and
b) group work QU 1-1. AS 1/6 For or
against globalization

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Globalisation : a wide ranging concept

INTERNATIONAL
MARKETS
FINANCIAL MARKETS
NATIONAL
LAND MARKETS
MARKETS
LABOUR MARKETS
FOOD MARKETS
COMMODITY MARKETS
LOCAL
SERVICE MARKETS
MARKETS
RESOURCE MARKETS
and others

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Globalization and
national development strategies

Global economic communities


include

- Investors
- Bankers
- Financiers
- Managers
- Scientists
- Engineers
- Educators
- Other skilled professionals.

These communities have a common style


and an economic culture that cuts across
other and national boundaries.

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Competitiveness and productivity

Competitiveness
is
The degree to which a country can,
under free and fair market conditions,
produces goods and services which meet
the test of international markets, while
simultaneously maintaining and
expanding the real incomes of its people
over the long term

Achievable through productivity


By OECD Organization for Economic Co-operation and
Development

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Competitiveness factors and conditions

Internationalisation
Government
Domestic economy

Finance

Quality COMPETITIVENESS
of people
Science &
Technology
Infrastructure
Management

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Productivity in a global world

Productivity strategies and approaches


are more and more influenced by

- economic globalisation and integration;

- technological developments;

- the move from traditional personnel


practices to international Human Resources
Management;

- changes in leadership styles: from


bureaucracy to entrepreneurship;

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Contribution of productivity to national
development

PRODUCTIVITY
is a key issue for
NATIONAL DEVELOPMENT
Strategies
Most productive companies:
Individual
Better quality
initiative and Human-Oriented
of Participation
creativity Management
working life

Productivity objectives important instruments of wealth


distribution, sound industrial relations, democratic workers
participation.

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New productivity improvement paradigm

PRODUCTIVITY
is now viewed increasingly
as
how the enterprise meets
the changing needs
&
the customers expectations

how the enterprise


creates and offers
customer value.

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New Productivity improvement paradigm

Productivity improvement efforts


must focus on

know what know how


to produce and distribute to produce and deliver
by goods/services
identifying changing customers in the most efficient way,
needs and expectations minimizing the negative social
and designing products and ecological impacts.
and services to satisfy them.

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Alliances & Networking
Higher competitiveness requires
cooperative alliances & networks
in order to compete better.

Alliances & networks let firms

achieve
advantages of scale, adjust for changes easily
scope and speed

reduce the business risk

focus on those things


reduce the competition
each firm does well

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Alliances & Networking (2)

Almost all the possible structures of alliances can be grouped into 2


categories:

HORIZONTAL ALLIANCES VERTICAL ALLIANCES


They include firms of the They include firms of
same business. different business.
They are useful to achieve They are useful to offer
scale or to handle niche areas complete solution to clients.
of expertise.
INTEL

BMW FIAT SEAT ACER

CANON

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Alliances & Networking (3)

STRATEGIC ALLIANCE :
A contractual agreement among
firms to cooperate in reaching an
objective without regard to the legal
or organizational form the alliance
takes.

The word strategic alliance include


the myriad arrangement that can
range from handshake agreements
to licensing, mergers, equity joint-
ventures.

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Alliances & Networking (4)

BUSINESS NETWORKS :
A group of already successful small-and-medium
sized enterprises (SMEs) that cooperate to seek
new business opportunities.

These SMEs group together to build a critical mass


to achieve the competitive advantages of scale,
scope and speed like that of a larger or diversified
organisation.

Refer to:
A) the Guidance Note
B) Field Visit QU-1.1-AS 2/6
Multinational in context

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Sustainable Development
What is
SUSTAINABLE DEVELOPMENT?

It is a development that meets the


needs of the present without
compromising the ability of the future
generations to meet their own needs

Input of raw materials, energy and the


output of waste materials must be within
the regenerative and absorptive
capacities of the ecosystem.

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Milestones of sustainable development

1970s 1980s : the


sustainable development
movement began. Many people
started to realize that production and
consumption patterns as evidenced in
the industrialised societies could not
be sustained;

1987 : the Brutland Report:


the 1st publication that link together
all the ideas of sustainable
development and provides direction
for possible global solutions.

1992 : UN Conference on
Environment in Rio de Janeiro
(Earth Summit): it gave high priority
in its Agenda 21 to foster values and
attitudes of respect for the
environment

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Milestones of sustainable development

1997 : Kyoto Protocol : 160


countries agreed on a global treaty to
limit the production of greenhouse
gases but remains to be ratified by
some countries responsible for 25%
of global carbon emissions.

2002: Johannesburg Summit :


social justice and the fight against
poverty have been considered key
principles of development that is
sustainable.

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Why is sustainable development important?

Because.

over the last 10 years, environmental disasters have caused over $


600 billion worth damage

over 100 million Europeans and North Americans live in cities where
air is unsafe to breathe.. The same in developing countries;

global temperatures are rising faster than ever before

if we carry on burning fossil fuels at present rates, greenhouse gases


in the atmosphere will increase by 50% within 15 years;

more and more of the worlds population is now facing acute


shortages of fresh water, slumps in food production, devastating
floods for some and disastrous droughts for others

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Why is sustainable development important?
(2)

Everyone
can and must
help improve things
by making small changes.

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Key areas of sustainable development

The concept of sustainability recognizes the


interdependent nature of 3 areas:

Society Environment

Economy

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The environmental perspective :
our common global future
The rise in global temperature and the various climate changes
are very likely to have been caused by human activity which
emits greenhouse gases.

SOURCES OF GREENHOUSE GASES :

Industry: burning solid waste,


fossil fuels (oil, natural gas and
coal) and wood.

Fossil fuel

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The environmental perspective :
our common global future (2)
Forest fires and other fires

Volcanic eruptions

Ocean surface warming

Scientists estimate we have about 10 years to


cut carbon emission to levels that will stabilize
the climate.

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Sustainability & Productivity

Productivity improvement
create
wealth.

An increased wealth
enables the society to invest more on
environment protection
&
rehabilitation measures.

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Sustainability & Productivity

All the measures that should be taken must have


the objective of introducing three types of actions
or programmes towards protecting the ecological
environment:

actions to
actions to actions to
reduce the rate
correct or adapt to the
of
clean-up the changed
environmental
damage done environment
degradation

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What about Indonesian sustainability?

Indonesia has a reasonably comprehensive body of


environmental and natural laws, for ex. The Environmental
Management Act (Law n. 23/1997).

There are also a number of organizations that help to educate


the public about environmental issues, for ex. The
Indonesian Centre for Environmental Law (ICEL) or Wahaka
Lingkungan Hidup Indonesia (WALHI), known as the Indonesia
Forum for the environment.

Look at
a) The Guidance Note and
b) Group Work QU 1-1 AS 3/6 Sustainable Development our
common global future.
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Interdependence: what does it mean?

dependent on others for


some needs = we cannot
produce everything we need
and we need to rely on other
systems to produce what you
need.

whatever human activity is


undertaken in one area of
the world, it will have an
impact on the rest of the
world (for ex. Ecological
problems)

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Interdependence: what does it mean? (2)

More than ever before we are linked to other systems on


every continent:

Economically through trade;

Politically through international relations and systems of


regulation;

Socially through the media and telecommunications;

Culturally through movements of people;

Environmentally through sharing one planet.

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What are systems?

A system is a group of
interacting, interrelated and
independent components
that form a complex and
unified whole.

Changes in one element or


part of the system cause
changes in other elements

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What are systems? (2)

Every system has a purpose


with a larger system;

All of a systems part must be


present for the system to carry
out its purpose optimally;

Systems change in response to


feedback;

Systems maintain their stability


by making adjustments based on
feedback.

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System Thinking

System thinking
is
a way of understanding
reality that emphasizes
the relationships among a
systems parts, rather
than the single parts
themselves in isolation.

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System Thinking (2)

System thinking
enables you to analyse
the inter-relationship
&
interdependence of systems
and sub-systems

It enables you to undertake


actions to make your environment
a better and safer place.

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System Thinking (3)

System thinking emphasizes


wholes rather than parts and
stresses the role of
interconnections

System thinking emphasizes


circular feedback, rather
than linear cause and effect;

System thinking contains


special terminology that
describes system behaviors (for
ex. reinforcing process and Look at:
balancing process )
a) Guidance Note and b)
Group Work QU 1-1 AS 4/6
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Implications of globalisation at national level

Globalisation has led many changes and advantages:

the international transmission of digitalised data;

the attracting of savings and their investment in various areas and


territories;

the cutting of transportation costs;

the increase in the international exchange of goods and services


thanks to the increasing importance of computer networks;

the possibilities of the digital economy.

How do all these new condition affect the national level?

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Implications of globalisation at national level
(2)

NATION : a group of people who share a similar set of


beliefs regarding political concepts, ideals, and institutions.

STATE : an entity that has certain characteristics including


land territory, a population, a government, an organized
economy and a system of circulation.

The NATION-STATE is still the most important form of


community around the world.

Are nation-state still powerful or are they


becoming dependent of other forces?

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Implications of globalisation at national level
(3)
2 opposite trend seem to
characterize economic development:

DECENTRALISATION GLOBALISATION

GLOCALISATION

TO CREATE DECENT WORK: PRODUCTIVE WORK UNDER CONDITIONS


OF FREEDOM, EQUITY, SECURITY AND DIGNITY, RIGHTS PROTECTED,
ADEQUATE PAY AND SOCIAL COVERAGE PROVIDED

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Implications of globalization at national level
(3)

DECENTRALISATION leads to adapt the response to


employment needs and economic paths to the local
conditions where the enterprises act, and it gives more
autonomy to local actors.

GLOBALISATION reinforces decentralization, because


provides opportunities for improving the local capacities,
enabling exchanges and spread of practices, learned
lessons, technologies, and methodologies.

GLOCALISATION is the new formulated term to mean


the possible role of local economies in a global context

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Think Global, Act Local

The local must not be in


opposition to the global, but
it must be infused and enriched
with global impulses and
influences.

Essential to operationalise this


new reality is a dialogue across
nations and cultures.

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Local Economic Development

The Local Economic Development


(LED)
is
a participatory process that
encourages and facilitates
partnership between the local
stakeholders, with the final aim of
creating decent jobs and
sustainable economic activities
based on the exploitation of local
resources and potential and the
opportunities of the global
context.

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Local Economic Development (2)

The Local Economic Development Approach

GLOBALLY : uses the opportunities offered by


globalization and the potential of ICTs;

LOCALLY : points out the relation between social


and economic objectives, individuates the
specific needs for development, coordinates
resources to purpose the final aim that is well
being of the population.

Look at :
a) Guidance note;
b) Field Visit QU 1-1- AS 5/6 , Interviewing the
local community to find out the impact of
globalization at local level

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Implications of globalisation at
individual level

Globalisation is not only about


what is remote and far away
from the individual, it is not
just something connected to
big systems.

Globalisation is a
phenomenon influencing
intimate and personal aspects
of our everyday lives.

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The decision making pyramid

The decision making pyramid illustrates

how those individual decision and choices that everyone


takes everyday have a global impact and influence
policies developed at the global level

and

how decisions and agreements made at the higher levels


clearly influence actions at the individual level, how they
are action-oriented and have direct impacts on our life.

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The decision making pyramid (2)

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The decision making pyramid (3)
As we go from the bottom to the
top, we see that:

individual decisions are replaced


by decisions taken by groups, the
largest (i.e. everyone) at the
topmost;

decisions become more complex


covering a broader range of
different aspects;

quality and quantity information


required for decision-making
increases;

short-term decisions are replaced


by longer-term decisions.

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The decision making pyramid (4)

The decision making pyramid clearly points out that :

we need to ensure that global goals and objectives are translated into
viable local actions that cumulatively help achieve the objectives;

appropriate stakeholders should be involved at the right level and partner


with each other for the purpose of taking the right action at that level;

proper communication among stakeholders between levels and within a


particular level is very important.

Look at
a) Guidance Note
b) Activity QU 1-1 AS 6/6
Think global and act local

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