Module QU - 1.1: Learning Unit 1

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;
International Training Centre of the ILO, 2007 QU 1.1 - TR. 2

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;

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;

Features of globalisation
The most important channels of

global integration are
International Capital
trade flows

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.

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.
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.

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

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;

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.

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

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.
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

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.

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

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

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.

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

Competitiveness factors and conditions
Internationalisation
Government
Domestic economy
Finance
Quality COMPETITIVENESS
of people
Science &
Technology
Infrastructure
Management

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;

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.

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.

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.

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

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

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.

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

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.

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

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.

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

Why is sustainable development important?
(2)
Everyone
can and must
help improve things
by making small changes.

Key areas of sustainable development
The concept of sustainability recognizes the

interdependent nature of 3 areas:
Society Environment
Economy

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

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.

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

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

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.
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)

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.

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

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.

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.

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.

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
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?

(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?

(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

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

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.

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.

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

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.

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.

The decision making pyramid (2)

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.

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

Module QU - 1.1: Learning Unit 1

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Module QU 1.

Globalisation & Competitiveness

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

International Training Centre of the ILO, 2007

an economic phenomenon which

...a rapid increase in cross-border

a greater movement of people,

International Training Centre of the ILO, 2007 QU 1.1 - TR. 2

There is no agreed starting point, but

late 19th century : big expansion in

18751925: establishment of the

post 2nd world war: development of

International Training Centre of the ILO, 2007 QU 1.1 - TR. 3

1947-1993: General Agreement on

1955: Asian-African Bandung

1989: fall of the Berlin wall;

1990s: development of the Internet

1994: creation of the WTO;

International Training Centre of the ILO, 2007 QU 1.1 - TR. 4

The most important channels of

International Training Centre of the ILO, 2007 QU 1.1 - TR. 5

Foreign direct investments and therefore

size of national market of target

expected growth in market size of

ability to repatriate capital and remit

productivity and work habits of

International Training Centre of the ILO, 2007 QU 1.1 - TR. 6

ICTs are important to

data and valuable

which is collected and

With Internet, the number of

Increase in competition between

The consumers benefit increase,

International Training Centre of the ILO, 2007 QU 1.1 - TR. 8

International Training Centre of the ILO, 2007 QU 1.1 - TR. 9

- Faster economic growth;

- Improvements in living standards

- Increase in foreign direct

- Increase of the interdependence

International Training Centre of the ILO, 2007 QU 1.1 - TR. 10

- Creation of global institutions like

- Voluntary adoption by global

- Greater respect for cultural

International Training Centre of the ILO, 2007 QU 1.1 - TR. 11

- Social and economic costs;

- Living standards of some poor countries

- Wider spread of human, animal and plant

- Increasing interdependence of countries

- Industries exploit inadequate

International Training Centre of the ILO, 2007 QU 1.1 - TR. 12

- Modern communications have increased

- Technological improvements destroy

- Brain drain of skilled workers to

- Indigenous and national cultures and

Different people have taken almost completely

There are three different perspective on

1.The liberal or integrative view

2.The radical view

3.The economic nationalist view

International Training Centre of the ILO, 2007 QU 1.1 - TR. 14

1. The liberal or integrative view :

2. The radical view :

International Training Centre of the ILO, 2007 QU 1.1 - TR. 15