ChAPTER 6: GLOBALIZATION

Globalization Globalization began after WWII (1945). The aftermath of the war meant that many countries had to work together to restore the economy as quickly as possible. One of the fastest ways of achieving this was through trade liberalisation.

Trade Liberalisation Trade liberalisation led to the birth of several international cooperative institutions, such as the World Bank, the IMF, and the WTO. The WTO was established to promote free trade. “Free trade” means that all import and export tariffs had been abolished to facilitate the exchange of goods and services with other countries.

Definitions The term “globalization” only began to be used in the late 1980s to bring to mind a world without borders which would facilitate the movement of goods, services, workers, capital, and investment.

Definitions The IMF defines globalization as “the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, freer international capital flows, and more rapid and widespread diffusion of technology”.

Definitions The IMF defines globalization as “the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, freer international capital flows, and more rapid and widespread diffusion of technology”.

Economic Globalization The most important aspect in economic globalization is international trade, especially for a country exporting goods and services to another country.

Economic Globalization Free trade is also important to economic globalization due to the abolishment of taxes and tariffs. Tariffs refer to taxes on goods and services. Tariffs on imported goods are also known as import duty. Tariffs on exported goods are known as export duty.

Economic Globalization Subsidisation also has a big role to play in economic globalization. Subsidy refers to a form of financial support provided to an economic sector with the aim of providing economic or social policy. Subsidisation results in lower production costs and allows for mass production at lower price points.

Movement of International Labour The movement of labour from one country to another is also a form of globalisation. This situation is rather problematic, as foreign workers do not necessarily have the same rights that local workers have, and may not be socially protected in terms of healthcare and so on.

Movement of International Labour Their movement from one country to another results in a shift in the distribution of income. The movement of unskilled labour to developed countries means that their income in the country in question will plummet but at the same time rise in their home country.

Information Technology and Communication The accessibility granted by information technology has allowed users and suppliers to communicate via the internet at all times. There is now little need to be physically present to do a business transaction when it can be done quickly, cheaply, and safely over the internet.

Information Technology and Communication The accessibility granted by information technology has allowed users and suppliers to communicate via the internet at all times. There is now little need to be physically present to do a business transaction when it can be done quickly, cheaply, and safely over the internet.

Socio-Cultural Factors Critics of the socio-cultural factors of globalization believe that the Western influences brought by globalisation do not necessarily reflect the everyday lives of normal Americans but are instead a fiction devised by Hollywood. Regardless of how true to life they might be, these factors still have a great influence on Asian life.

Benefits of Globalization Wider markets: Restriction-free international markets make it possible for each country to widen the reach of their markets beyond that of their borders Influx of capital: The capital obtained through foreign investment will be of great use to developing countries because they generally face the problem of a lack of capital and skilled labour

Pros of Globalization Technology transfer: Globalization can lead to the expansion of technology transfers as foreign investors bring new technology with them. Wider choice of goods: Wider array of goods imported from other countries More job opportunities: Globalization can lead to more local business opportunities

Pros of Globalization Wider markets: Restriction-free international markets make it possible for each country to widen the reach of their markets beyond that of their borders Influx of capital: The capital obtained through foreign investment will be of great use to developing countries because they generally face the problem of a lack of capital and skilled labour

Cons of Globalization Prone to inequality: Globalization is a good idea of all countries are at the same level of development and ability. But this is not the real situation. Influence on local cultures: While foreign cultures are not necessarily a bad thing, their influx can lead to the dilution of local culture