Globalization https://www.youtube.com/watch?v=SyJ23a7_fvQ

What Is Globalisation? Globalization is the process by which the world is becoming increasingly interconnected as a result of: increased contact between people and nations throughout the world through various forms of cooperation and exchange such as trade cultural exchange political cooperation across national borders science etc. Globalization is the result of: Technology which make it possible for people, goods, money and information and ideas to travel the world much faster than ever before and the liberalisation (1) of world markets, making it much easier to trade across national boundaries Globalisation has been taking place for hundreds of years, but has speeded up enormously over the last half-century 1 - Liberalization of world markets involves less restrictions on trade

ASPECTS OF GLOBALIZATION ECONOMIC CULTURAL POLITICAL THESE ASPECTS ARE ALL INTERCONNECTED! *********************

Factors Influencing Globalisation Factors influencing globalisation include: Communications: Cable TV, personal computers, telephony and the Internet have created a global village, tying the world closer together. Businesses in the western world can have a call centre in India answering calls from western customers. Transport has become cheap and quick. People, especially in the western civilization, travel all over the world People from other countries can travel to the west to seek better-paid jobs. Businesses can more easily ship products and raw materials all over the world - making products and services from all over the globe available to customers. Trade liberalisation: Governments around the world have relaxed laws restricting trade and foreign investment Countries in the developing world have opened up their countries to western businesses and investment Some governments offer grants and tax incentives to persuade foreign companies to invest in their country. The idea is that there should be no restrictions on trade between countries is known as free trade or free market capitalism. Free trade involves a minimum of government intervention to regulate trade such as taxes on imported goods and services, quotas on imported goods and services, and subsidies Protectionist trade policies involve government intervention in the market by regulating prices on goods and services and supply restrictions. Such government interventions generally increase the cost of goods and services to both consumers and producers. Interventions include subsidies, taxes on goods and services, and other laws regulating the economic market and investments by for example by domestic and foreign companies Although globalisation probably is helping to create more wealth in developing countries – it is not helping to close the gap between the world's poorest countries and the world's richest.

Multinational Corporations (MNC) or Transnational Corporations Foreign investment in another country: Globalisation has resulted in many businesses setting up or buying services in other countries. When a foreign company invests in a country, perhaps by building a factory or a shop. Multinational corporations or transnational corporations: Companies that operate in several countries are called multinational corporations (MNCs) or transnational corporations (TNCs) These companies are in constant competition with one another to expand into new markets and increase their profits McDonald's, the US fast food chain is a large MNC: McDonald’s has nearly 30,000 restaurants in 119 countries Brand names like Nike, Kellogg's, Microsoft, Sony, Adidas are recognised almost everywhere in the world (see next slide) Most MNCs come from developed countries: The majority of MNCs come from more economically developed countries (MEDC) such as the US and UK. Multinational corporations invest in other MEDCs - the US car company Ford, for example, makes large numbers of cars in the UK. But MNCs also invest in less economically developed countries - for example the British DIY store B&Q now has stores in China.

Multinational Corporations

Factors Attracting MNCs to a Country Cheap raw materials Cheap labour supply Good transport Access to market, where the goods are sold Friendly government policies Countries: India, South America Asia in general

International Organizations Aiding Economic Globalization International business is aided by a number of international organizations: World Trade Organization (WTO) The International Monetary Fund (IMF) World Bank These international organizations help smooth the way for international business

Positive Impacts of Globalisation Improved standard of living: Investment by MNCs helps countries by providing new jobs and skills for local people. More wealth to local economies: MNCs bring wealth / foreign currency to local economies when they buy local resources, products and services - providing resources for education, health and infrastructure. Cultural exchange and contact: There is far more mixing of people and cultures from all over the world, enabling more sharing of ideas, experiences, and lifestyles. People can experience foods and other products not previously available in their countries. In this way globalization may diminish cultural barriers between people, and make people more open-minded to other cultures and knowledgeable. Greater awareness: Globalisation can help make people aware of events in far-away parts of the world. For example, people in Norway were quickly aware of the impact of the 2004 Tsunami tidal wave on countries in South East Asia, and were therefore able to send help rapidly. Global cooperation/aid: It may help make people more aware of global issues such as Global warming Poverty Human trafficking Terrorism, etc. and alert them to the need for sustainable development

Negative Impacts of Globalisation However not all people think that globalisation is such a great idea. Critics include many different groups such as environmentalists, anti-poverty campaigners and trade-unionists. Some of the negative impacts they point to are: Exploitation of developing countries: Globalisation operates mostly in the interests of the richest countries which continue to dominate world trade, and at the expense of developing countries - whose role in the world market is mostly to provide the North and West with cheap labour and raw materials. Unemployment and ousting of local businesses: There are no guarantees that the wealth from inward investment will benefit the local community. Often, profits are sent back to the MEDC where the MNC is based. Multinational companies, with their massive economies of scale, may drive local companies out of business. If it becomes cheaper to operate in another country the MNC might close down the factory and make local people redundant. Violation of international laws: Lack of strictly enforced international laws means that MNCs may operate in a way that would not be allowed in an MEDC - for example polluting the environment, running risks with safety or imposing poor working conditions and low wages on local workers. A threat to cultural diversity: Globalisation is viewed by many as a threat to the world's cultural diversity - drowning out local economies, traditions and languages and re-casting the whole world in the mould of the capitalist North and West. An example is that a Hollywood film is far more likely to be successful worldwide than one made in India or China, which also have thriving film industries. Anti-globalisation campaigners sometimes try to draw people's attention to these points by demonstrating against the World Trade Organisation, an inter-governmental organisation which promotes the free-flow of trade around the world.

The Globalization Debate Con Destroys manufacturing jobs in wealthy nations Wage rates of unskilled in advanced countries decline Outsourcing Companies move to countries with fewer labor and environment regulations Loss of sovereignty Homogenized cultures Pro Lower prices for goods and services Economic growth Increase in consumer income Creates jobs (for many) Countries specialize in production of goods and services that are produced most efficiently The past quarter century has seen rapid changes in the global economy. Barriers to the free flow of goods, services, and capital have been coming down. The volume of cross-border trade and investment has been growing more rapidly than global output, indicating that national economies are becoming more closely integrated into a single, interdependent, global economic system. As their economies advance, more nations are joining the ranks of the developed world. But it is always hazardous to use established trends to predict the future. The world may be moving toward a more global economic system, but globalization is not inevitable. Countries may pull back from the recent commitment to liberal economic ideology if their experiences do not match their expectations. Also, greater globalization brings with it risks of its own. This was starkly demonstrated in 1997 and 1998 when a financial crisis in Thailand spread first to other East Asian nations and then in 1998 to Russia and Brazil. Ultimately the crisis threatened to plunge the economies of the developed world, including the United States, into a recession. This slide outlines some of the arguments from the great globalization debate.

CULTURAL GLOBALIZATION Consumerism – People want more than they need Cultural lines have become blurred as world becomes more connected - (cultural imperialism) “Americanization” or “McDonaldization” threatens local cultures Hollywood movies Disneyland Starbucks Dominance of the English language

Americanization or McDonaldization Pepsi in Russian

Anti-Globalization Movement Globalization has set off hostile reactions among many people around the world These people are often referred to as the ”anti-globalization movement” This is a misleading term, however, as most of these people are not against bringing the peoples of the world closer together. On the contrary these work hard to unite people from all over the world to: Oppose the effects of an international economic system which they believe is destructive

Fears Held by Anti-Globalization Critics Local cultures and languages are destroyed by an international corporate consumer culture which often uses English as a lingua franca The un-ending and explosive economic growth is badly damaging the ecology of the planet and using up resources at the expense of local populations and future generations The gap between the rich and poor nations is widening because international companies force weaker and poorer nations to accept trade conditions that favour the rich That WTO, IMF and the World Bank create trade conditions that benefit rich countries at the expense of individuals in the poorer countries Cheap labour Child labour Long working hours Bad working conditions

Defenders of Globalization Defenders of globalization argue that: Since 1985 the number of people living on less than 1 dollar a day has been halved Life expectancy in the developing wolrd has doubled since WWII In 1960 56% of the world’s population lived in nations with less than 2200 calories of food per day. Today it is only 10% Between 1950 and 1999, the number of people in the world who can read and write increased from 52% to 80% Differences in income in the world have been reduced over the past decades

The Financial Crisis – Now What? Economic globalization to blame? More restrictions put on trade between nations? Protectionism Increased subsidies on locally produced commodities? Increased taxes on imported commodities? Restrictions on imported commodities? How will this affect developing countries? The level of consumption in both developed and developing countries reduced Businesses facing bankruptcy Increased unemployment around the world This is happening at this very moment in: Norway, Iceland, USA, and Asia + many other countries