International Business Lecture 2: Perspectives on globalization

Slides:



Advertisements
Similar presentations
FOREIGN DIRECT INVESTMENT AND ITS POLITICAL ECONOMY
Advertisements

THE THEORY OF COMMON MARKET
CHAPTER 1 MARKETING RESEARCH FOR INTERNATIONAL MARKETING DECISIONS International Business: The New Realities1.
High-Level Seminar on E- Communications The development of the ICT sector during the crisis: International comparisons Information Technology Outlook Graham.
International Business IB refers to the performance of trade and investment a ctivities by firms across national borders. Globalization of markets is the.
Foreign Direct Investment
International Business 8e
Chapter 15 Multinationals and Migration
Chapter 1 Globalization.
Chapter 1: Expanding Abroad Motivations, Means, and Mentalities
Foreign Direct Investment 7 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall.
International Business 9e
International Business
International Business
Perspectives on globalization
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Global Business Today 7e by Charles W.L. Hill.
Chapter 7 Foreign Direct Investment McGraw-Hill/Irwin Global Business Today, 4/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. Foreign.
The Political Economy Of Foreign Direct Investment
Gray, Salter & Radebaugh Chapter 1 Global Accounting and Control: A Managerial Emphasis   Sidney J. Gray, University of New South Wales   Stephen B.
Transnational companies and the financial crisis
Foreign Direct Investment. © Prentice Hall, 2006International Business 3e Chapter Chapter Preview Characterize global FDI flows and patterns Discuss.
FORIGN DIRECT INVESTMENT
Globalization and International Linkages
Foreign Direct Investment: attract more to benefit more Khalil Hamdani Istanbul, 20 November 2013.
Power Point Presentation Materials Transnational Management Text, Cases and Readings in Cross-Border Management 4th Edition Christopher A. Bartlett Sumantra.
Lesson 2: International Investment. Foreign Investment What is foreign investment? “Flows of capital from one nation to another in exchange for significant.
International Business: An Overview  Jashim Uddin Senior Lecturer, East West University, Bangladesh.
Glossary of Key Terms balance of payments. An account of the flow of goods, services, and money coming into and going out of the country. capital. Money.
Six C h a p t e rC h a p t e r Foreign Direct Investment Part Three Cross-Border Trade and Investment.
© The McGraw Hill Companies, Inc., 2000 Foreign Direct Investment Chapter 6.
Chapter 1 Globalization McGraw-Hill/Irwin Global Business Today, 4/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. Globalization.
Chapter 1 Globalization McGraw-Hill/Irwin Global Business Today, 4/e © 2006 The McGraw-Hill Companies, Inc., All Rights Reserved. Globalization.
Does globalization hurt or help poor people ?
Chapter 1 GlobalizationGlobalization 1. What Is Globalization? The globalization of markets refers to; “The merging of historically distinct and separate.
International Business 9e By Charles W.L. Hill McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Objectives: To understand the concept of globalisation
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Impact of Globalisation. Economic Growth v Economic Development Economic growth measures GDP… how much is the economy producing. Economic development.
Chapter 02 International Trade and Investment McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
International Business: Strategy, Management, and the New Realities MGT 464 International Business Management Professor Stone Fall 2010.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
To d a y Charles W. L. Hill Global Business Second Edition.
International Business 9e By Charles W.L. Hill McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.
Globalization and International Business
Chapter 7 Foreign Direct Investment
International Business: Strategy, Management, and the New Realities 1.Introduction to International Business Strategy Management & the New Realities by.
International Business : Challenges in a Changing World International Business Lecture 2: Perspectives on globalization.
For use with Business in Context 6e by David Needle © 2015 Cengage Learning EMEA Ltd 2A.0 MULTINATIONALS AND JOINT VENTURES  Characteristics.
Foreign Direct Investment 7 Copyright © 2012 Pearson Education, Inc. publishing as Prentice Hall.
Global Impacts and Global Organizations. Environmental Challenges Technology and industrialization have helped to raise the standard of living for many.
Foreign Direct Investment Chapter Objectives Describe worldwide patterns of foreign direct investment (FDI) and reasons for those patterns Describe.
Patterns of Trade. Research task Choose 2 countries and create a report/
INBS 440: International Retailing
Foreign Direct Investment
International Business 9e
INTERNATIONAL FINANCE
The Interdisciplinarity in Teaching International Economics
International Business 9e
FORIGN DIRECT INVESTMENT
ChAPTER 6: GLOBALIZATION
Foreign Direct Investment
Presentation on Foreign Direct Investment
Chapter 7 Foreign Direct Investment
Liberalization and Privatization in India
Foreign Direct Investment
International Business
International Business 9e
International Business 12e
International Business 9e By Charles W.L. Hill McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Presentation transcript:

International Business Lecture 2: Perspectives on globalization

Aims of the lecture To define and contrast globalization of markets and globalization of production To identify methods of internationalizing operations To apply theories of internationalization and foreign direct investment (FDI) To follow trends in FDI outflows and inflows, highlighting the growing influence of emerging economies To outline the impacts of globalization on societies, together with the roles (actual and potential) of MNEs

What is globalization? Definition: Increasing and deepening interactions between individuals and organizations across the globe. Processes are ongoing, at varying pace between countries and between sectors. Globalization of markets, implying growing uniformity, has been partially realized, but local preferences predominate in many sectors. Globalization of production, implying co-ordination of operations across borders, has transformed manufacturing, but country differences are important.

Classifying countries in terms of economic development Developed countries – Industrialized and economically advanced countries, with high levels of prosperity. Developing countries – Countries changing from mainly agricultural or natural resource-based economy to industrial production. Transition economies – Countries moving from communist or state-planned systems to market-based systems. (They overlap with developing countries, as modernization of their industries is a priority.) Emerging economies or markets – Fast-growing developing and transition economies.

Figure 2.1: Globalization

Table 2.1: What does globalization mean for business, society and government?

Methods of internationalizing operations Outsourcing – contracting with another company to carry out operations, usually more cheaply than the firm can do ‘in-house’. Includes: Business process outsourcing (BPO) Offshoring (contracting out of a function to a low-cost location) FDI – ownership and control of foreign assets. Includes: Greenfield investment Acquisition of an existing business Joint venture

Figure 2.2: Methods of internationalizing operations

Theories of internationalization Early theories of FDI were based on location and ownership advantages Product life cycle theory Theory of incremental internationalization Concept of ‘psychic distance’ Dunning’s eclectic paradigm, known as the OLI paradigm – configuring ownership, location and internalization advantages

Figure 2.3: Product Life Cycle

Figure 2.4: Incremental internationalization

Production/ manufacturing Export Sales subsidiaries Production/ manufacturing Psychic distance Market knowledge Experiential knowledge Size of market Incremental internationalization

Figure 2.5: Dunning’s eclectic paradigm

GLOBALIZATION THEORIES 1. World-System Theory: Synopsis and Analysis 2. World Polity Theory: Synopsis and Analysis 3. World Culture Theory: Synopsis and Analysis Globalization and Its Discontents - Wikipedia, the free encyclopedia Globalization and Its Discontents is a book published in 2002 by the 2001 Nobel ..... Still Discontent with Globalization, article by Stiglitz in Aspenia ... http://en.wikipedia.org/wiki/Globalization_and_Its_Discontents - 51k - Cached - Similar pages

Changing patterns of FDI FDI has been a driver of globalization. FDI inflows … into developed countries have focused on proximity to large markets. into to developing and emerging economies are growing, due to the benefits of globalized production and growth in emerging markets. Outward investors have been predominantly from the developed countries, but emerging MNEs are now rapidly internationalizing – investing in both developed and developing countries.

Figure 2.6: Growth in value of FDI stock Source: UN, World Investment Reports 2005 and 2007 (Geneva: UN)

Figure 2.7: FDI inflows, 1994-2006 Source UN, World Investment Reports 2005 and 2007 (Geneva: UN)

Figure 2.8: Number of MNEs based in developed, developing and transition economies Source UN, World Investment Report 2007 (Geneva: UN)

Figure 2.9: FDI outflows from developing and transition countries Source UN, World Investment Reports 2005, 2006 and 2007 (Geneva: UN)

Major FDI Indicators (WIR 2010) Flow 1401466 256465 40715 3588 32779 18098 887 5286 1137976 501755 698224 724878 15280 313997 380859 16959 Stock 7442548 1728455 193348 16339 122250 97170 43451 54444 5653181 1620467 2322127 2440336 72878 2783235 2996215 143752 1114189 478349 95000 34613 25949 12522 5696 61620 565892 276181 361949 378388 15831 129883 148753 22920 17743408 4893490 473083 163959 400808 309523 125085 412229 12352514 5146806 7447904 8037813 271399 3120583 3648577 394724 100.0% 27.6% 2.7% 0.9% 2.3% 1.7% 0.7% 69.6% 29.0% 42.0% 45.3% 1.5% 17.6% 20.6% 2.2% % of 2009 World FDI 2000 2009 Major FDI Indicators (WIR 2010) World Developing economies China: India: Brazil Mexico South Africa Commonwealth of Independent States (CIS) Developed economies Euro area European Union (EU) Developed economies: Europe Developed economies: Asia United States Developed economies: America Developed economies: Oceania http://stats.unctad.org/FDI/TableViewer/tableView.aspx US Dollars at current prices and current exchange rates in millions

Impacts of globalization on societies Economic impacts: For host societies, FDI and outsourcing bring jobs and prosperity in favoured sectors but, especially in low-skill sectors, work is insecure as investors may shift production to another country Loss of low-skill jobs in home countries of investors Widening inequality – both within and between countries. Diffusion of technology: Host societies benefit from technology transfer and spillover effects, but risk of stifling local innovative capacity.

Source ILO (2004) A Fair Globalization (Geneva : ILO) Figure 2.10: Share of the top 1% of earners in gross income in selected industrialized countries

Figure 2.11: Number of internet users per thousand people Source UNDP (2007) Human Development Report 2007-2008 (Basingstoke: Palgrave Macmillan)

Figure 2.12: Globalized production and social impacts

Global financial markets Global finance is often cited as at the forefront of globalization, facilitated by: The revolution in IT and the internet Liberalization of national financial systems, opening up to outside investors. The benefits for emerging economies have been rapid economic integration, capital investment and economic growth. However, risks of global financial volatility have grown.

Cultural and environmental impacts of globalization Culture change through industrialization and urbanization. Convergence in lifestyles as consumer societies grow. On the other hand, cultural differences persist. Environmental Industrialization, power generation and extraction of natural resources have gathered pace, bringing environmental degradation and hastening climate change. Developed and emerging countries have differing perspectives of on the need to promote environmental protection

Conclusions Globalization has ‘shrunk’ the world – due to IT, communications and modern transport, combined with opening up of countries to outside investors. Globalization of production has transformed manufacturing, but markets, especially in consumer products, remain localized. MNEs have been at the forefront of internationalization of production, especially through FDI, now increasingly encompassing emerging MNEs and markets. New jobs and greater consumer choice have resulted, but negative social impacts represent the ‘dark’ side of globalization.