1. 7. Globalization
“The process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture” (Wiki)
Characteristics of globalization:
Losers and winners (?)
Crises and integration
Openness and trade
FDI / Offshoring and Outsourcing
Technology and migration flows

2. 7. Globalization Characteristics of globalization (continued):
Losers and winners (?)
- Positive: economic growth, higher incomes, new jobs
- Negative (?): (sharp) inequality, might do harm to rising industries, environment, cultural decay of man
Economics is not a zero-sum game!
Crises and integration
Now much more integrated but... How much room still left?

3. 7. Globalization
Source: TK, cited in Ghemanwat “World 3.0”.

4. 7. Globalization Openness and trade - Exports and imports rose
- Developing countries experienced a recent surge
Openness and economic growth
Smaller countries more dependent
Trade barriers down

5. 7. Globalization

6. 7. Globalization Average tariffs through time
Source: Busse, HWWA-Discussion paper 1216, 2001

7. 7. Globalization FDI When a firm invest in a foreign country (MNEs)
Greenfield (new) or acquisition/merger (ongoing)
Sustained growth of FDI from the 1990s and on
Especially in developing countries
Changing nature of trade (lower wages)
Growing importance of Asia / China
To circumvent trade barriers
To be closer to major customers

8. 7. Globalization
FDI Worldwide
Data source: UNCTAD 10

9. 7. Globalization Offshoring and Outsourcing
Offshoring: relocation of activities abroad; outsourcing: externalization of activities to a third party provider
From less complex (manufacturing) to knowledge-intensive activities (product development)
Unexploited pools of talents (India and China)
Internet
Both practices have been growing in recent times
Manufacturing sector more prominent
Materials (production) offshoring more important
Employment effects are negligible (short and long run)
Productivity effects are possible (short and long run)

10. 7. Globalization

11. 7. Globalization

12. 7. Globalization Technology and migration flows
Transport and communication costs significantly reduced
People more mobile nowadays
People more skillful today (education, experience, languages, internet, etc.)
Are countries stricter regarding immigration laws?
Whole families more likely to move and adapt (expats)
Mobility still influenced by deeply rooted cultural factors

13. 7. Globalization Transport and telecommunication
Source: Busse, HWWA-Discussion paper 1216, 2001

14. 7. Globalization
Source: WEO, 05/1997