1. Session 16 Globalization There are only two families in the world, my old grandmother used to say, The Haves and the Have-Nots. Cervantes, Miguel de (1547 - 1616) Spanish novelist. Don Quixote, Pt. II, Ch. 20, 1615

2. What is globalization?

3. Make the world your sales territory

4. What is globalization? World I National economies were self-contained entities National economies were self-contained entities Barriers to cross- border trade and investment Barriers to cross- border trade and investment National differences in government regulations, culture, etc. National differences in government regulations, culture, etc. World II Barriers to cross- border trade and investment are tumbling Barriers to cross- border trade and investment are tumbling Perceived distance is shrinking Perceived distance is shrinking National economies are merging National economies are merging Material culture is becoming similar Material culture is becoming similar

5. Today facts The volume of goods, services, and investment crossing national borders has expanded faster than world output The volume of goods, services, and investment crossing national borders has expanded faster than world output

6. Drivers of globalization 1.Declining trade and investment barriers Protectionism (1920s – 1930s) WWIIGATT From 1991 to 2000 of the 1121 changes worldwide in the laws governing FI, 95% created more favorable environment word trade >> world output Firms are finding their home markets under attack from foreign companies. Country1913195019902000 France21%18%5.9%3.9% Germany20265.93.9 Italy18255.93.9 Japan30-5.33.9 Holland5115.93.9 Sweden2094.43.9 Britain-235.93.9 United States 44144.83.9 Average tariff rates on manufactured products as %value

7. Drivers of globalization 2.The role of technological change –Microprocessors and telecommunications –Internet –Transportation technology Source: National Science Board, Science and Engineering Indicators - 2000

8. The Changing Demographic of the Global Economy World output and world trade World output and world trade Country Share of World Output Share of World Export 196320002000 United States 40.3%27.0%12.3% Japan5.514.27.54 Germany9.77.38.7 Canada3.02.04.4 ChinaNA3.23.92 South Korea NA1.42.7

9. The Changing Demographics of the Global Economy 2. The changing FDI picture

10. The Changing Demographics of the Global Economy 3. The changing nature of the MNE Since 1960s, - The rise of non-US MNEs - The rise of mini-multinationals Country1973199019972000 USA48.5%31.5%32.4%26% Japan3.51215.717 UK18.816.86.68 Germany8.18.912.712

11. Globalization

12. Globalization