Globalization

GlobalizationGlobalization

Meaning of globalization (mondalisation) f

Why globalization Features of globalization Measurement of globalization Method and essential condition Advantage of globalization Disadvantage of globalization Impact of globalization on India Impact of globalization on under developing &

developing countries

Meaning of Meaning of GLOBALIZATION

“The whole world is market and everybody is buyer and seller.” taken from W.S.

• a “borderless” world as goods, services, cultural products and ideas travel across borders with relative ease.

• Vasudhaivh kutumbkum (the whole world is a family) • “ the growing economic interdependence of countries worldwide

through increasing volume and variety of cross-border transactions in goods and services, free international capital flows, and more rapid and widespread diffusion of technology”. According to I.M.F

• Globalization in a literal sense is international integration .

• refer to the expansion of economies beyond national borders

Why globalizationWhy globalization

• Factors to increase globalization-1. Industrialization 2. Endless need3. Worldly problem- Natural 2. Social4. Communication networks5. Collapse of communism6. Growth of economics corporation (WTO,IMF,UNO etc.)

free trade

Method to measure globalizationMethod to measure globalization

• By using trade volume (export-import)Endogenous variables are also part of e-i

• Non-tarrif barriers ratio (trade tarrif may vary by year)

Advantage Advantage • Increased free trade between nations.• Increased liquidity of capital allowing investors in

developed nations to invest in developing nations.

• Corporations have greater flexibility to operate across borders.

• Global media ties the world together.• Increased flow of communications allows vital

information to be shared between individuals and corporations around the world .

AdvantagesAdvantages

• Greater ease and speed of transportation for goods and people.

• Reduction of cultural barriers ,increases the global village effact.

• Spread of democratic ideals to developed nations .• Greater interdependence of nation-states.• Reduction of likelihood of war between developed

nations.• Increases in environmental protection in developed

nations.• Technology transfer from developed to developing

countries.

Disadvantage of globalizationDisadvantage of globalization

• Brain-drain• Pollution• Exploitation of natural resources• Economic disruptions by other nations• Greater chance of reactions for globalization

being violent in an attempt to preserve cultural heritage. (racial tension)

• Greater risk of diseases.• Spread of materialistic lifestyle and attitude that

sees consumption as the path to prosperity.• International bodies like the WTO infringe on

national and individual sovereignty.

…………..Disadvantage of globalization..Disadvantage of globalization

• Increase in the chances of civil war within developing countries and open war between developing countries as they vie for resources.

• Great competition for domestic companies in developing countries.

• Investors have control on politics of country.

Impact of globalization on India Impact of globalization on India

• Evaluation of L.P.G.

• Opportunities in BPO,KPO,IT etc. sector

• International expansion of Indian companies, products

• Increase in the manufacturing and export

• It reduces the poverty from 40% to 25%.

• It increased the FDI.

• It increased the competition for domestic companies.

Globalization of competition

The rise of China and India

The emergence of the knowledge,

innovation, creative economy

The Internet/ IT revolution

Resource

prices

Reform and governance pressures

Firm

Global forces affecting firmsGlobal forces affecting firms

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

1960 1966 1972 1978 1984 1990 1996 2002

GDP

Exports

World merchandise trade has been World merchandise trade has been growing much faster than world outputgrowing much faster than world output

Source: World Bank