Impact of Globalization

GLOBALIZATIONIMPACT OF

Presented by:-omprakash pateriyaM.B.A.sanghvi institute of management and science

GROUP MEMBERSGROUP MEMBERS

• Gautam Karde• Omprakash Pateriya• Pawan Banve• Prakriti Mathur• Sunil Sirohi• Arunesh Tyagi• Vivek Divedi• Puran Singh Jadhav• Shalesh Kumar• Pravin Mishra

INTRODUCTION ABOUT INTRODUCTION ABOUT GLOBALIZATIONGLOBALIZATION

Meaning of Meaning of GLOBALIZATIONGLOBALIZATION

“The whole world is market and everybody is buyer and seller.” 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

Globalisation meansGlobalisation means

Worldwide intensive exchange of people, knowledge, capital, goods and services.

Globalisation helps in integration of the world, and allows new ideas and technological innovation to spread around the globe.

Globalisation is much wider than an economic process and involves all human relationships and civilizations.

WHAT IS GLOBALIZATION?

The trend toward countries joining together economically,

Education Society Politics and Viewing themselves not only through their

national identity but also as part of the world as a whole.

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)

GlobalizationGlobalization

NEED NEED FOR FOR GLOBALIZATIONGLOBALIZATION

Technology in developing countries.

It raises life expectancy.

It is reducing poverty worldwide.

It promotes world peace.

IMPACT OF GLOBALIZATION

COMMUNICATION TRANSPORTATION TRADE LIBERALISATION

IMPACT India’s growth rate in the 1970’s was very low at 3%

and GDP growth in countries like Brazil, Indonesia, Korea, and Mexico was more than twice that of India.

Though India’s average annual growth rate almost doubled in the eighties to 5.9%, it was still lower than the growth rate in China, Korea and Indonesia. The pick up in GDP growth has helped improve India’s global position.

India’s position in the global economy has improved from the 8th position in 1991 to 4th place in 2001; when GDP is calculated on a purchasing power parity basis.

During 1991-92 the first year of Rao’s reforms program, The Indian economy grew by 0.9%only.

However the GDP growth accelerated to 5.3 % in 1992-93, and 6.2% 1993- 94.

A growth rate of above 8% was an achievement by the Indian economy during the year 2003-04.

India is ranked 18th among the world’s leading exporters of services with a share of 1.3% in world exports

India’s GDP growth rate can be seen from the following graph since independence

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.

INDIA’s GDP Growth Rate

Globalization

WINNERS…LOSERS…

PROS Pros Of Globalization

With globalization, there is a global market for companies to trade their products & a wider range of options for people, to choose from among the products of different nations.  

Developing countries benefit a lot from globalization, as there is a sound flow of money and thus, a decrease in the currency difference.

To meet the increasing demands that follow globalization, there is an increase in the production sector. This gives loads of options to the manufacturers as well.

Competition keeps prices relatively low, and as a result, inflation is less likely to occur.

……CONTD The focus is diverted and segregated among all the

nations. No country remains the single power head; instead there are compartmentalized power sectors. The decisions at higher levels are meant for the people at large.  

Communication among the countries is on the rise, which allows for better understanding and broader vision.

As communication increases amongst two countries, there is interchange of cultures as well. We get to know more about the other's cultural preferences.

As we feed to each other's financial needs, the ecological imbalance is also met . Governments of countries show concern about each other.

CONS

Globalization is causing Europeans to lose their jobs as work is being outsourced to the Asian countries. The cost of labor in the Asian countries is low as compared to other countries.

The high rate of profit for the companies, in Asia, has resulted in a pressure on the employed Europeans, who are always under the threat of the business being outsourced.

Companies are opening their counterparts in other countries. This results in transferring the quality of their product to other countries, thereby increasing the chances of depreciation in terms of quality.

……CONTD

There are experts who believe that globalization is the cause for the invasion of communicable diseases and social degeneration in countries.

The threat that the corporate would rule the world is on high, as there is a lot of money invested by them.

It is often argued that poor countries are exploited by the richer countries where the work force is taken advantage of and low wages are implemented.

ADVANTAGES & DISADVANTAGES OFGLOBALIZATION

Advantages Disadvantages

Increased free trade between nations

Increased flow of skilled and non-skilled jobs from developed to developing nations as corporations seek out the cheapest labor

Increased liquidity of capital allowing investors in developed nations to invest in developing nations

Increased likelihood of economic disruptions in one nation effecting all nations

Corporations have greater flexibility to operate across borders

Corporate influence of nation-states far exceeds that of civil society organizations and average individuals

Global mass media ties the world together

Threat that control of world media by a handful of corporations will limit cultural expression

Increased flow of communications allows vital information to be shared between individuals and corporations around the world

Greater chance of reactions for globalization being violent in an attempt to preserve cultural heritage

Advantages Disadvantages

Greater ease and speed of transportation for goods and people

Greater risk of diseases being transported unintentionally between nations

Reduction of cultural barriers increases the global village effect

Spread of a materialistic lifestyle and attitude that sees consumption as the path to prosperity

Spread of democratic ideals to developed nations

International bodies like the World Trade Organization infringe on national and individual sovereignty

Reduction of likelihood of war between developed nations

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

Increases in environmental protection in developed nations

Decreases in environmental integrity as polluting corporations take advantage of weak regulatory rules in developing countries

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

CHALLENGES Productivity: Productivity is improved by producing in

countries where production is most efficient. However, this often means workers in one country lose jobs as their work moves to more efficient locations.

Consumers: Consumers benefit from a wider array of competitively priced goods. However, they have less control over supplies coming from abroad than over goods produced domestically.

Employment: Employment may increase as economic growth and specialization take hold. However, domestic employment fluctuates according to foreign conditions (such as economic crises elsewhere that reduce demand for employment domestically).

The Environment: As global consumption increases due to globalization, more natural resources deplete. Differing environmental standards across countries create opportunities for businesses to exploit resources in countries with the least amount of environmental protection regulation.

Monetary and Fiscal Conditions: As money moves more freely, it is better able to seek out the best investment opportunities on a global scale. However, governments have less control over the inflow and outflow of funds. Furthermore, capital seems to be flowing more freely to countries with lower tax rates and less regulatory restrictions, putting additional pressures on national fiscal and monetary policies.

Sovereignty: Globalization may undermine national sovereignty in two ways: First, contact with other countries creates more cultural borrowing and may dilute a country's cultural uniqueness. Second, countries are concerned that important decisions may be made abroad by foreign owners of domestically located firms.