Abhishek K-abhishek A

POST GLOBALISATION ERA

Introduction and Definition: The social and economic process through which the borders of geography, national politics and culture are overcome by global flows of capital, technology, investment and trade at a highly accelerated rate.

WHAT IS GLOBALISATION?

Globalisation is an ‘Umbrella’ term defined precisely by IMF as 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.

FREE MOVEMENT OF GOODS

FREE MOVEMENT OF CAPITAL

GLOBALISATION

FREE MOVEMENT OF SERVICES

FREE MOVEMENT OF TECHNOLOGY

Why Globalisation

New opportunities to developing countries Greater access to developed country markets Technology transfer lead to improved productivity Higher living standard

Tools of Globalisation OUTSOURCI NG

+ IT

=

GLOBALISA TION

Theories of Globalization • A. Globalization is good and all have benefited. – Frances Fukuyama End of History and the Last Man – Thomas Friedman, The Flat Earth, 2005 • Global players: Nandan Nilekani (CEO, Infosys in India), Walmart, UPS etc. • World is flat playing field and has shrunk in size due to communications/technology

• B. Globalization is the Victory of Corporate Power: – Globalization is generally bad – David Korten When Corporations Rule the World, 1995. • Globalization has caused – Poverty

Theories of Globalization • C. Globalization is the end of the nation state – Kenichi Ohmae The End of the Nation State: The Rise of Regional Economics – David Held, Democracy and Global Order

• D. Globalization benefits some more than others: – Joseph Stiglitz: Globalization and Its Discontents 2001 • Capital market liberalization not the answer in all markets • Globalization benefits certain parties • Excessive reliance on market fundamentalism

Globalization: Historic Background Globalization: Components Modernization: the upgrading of technologies and living standards that occur as ideas, products, and services diffuse through world markets Westernization: the emulation of lifestyles and behaviors of Western societies, most notably those of North America and Western Europe

Globalization: Historic Background qThe Exploration Era to 1500

qCivilization of Latin America (Incas, Mayans, Aztecs), Asia (India & China), Western Europe (Romans) and Egypt (pharaohs and pyramids) qSixth century B.C.: Silk Road from Middle East to China qRoman Empire established trade routes and common currency q12th & 13th centuries: Major navigational advances for sail ships q15th century: Major period of exploration to Americas, Africa and Asia

Globalization: Historic Background q 1900-today: The Era of the Modern International Corporation

Ø 1900-1945: Company Internationalization

Ø “Companies began to replace countries as the major catalysts of economic and cultural change” Aided by air travel, automobiles, radio and television

Ø 1945-1980: Era of Increasing International Competition

Ø “Corporations began to reassert themselves in international markets” European and Japanese companies challenge US corporations in international markets

The Major Catalysts of Post 1980 Globalization Ø International Trade: GATT and WTO. Trade increases to about $8 trillion in 2002 Ø Trade Blocs: Trade blocs to facilitate commercial interactions among members: EU, NAFTA Ø Foreign Direct Investments (FDI): International companies make investments in factories, plant and machinery in non-domestic markets. 10 fold increase over 1980-2002 to over $7 trillion Ø Global Movements towards Capitalism:

Benefits and Drawbacks of Globalization A. Benefits – Increase in overall wealth b/w 1950 - 1995 • Global economic output from $ 6.4 trillion to $35.5 trillion • Trade went from .4 trillion to 5 trillion n n n

Ease of travel, communication, information Exchange of Cultures International Democratization

Benefits and Drawbacks of Globalization B. Drawbacks – Globalization benefits rich and does little for poor – Growing Inequalities • Despite increase in wealth persistent and enormous gap between rich and poor in world

Benefits and Drawbacks of Globalization B. Drawbacks of Globalization – Loss of Sovereignty • International Instruments • Regional Instruments – Common currency – Trading Agreements

– Neocolonialism? • Case Study: Malaysia – Stanley Fish IMF » ‘sick patient’ – PM Malathir of Malaysia » West creates dependency/deliberately manipulate currency for their own profit » Conditions of bail out = neocolonialismm

Benefits and Drawbacks of Globalization B. Drawbacks of Globalization – Backlash against West rooted in anger • Inequality and poverty • Sense of rules not fair to all – Violent Protest – Terrorism

– Negative implications for environment? • Globalized economy assumes perpetual growth • Consumption of non-renewable resources – ‘Addiction to oil’ goes global

• Increase in waste products – Global warming

Political Implications of Globalization • A. Increased Growth/Wealth (Vincente Fox) • B. Economic Inequality (75% of world is poor) • C. Political Instability (Indonesia) • C. Loss of Sovereignty (IMF in Asian Crisis) • D. Pressures on Immigration and Borders (Mexican crisis - flood of economic immigrants) • E. Environmental Impact of Growth

Globalization and the Developing World Up to 1985, the Triad nations of North America, Western Europe, and Japan were dominant in world commerce As developing markets opened up to trade and investments, so new ideas and technologies began to contribute to economic and cultural change The diffusion of technologies and consequent modernization processes have barely impacted many emerging

CONCLUSION: We’re witnessing no less than a paradigm shift in the global business and consumer landscape. The ability to interpret, navigate and respond to capital flows and investments, talent and intellectual property, energy and resource allocation, connectivity and information transparency, GDP and consumer purchase influence, and innovation will define the future success of every business aspiring to position itself for success in the post-globalization environment.

PRESENTED BY :-