Globalization

Globalization  Meaning of globalization (mondalisation)  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 f

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 globalization • 1. 2. 3. 4. 5. 6.

Factors to increase globalizationIndustrialization Endless need Worldly problem- Natural 2. Social Communication networks Collapse of communism Growth of economics corporation (WTO,IMF,UNO etc.)

free trade

Method 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 • 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 .

Advantages • 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 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 • 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 • 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.

Global forces affecting firms The rise of China and India

Globalization of competition

Reform and governance pressures

Firm

Resource prices

The emergence of the knowledge, innovation, creative economy

The Internet/ IT revolution

World merchandise trade has been growing much faster than world output 9000 8000 7000 6000 5000

GDP Exports

4000 3000 2000 1000 0 1960 1966 1972 1978 1984 1990 1996 2002

Source: World Bank