Globalization

By: Allison Chen

Overview “Globalization is a process that results in the

growing interconnectedness of the world” Driven by technological innovations Effects similar to chaos theory

Main Controversies Trade Environment Media Development Women Investment International law

Technology Culture Migration Human rights Energy Education Health

Economic Globalization Accelerated in 1980s and 1990s free-market economic

systems Reductions in barriers to commerce and international

agreements Growth and development levels increase higher wages, shift

from labor-intensive to more capital and knowledge intensive industry

Foreign direct investment (FDI): measure of foreign ownership of productive assets, such as factories, mines and land Largest form of private capital inflow to developing countries Brings technical information, jobs, and transmission of ideas

Most direct effect on people through their work and employment

Local markets exposed to global competition

Volume of World Merchandise Trade Growth

19%

14%

13%

7%

5%

3%

3%

2%2%

2%2%

Top Trading Partners for Year End 2012 (Exports)

CanadaMexicoEUChinaJapanBrazilS. KoreaHong KongAustraliaSingaporeSwitzerland

18.70%

14.30%

12.20%

12.10%

6.40%

2.60%

2.40%1.80%

1.70% 1.70%1.40%

Top Trading Partners for Years End 2012 (Imports)

ChinaCanadaMexicoEUJapanS. KoreaSaudi ArabiaIndiaTaiwanVenezuelaBrazil

16%

14%

13%

12%

6%

3%

2%2%

2% 2% 2%

Top Trading Partners for Year End 2012

CanadaChinaMexicoEUJapanS. KoreaBrazilSaudi ArabiaTaiwanIndiaVenezuela

Multinational Corporations Multinational corporation (MNC): a business

organization whose activities is located in multiple countries and is the organizational form that defines FDI

Dominant role in trade and financial interactions globally

Creates competition between countries vying for investment

Political as well as economic force Comprises one-third of the world’s exports Inequality: wealth and strong bargaining position

relative to the often poorer (and weaker) developing countries in which they invest

MNC Example: Nike, Inc. Headquarters: Beaverton, Oregon Development, marketing, and selling of athletic

equipment Manufacturing locations: 45 countries, factories

mostly in Asia (Indonesia, China, Taiwan, Indian, Thailand, Vietnam, Pakistan, Philippines, and Malaysia)

Operates in 120 countries and has over 20,000 employees

Technology Promotion of new products and ideas across

nations and cultures channels to exchange information

Internet creates new ways to make transactions and run businesses

Individuals connect globally and collaborate on ideas and technological innovations

Inequality Income gap between rich and poor nations

increasing Capital directed at capital-generating industrial

sectors Alienation, massive unrest, and political and

social instability Spending directed away from social welfare and

towards export sectors Race to the bottom: a dynamic whereby

companies seek the lowest level of regulation and taxation lowering of standards of labor, human rights, and environmental protection

Global Governance Creation of global institutions (ex. IMF, WTO,

WHO, and World Bank) Loss of national sovereignty in certain issues Treaties are strongest and most binding type of

law International Court of Justice (UN): settles legal

disputes Enforced through reciprocity, shaming, and

collective action

Environment Global warming caused by fossil fuel

combustion, the burning of forests, and biomass combustion Produce halogens (carbon dioxide, methane, etc.)

Ozone depletion Exploit resources of countries with little regard

to environmental cost Illegal international wildlife trafficking Spread of invasive species

Cultural Globalization Diffusion of Western culture Defense of local and traditional cultures Languages countries trying to protect

languages from the immigration of foreign words

Democratization Entertainment translated into multiple

languages

Major Languages Spoken Around the World

http://apps.npr.org/tshirt/#/title

Benefits of Globalization Allows for countries to specialize: labor,

natural resources, and technology Increases the variety of goods and services

available Increased competition spurs domestic firms to

invest in equipment and software embodied with the latest technologies

Poor countries provided access to new ideas and technologies

Downside of Globalization Creates people in certain industries who

cannot compete with foreign manufacturers Move production overseas for cheaper labor,

creating increased unemployment Rising income inequality between the low-

skilled and high-skilled workers