‘Economica Globalisacia’

I am not quite sure what exactly am I doing right now, studying, revising or just simply, reading? But yes, economics. And I am going to be frankly, honest now. I am going to bore you to the core, so leave this page before you die.

Globalization refers to the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology. Political globalization refers to an increasing trend towards multilateralism (cooperation between nations: the principle or belief that several nations should be cooperatively involved in the process of achieving a goal) towards influencing or governing the world as a whole.

Political and economic globalization advanced, while social globalization is stagnating. Oh my god, this article I am reading is killing my brain cells! Okay, what are the possible reasons to the slow growth in globalization? Okay Googling isn’t helping me right now. I shall be checking my text book.

From Sloman and Hinde’s Economics for Business (:

“There has always been a degree of economic, political and cultural interdependence. What makes globalization an issue today is the speed at which interdependence is growing. This is partly the result of the unusual technological change, particularly in respect to transport and communication, and partly the result of a political drive to remove barriers between countries and embrace foreign influences.

A global economy enables a business to locate the different dimensions of its value chain wherever it is likely to get the best deal, whether this is lower costs or better quality or both.

Michael Porter’s Value Chain (1985) describes the high-level interrelationship between a business’ key operations or activities that are involved in delivering value to a business’ customers.

What is driving globalisation?

Yip (1995) suggests that the globalisation potential of an industry, that is its ability to set global strategy and compete in a global marketplace, can be analysed under four headings:

Market drivers

  • Convergence of lifestyles and tastes
  • Increasing travel, creating global consumers
  • Growth of global and regional channels
  • Establishment of world brands
  • Push to develop global advertising

Cost drivers

  • Continuing push for economies of scale
  • Accelerating technological innovation
  • Advances in transportation
  • Emergence of newly industrialised countries with “productive capability” and “low labour costs”
  • Increasing cost of product development relative to market life. Pardon, whott?

Government drivers

  • Reduction of tariff barriers
  • Reduction of non-tariff barriers
  • Creation of blocs
  • Privatisation in previously state-dominated economies
  • Shift to open market economies from closed communist systems in eastern Europe

Competitive drivers

  • Continuing increases in the level of world trade
  • Rise of new competitors intent upon becoming global competitors
  • Growth of global networks making countries interdependent in particular industries
  • More companies becoming globally centred rather than nationally centred
  • Increased formation of global strategic alliances

Other drivers

  • Revolution in communication and information
  • Globalisation of financial markets
  • Improvements in business travel

Oh by the way I think Rosie Huntington-Whiteley is very gorgeous, okay I don’t have a more decent photo of her. And I saw her in my HairIdeas magazine, and I first thought this woman probably had some crazy, fake lip-job – but then I don’t think so now? And then I saw her again in Mansur’s GQ magazine last night, and then I realised I’ve seen her in Mansur’s other GQ magazine as well (:

VAVA VICTORIA SECRET

The supporters of globalisation argue that it has massive potential to benefit the entire global economy. With freer trade and greater competition, countries and businesses within them are encouraged to think, plan and act globally. Technology spreads faster; countries specialise in particular products and processes and thereby exploit their core competitive advantages!

Supporters of globalisation recognise that not all countries benefit equally from globalisation: those that have wealth will, as always, possess more opportunity to benefit from the globalisation process, whether from lower prices, global political agreements or cultural experience.

The critics of globalisation argue that it contributes to growing inequality and further impoverishes (to deprive of natural richness or strength, poverty or to diminish quality) poor nations.

By ‘exploiting’ low-wage labour, companies are able to compete more effectively on world markets. As competitive pressures intensify and companies seek to cut costs further, this can put downward pressure on such wages.

In political terms,

Critics of globalisation see the world being dominated by large businesses. Multinationals put pressure on their home governments to promote their interests in their dealings with other countries, thereby heightening the domination of rich countries over the poor.

Cultural aspects of globalisation. Critics see the world dominated by multinational brands, western fashion, music and TV. Rather than globalisation fostering a mix of cultural expression, critics suggest that cultural differences are being replaced by the dominant (Western) culture of the day.

Reference: Sloman and Hinde (2007) Economics for Business, Fourth Edition.

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