Globalization

[Audio] Globalization. Globalization. Ashley Carroll acarroll@my.keller.edu INTL500 Professor Biswas November 19, 2023.

[Audio] Introduction – what is globalization? Globalization is a complex and multifaceted process that involves the increasing interconnectedness and interdependence of countries and people around the world, primarily driven by advancements in technology, communication, trade, and cultural exchange. It encompasses various dimensions, including economic, political, social, and cultural aspects. Some key elements of globalization include: 1. Economic Integration: The global movement of goods, services, capital, and information, facilitated by international trade agreements, multinational corporations, and financial markets. 2. Cultural Exchange: The spread of ideas, values, and cultural elements across borders through media, technology, travel, and immigration. 3. Information and Communication Technology: The rapid development of the internet, social media, and telecommunications, which enable instant global communication and the exchange of information. 4. Political Interdependence: The interconnectedness of nations through international organizations and treaties, as well as the global impact of political decisions and events. 5. Migration: The movement of people across borders for work, education, and other reasons, leading to increased cultural diversity and global labor markets. 6. Environmental Interdependence: The shared responsibility for addressing global environmental issues such as climate change, pollution, and resource depletion. Over the past 10 years, several aspects of globalization and the world have changed significantly, including: (International Monetary Fund, 2008) 1. Technological Advancements: The proliferation of smartphones and the expansion of high-speed internet access have made global communication and information sharing more accessible than ever. This has transformed industries, politics, and social interactions. 2. Trade and Supply Chains: The global trade landscape has shifted due to geopolitical tensions, trade disputes, and the COVID-19 pandemic. Supply chains have been reconfigured, with a growing emphasis on resilience and regionalization. 3. Geopolitical Shifts: The global balance of power has evolved, with emerging economies like China gaining influence and challenging the traditional dominance of Western powers. This has led to changes in international diplomacy and trade dynamics. 4. Environmental Concerns: There is an increased awareness of environmental issues, with greater international efforts to address climate change, biodiversity loss, and sustainability. The Paris Agreement and other global initiatives reflect this focus on environmental cooperation. 5. Immigration and Migration: Global migration patterns have shifted, influenced by conflicts, economic opportunities, and political factors. The global refugee crisis has sparked debates on border control, immigration policies, and humanitarian responses. 6. Digital Economy and E-commerce: The rise of e-commerce and digital platforms has transformed the way business is conducted worldwide, impacting traditional retail, employment models, and consumer behavior. 7. Cultural Exchange and Identity: The internet and social media have facilitated the spread of cultural trends and the formation of virtual communities. These platforms have also amplified discussions around cultural diversity, identity, and social justice issues. 8. Global Health: The COVID-19 pandemic underscored the interconnectedness of global health. It led to increased collaboration on vaccine development, public health measures, and international responses to health crises. These changes highlight the dynamic nature of globalization and its impact on various aspects of the world over the past decade. Globalization continues to evolve, presenting both opportunities and challenges for societies, economies, and governments worldwide. Ted talk: Old globalization was traditionally measured in goods traded. New globalization, as Bhattacharya describes, can be measured in cross-border data flow (which by 2025 could be worth more than the world's exports combined). In other words, the world economy is far from dead -- it's growing..

[Audio] Data illustrating globalization: The chart Outlines in yellow above shows how much more trade we have today relative to a century ago. But what about trade relative to total economic output? Over the last couple of centuries the world economy has experienced sustained positive economic growth, so looking at changes in trade relative to GDP offers another interesting perspective. The chart outlined in red plots the value of trade in goods relative to GDP (for example. the value of merchandise trade as a share of global economic output). Up to 1870, the sum of worldwide exports accounted for less than 10% of global output. Today, the value of exported goods around the world is close to 25%. This shows that over the last hundred years of economic growth, there has been more than proportional growth in global trade. The chart outlined in green from the UN World Development Report (2009), plots the fraction of total world trade that is accounted for by intra-industry trade, by type of goods. As we can see, intra-industry trade has been going up for primary, intermediate and final goods. This pattern of trade is important because the scope for specialization increases if countries are able to exchange intermediate goods (e.g. auto parts) The value of exports, by country and regions, expressed as a share of GDP. Uses CEPII national trade data. for related final goods (e.g. cars). In the next chart highlighted in blue The value of exports, by country and regions, expressed as a share of GDP. Uses CEPII national trade data. Purple map : Exports of goods and services represent the value of all goods and other market services provided to the rest of the world. They include the value of merchandise, freight, insurance, transport, travel, royalties, license fees, and other services, such as communication, construction, financial, information, business, personal, and government services. They exclude compensation of employees and investment income (formerly called factor services) and transfer payments. Data are in constant 2015 prices, expressed in U.S. dollars..

[Audio] Findings and analysis: Opportunities: International business presents both significant opportunities and potential threats. These can vary depending on the specific countries and industries involved, but here are some major factors to consider: **Opportunities:** (Dill, 2022) 1. **Market Expansion**: Access to a broader customer base can result in increased sales and revenue. International markets may offer new consumer segments and growth opportunities. 2. **Diversification**: Entering multiple international markets can help reduce risks associated with economic downturns in any one country or region. It spreads risk across different markets. 3. **Economies of Scale**: Larger markets can lead to cost advantages through increased production and distribution efficiency. This can lower the cost of goods and services. 4. **Access to Talent**: International expansion can provide access to a broader pool of skilled labor, expertise, and unique talents, which can enhance innovation and competitiveness. 5. **Resource Access**: International operations can provide access to natural resources, technology, and infrastructure that may not be readily available in the home country. 6. **Brand Enhancement**: Expanding internationally can enhance a company's brand and reputation, showcasing global reach and relevance. 7. **Tax and Regulatory Benefits**: Some countries may offer favorable tax and regulatory environments for foreign businesses, reducing the overall tax burden..

[Audio] Findings and Analysis: Threats: 1. **Political and Regulatory Risks**: Political instability, government policies, and regulations can change rapidly and impact the business environment. Changes in trade policies, tariffs, and sanctions can be disruptive. 2. **Economic Volatility**: Currency exchange rate fluctuations and economic instability can affect the profitability of international operations. 3. **Cultural and Social Differences**: Understanding and adapting to different cultural norms, preferences, and consumer behaviors is essential to success. Missteps can damage a company's reputation. 4. **Logistics and Infrastructure Challenges**: Transportation, supply chain, and infrastructure issues can hinder operations and increase costs. Inefficient logistics can lead to delays and lost opportunities. 5. **Competitive Pressures**: Entering new markets often means facing competition from well-established local companies and global competitors. Businesses need to differentiate themselves effectively. 6. **Intellectual Property (IP) Protection**: Protecting intellectual property, such as patents, trademarks, and copyrights, can be challenging in some international markets, leading to potential IP theft or infringement. 7. **Security Risks**: Security threats, including cyberattacks, terrorism, and civil unrest, can disrupt business operations and pose risks to personnel and assets. 8. **Supply Chain Disruptions**: Events like natural disasters, pandemics, or geopolitical tensions can disrupt supply chains and affect the availability of goods and services. 9. **Ethical and Environmental Concerns**: Companies may face scrutiny for unethical practices, environmental impact, and sustainability issues in international markets, potentially damaging their reputation. 10. **Exchange Rate Risks**: Fluctuations in exchange rates can impact the cost of goods, revenue, and profits, especially if a company has substantial foreign currency exposure. 11. **Legal and Compliance Issues**: Complying with local laws and regulations, including tax laws and labor laws, can be challenging and costly for international businesses. To make informed entry and investment decisions internationally, companies should conduct thorough market research, risk assessments, and due diligence. It's crucial to understand the local business environment, cultural nuances, and the competitive landscape. Additionally, building strong local partnerships and having contingency plans in place to address potential threats is essential for success in the global marketplace. Staying agile and adaptable in the face of evolving geopolitical, economic, and social changes is key to navigating the international business market..

[Audio] Conclusion and Looking Ahead: Managerial Critical Thinking Industry Focus for Globalization: Renewable Energy Sector The renewable energy sector emerges as a particularly suitable industry for today's globalization. The transition to clean and sustainable energy sources is imperative for addressing global environmental challenges, aligning seamlessly with the evolving trends in globalization. Reasoning: Global Relevance and Sustainability One compelling reason for the suitability of the renewable energy sector is the global concern for renewable energy solutions. Worldwide, countries are committed to reducing greenhouse gas emissions and combating climate change, leading to a rapid surge in demand for renewable energy technologies like solar, wind, and hydroelectric power. The industry not only aligns with global environmental goals but also offers opportunities for international collaboration, technology transfer, and investment across various countries. the renewable energy sector stands out as an ideal choice for businesses aiming to contribute to global sustainability efforts while capitalizing on the expanding global market..

[Audio] References used in presentation. References.

[Audio] Other references. References. International Monetary Fund. (2008, May). Globalization: A Brief Overview. Imf.org; International Monetary Fund. https://www.imf.org/external/np/exr/ib/2008/053008.htm Mussa, M. (2020, August 25). Factors driving global economic integration -- by Michael Mussa, economic counselor and director of research, IMF. IMF. https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp082500 Ortiz-Ospina, E., Beltekian, D., & Roser, M. (2018, October). Trade and Globalization. Our World in Data. https://ourworldindata.org/trade-and-globalization.

[Audio] Thank you !. Thank You!.