File Name: globalization and world economy .zip
- Economic Development and Globalization
- Globalization: Definition, Benefits, Effects, Examples – What is Globalization?
- Economic globalization
Globalization aims to benefit individual economies around the world by making markets more efficient, increasing competition, limiting military conflicts, and spreading wealth more equally. The Milken Institute's "Globalization of the World Economy" report of highlighted many of the benefits associated with globalization while outlining some of the associated risks that governments and investors should consider, and the principles of this report remain relevant. Some of the benefits of globalization include:. Some of the risks of globalization include:. The economic crisis led many politicians to question the merits of globalization.
Economic Development and Globalization
Economic globalization is one of the three main dimensions of globalization commonly found in academic literature, with the two others being political globalization and cultural globalization , as well as the general term of globalization.
It is the increasing economic integration and interdependence of national, regional, and local economies across the world through an intensification of cross-border movement of goods, services, technologies and capital. While economic globalization has been expanding since the emergence of trans-national trade , it has grown at an increased rate due to improvements in the efficiency of long-distance transportation, advances in telecommunication , the importance of information rather than physical capital in the modern economy, and by developments in science and technology.
International commodity markets , labor markets , and capital markets make up the economy and define economic globalization. Beginning as early as BCE, people in Syria were trading livestock, tools, and other items. In Sumer , an early civilization in Mesopotamia , a token system was one of the first forms of commodity money.
Labor markets consist of workers, employers, wages, income, supply and demand. Labor markets have been around as long as commodity markets. The first labor markets provided workers to grow crops and tend livestock for later sale in local markets. Capital markets emerged in industries that require resources beyond those of an individual farmer.
Globalization is about interconnecting people around the world beyond the physical barrier of geographical boundaries. These advances in economic globalization were disrupted by World War I. Most of the global economic powers constructed protectionist economic policies and introduced trade barriers that slowed trade growth to the point of stagnation. Globalization did not fully resume until the s, when governments began to emphasize the benefits of trade.
Three suggested factors accelerated economic globalization: advancement of science and technology, market oriented economic reforms, and contributions by multinational corporations. The invention of containerized shipping , along with increases in ship sizes, were a major part of the reduction in shipping costs. On 27 October , the London Stock Exchange enacted newly deregulated rules that enabled global interconnection of markets , with an expectation of huge increases in market activity.
This event came to be known as the Big Bang. Multinational corporations reorganized production to take advantage of these opportunities. Labor-intensive production migrated to areas with lower labor costs,  especially China,  later followed by other functions as skill levels increased. Networks raised the level of wealth consumption and geographical mobility.
This highly dynamic worldwide system had powerful ramifications. The People's Republic of China and the last remnants of ex-Soviet bloc countries like Ukraine and Russia were admitted much later to the WTO process after painful structural reforms.
An intergovernmental organization or international governmental organization IGO refers to an entity created by treaty, involving two or more nations, to work in good faith, on issues of common interest. IGO's strive for peace, security and deal with economic and social questions. International non-governmental organizations include charities, non-profit advocacy groups, business associations, and cultural associations.
International charitable activities increased after World War II and on the whole NGOs provide more economic aid to developing countries than developed country governments. Since the s, multinational businesses have increasingly relied on outsourcing and subcontracting across vast geographical spaces, as supply chains are global and intermediate products are produced.
Firms also engage in inter-firm alliances and rely on foreign research and development. This in contrast to past periods where firms kept production internalized or within a localized geography. Innovations in communications and transportation technology, as well as greater economic openness and less government intervention have made a shift away from internalization more feasible. International migrants transfer significant amounts of money through remittances to lower-income relatives. Communities of migrants in the destination country often provide new arrivals with information and ideas about how to earn money.
In some cases, this has resulted in disproportionately high representation of some ethnic groups in certain industries, especially if economy success encourages more people to move from the source country.
Movement of people also spreads technology and aspects of business culture, and moves accumulated financial assets. Economic growth accelerated and poverty declined globally following the acceleration of globalization. Per capita GDP growth in the post globalizers accelerated from 1. This acceleration in growth is even more remarkable given that the rich countries saw steady declines in growth from a high of 4.
Also, the non-globalizing developing countries did much worse than the globalizers, with the former's annual growth rates falling from highs of 3. This rapid growth among the globalizers is not simply due to the strong performances of China and India in the s and s—18 out of the 24 globalizers experienced increases in growth, many of them quite substantial.
According to the International Monetary Fund , growth benefits of economic globalization are widely shared. While several globalizers have seen an increase in inequality, most notably China , this increase in inequality is a result of domestic liberalization, restrictions on internal migration, and agricultural policies, rather than a result of international trade.
Poverty has been reduced as evidenced by a 5. Even in China , where inequality continues to be a problem, the poorest fifth of the population saw a 3.
In several countries, those living below the dollar-per-day poverty threshold declined. In China , the rate declined from 20 to 15 percent and in Bangladesh the rate dropped from 43 to 36 percent. Globalizers are narrowing the per capita income gap between the rich and the globalizing nations. China , India , and Bangladesh , some of the newly industrialised nations in the world, have greatly narrowed inequality due to their economic expansion. The global supply chain consists of complex interconnected networks that allow companies to produce handle and distribute various goods and services to the public worldwide.
Corporations manage their supply chain to take advantage of cheaper costs of production. A supply chain is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer.
Supply chain activities involve the transformation of natural resources , raw materials , and components into a finished product that is delivered to the end customer. Globalization is sometimes perceived as a cause of a phenomenon called the " race to the bottom " that implies that to minimize cost and increase delivery speed, businesses tend to locate operations in countries with the least stringent environmental and labor regulations.
Pressure to do this is increased if competitors lower costs by the same means. This both directly results poor working conditions, low wages, job insecurity, and pollution, but also encourages governments to under-regulate in order to attract jobs and economic investment. In developing countries with loose labor regulations, there are adverse health consequences from working long hours and individuals that burden themselves from working within vasts global supply chains.
Although both men and women experience shortcomings with health, the final reports stated that women, with the double burden of domestic and paid work experience an increased the risk of psychological distress and suboptimal health.
Strazdins concluded that negative work-family spillover especially is associated with health problems among both women and men, and negative family-work spillover is related to a poorer health status among women. It is common for the work lifestyle to bring forth adverse health conditions or even death due to weak safety measure policies.
After the tragic collapse of the Rana Plaza factory in Bangladesh where over deaths occurred the country has since then made efforts in boosting up their safety policies to better accommodate workers. In developing countries with loose labor regulations and a large supply of low-skill, low-cost workers, there are risks for mistreatment of some workers, especially women and children. The reason it costs corporations more is because people can not work to their full potential in poor conditions, affecting the global marketplace.
This kind of sudden reduction or elimination in hours is seen in industries such as the textile industry and agriculture industry, both of which employ a higher number of women than men. Several movements, such as the fair trade movement and the anti-sweatshop movement , claim to promote a more socially just global economy.
The fair trade movement works towards improving trade, development and production for disadvantaged producers. The fair trade movement has reached 1. Fair trade works under the motto of "trade, not aid", to improve the quality of life for farmers and merchants by participating in direct sales, providing better prices and supporting the community. Various transnational organizations advocate for improved labor standards in developing countries.
This including labor unions , who are put at a negotiating disadvantage when an employer can relocate or outsource operations to a different country. Capital flight occurs when assets or money rapidly flow out of a country because of that country's recent increase in unfavorable financial conditions such as taxes , tariffs , labor costs , government debt or capital controls.
This is usually accompanied by a sharp drop in the exchange rate of the affected country or a forced devaluation for countries living under fixed exchange rates. Currency declines improve the terms of trade , but reduce the monetary value of financial and other assets in the country.
This leads to decreases in the purchasing power of the country's assets. A article in The Times reported that hundreds of wealthy financiers and entrepreneurs had recently fled the United Kingdom in response to recent tax increases, relocating to low tax destinations such as Jersey , Guernsey , the Isle of Man and the British Virgin Islands.
Capital flight can cause liquidity crises in directly affected countries and can cause related difficulties in other countries involved in international commerce such as shipping and finance. Asset holders may be forced into distress sales. Borrowers typically face higher loan costs and collateral requirements, compared to periods of ample liquidity, and unsecured debt is nearly impossible to obtain. Typically, during a liquidity crisis, the interbank lending market stalls.
While within-country income inequality has increased throughout the globalization period, globally inequality has lessened as developing countries have experienced much more rapid growth.
Economic inequality includes equity , equality of outcome and subsequent equality of opportunity. Although earlier studies considered economic inequality as necessary and beneficial,  some economists see it as an important social problem. International inequality is inequality between countries.
Income differences between rich and poor countries are very large, although they are changing rapidly. Per capita incomes in China and India doubled in the prior twenty years, a feat that required years in the US. Certain demographic changes in the developing world after active economic liberalization and international integration resulted in rising welfare and hence, reduced inequality. According to Martin Wolf , in the developing world as a whole, life expectancy rose by four months each year after and infant mortality rate declined from per thousand in to 58 in due to improvements in standards of living and health conditions.
Furthermore, the reduction in fertility rates in the developing world as a whole from 4. Thus, despite seemingly unequal distribution of income within these developing countries, their economic growth and development have brought about improved standards of living and welfare for the population as a whole.
Economic development spurred by international investment or trade can increase local income inequality as workers with more education and skills can find higher-paying work.
This can be mitigated with government funding of education. This allows the owners of companies that service global markets to reap disproportionately larger profits. This may happen at the expense of local companies that would have otherwise been able to dominate the domestic market, which would have spread profits around to a larger number of owners. On the other hand, globalized stock markets allow more people to invest internationally, and get a share of profits from companies they otherwise could not.
A systematic, and possibly first large-scale, cross-sectoral analysis of water , energy and land in security in countries that links national and sector consumption to sources showed that countries and sectors are highly exposed to over-exploited, insecure, and degraded such resources.
The study finds that economic globalization has decreased security of global supply chains with most countries exhibiting greater exposure to resource risks via international trade — mainly from remote production sources — and that diversifying trading partners is unlikely to help nations and sectors to reduce these or to improve their resource self-sufficiency. Businesses in developed countries tend to be more highly automated , have more sophisticated technology and techniques, and have better national infrastructure.
For these reasons and sometimes due to economies of scale , they can sometimes out-compete similar businesses in developing countries. This is a substantial issue in international agriculture, where Western farms tend to be large and highly productive due to agricultural machinery , fertilizer, and pesticides; but developing-country farms tend to be smaller and rely heavily on manual labor.
Conversely, cheaper manual labor in developing countries allowed workers there to out-compete workers in higher-wage countries for jobs in labor-intensive industries.
Globalization: Definition, Benefits, Effects, Examples – What is Globalization?
Economic globalization is one of the three main dimensions of globalization commonly found in academic literature, with the two others being political globalization and cultural globalization , as well as the general term of globalization. It is the increasing economic integration and interdependence of national, regional, and local economies across the world through an intensification of cross-border movement of goods, services, technologies and capital. While economic globalization has been expanding since the emergence of trans-national trade , it has grown at an increased rate due to improvements in the efficiency of long-distance transportation, advances in telecommunication , the importance of information rather than physical capital in the modern economy, and by developments in science and technology. International commodity markets , labor markets , and capital markets make up the economy and define economic globalization. Beginning as early as BCE, people in Syria were trading livestock, tools, and other items.
Objective of the Course. The main objective of the course is to provide students with updated theoretical and empirical material regarding the development process and emerging economies, as well as an excellent knowledge of the current organization of the world economy and an understanding of the key drivers of structural change. Students will develop their analytical skills through an initiation to research work. Since the s, the rapid international integration of a number of developing countries - mainly from Asia - has resulted in major changes to the world economy. This integration has been both an engine and an outcome of the globalization process. The course will analyze the process of international integration and how developing countries have caught up.
PDF | On Mar 1, , Jeffrey A Hart published Globalization of the World Economy? Theoretical and Practical Implications | Find, read and cite.
The global economy has changed significantly over the past few decades, in the way that it is organised and governed by collaborating nations. These changes have repercussions that not only affect the flow of goods and services between countries, but also the movement of people. So what exactly is the global economy, how does it function, and how does it affect our lives? Here we take a closer look to help you understand the complexities of the force that governs the modern world! The global economy refers to the interconnected worldwide economic activities that take place between multiple countries.
Globalization — what is it? What is the definition of globalization? Benefits and negative effects? What are the top examples of globalization?
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