GLOBALIZATION

GLOBALIZATION

• Ongoing process by which regional economies, societies, and cultures have become integrated through a globe-spanning network of communication and execution

EFFECT OF GLOBALISATION ON NATIONAL GOVTS

• Movement of material and goods between and within national boundaries

• Emergence of worldwide financial markets and better access to external financing for borrowers

• Realization of a global common market, based on the freedom of exchange of goods and capital

• Increased budgetary pressure.

• Growth of cross-cultural contacts• Greater international travel and tourism• Spread of local consumer products (e.g., food) to

other countries • Development of a Global Information System,

global telecommunications infrastructure and greater transborder data flow, using such technologies as the Internet, communication satellites, submarine fiber optic cable, and wireless telephones

• The creation of the international criminal court and international justice movements

THE POWER OF BIG BUSINESS CORPORATIONS

• Of the 100 largest economies in the world, 51 are now global corporations and only 49 are countries

• The combined sales of the world's top 200 corporations are far greater than a quarter of the world's economic activity

-Ms Sarah Anderson and Mr John Cavanagh of Corporate Watch

• Capital-scarce countries look up to MNCs as harbingers of capital, technology and best practice systems

• If an MNC commits to wholly-owned subsidiaries, or joint ventures with equity stakes (irrespective of majority or minority holdings), it is certain the MNC hopes to acquire managerial control

• lead to greater levels of employment providing job opportunities to the local labour

• a vehicle for faster transfer and diffusion of technology

• provide access to management and organizational skills provide the host country with foreign exchange

• hurt domestic firms by eliminating competition (due to enjoying comparative advantage over local firms)

• worsen the imbalance between rural and urban areas (growing difference between incomes)

GLOBALISATION AND ITS EFFECT ON THE WORLDS POOR

• Globalization offers new opportunities for accelerating development and poverty reduction

• Even when there are new opportunities for jobs opened by the integration into the international economy, old jobs and occupations disappear