IBG - 1 Globalisation S2 2014

Copyright 2011 McGraw-Hill Australia Pty Ltd
PPTs t/a Global Business Today 2e by Hill, Cronk and Wickramasekera

Slides prepared by Fuming Jiang

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International Business G


Unit Convenor
Dr Michael Corliss
Room: 6D14
Phone: 6206 8918
Email: michael.corliss@canberra.edu.au

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Materials for the Unit

Unit Outline
Text Book
Unit Website

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Assessment

Workshop participation 10%
Report Plan 30%
Final Report 60%

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Overview of Unit
Globalisation
National Differences in the Political Economy
Political Economy and Economic Development
International Trade Theory
The Political Economy of International Trade
The Global Monetary System
Foreign Direct Investment
Regional Economic Integration
Differences in Culture
The Strategy of International Business
Entry Strategy and Strategic Alliance
Exporting, Importing and Counter Trade
Global Production, Outsourcing and Logistics
Global Marketing and R&D

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Globalisation
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Lecture/chapter topics
Introduction
What is globalisation?
The emergence of global institutions
Drivers of globalisation
The changing shape of the global economy
The globalisation debate

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Introduction
A fundamental shift is occurring in the
world economy
Integrated world economy
Interdependent world economy
Globalisation and opportunities
Globalisation and threats

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What is globalisation?
Globalisation refers to the shift towards a
more integrated and interdependent world
economy.
Facets of globalisation
Globalisation of markets
Globalisation of production
Emergence of global institutions

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The emergence of global
institutions

Over the past 60-plus years, a number of
important global institutions have been
created to:
help manage, regulate and police the global
marketplace
promote the establishment of multinational
treaties to govern the global business system
WTO, IMF, WORLD BANK, UN

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Two macro factors seem to underlie the
trend towards greater globalisation:
Declining trade and investment barriers: the decline
in barriers to the free flow of goods, services and
capital
The role of technological change: particularly the
dramatic developments in recent years in
communication, information processing and
transportation technologies
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Average Tariff Rates on Manufactured
Products


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Volume of World Trade and World
Production


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FDI Inflows and Trade, Growth Rates


The role of technological change
The lowering of trade barriers made globalisation of
markets and production a theoretical possibility;
technological change made it a tangible reality.
Major technological advancements:
microprocessors and telecommunications
the Internet and the World Wide Web
transportation technology
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The changing shape of the global
economy
As late as the 1960s, four stylised factors
described the global economy:
The US dominated the world economy and the
world trade picture.
There was US domination in foreign direct
investment (FDI).
US multinationals dominated the international
business scene.
The centrally planned economies of the communist
world were off limits to Western international
business.

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economy
The changing world output and the
changing world trade picture
In the early 1960s, the US was the world's dominant
industrial power, accounting for about 40.3% of
world output.
By 2009 the US accounted for only 20.1% of world
output, and 9.3% of world trade.
Germany, France and the United Kingdom, all
nations that were among the first to industrialise,
also saw their relative standing slip.
http://www.abc.net.au/lateline/content/2011/s3294118.htm
Minute 4:03

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Changing Pattern of World Output and
Trade


economy
The changing picture of foreign direct
investment (FDI)
The stock of FDIs generated by rich industrial
countries has been on a steady decline.
There has been sustained growth in cross-border
flows of FDI.
The flow of FDI has been directed at developing
nations, especially China.
In 2009, Chinas FDI in US companies exceeded US
investment in Chinese entities.
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Percentage share of total FDI stock,
19802008, selected years

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FDI inflows, 19702008, by economy type and
selected years (percentage of world total)

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FDI inflows, 2000, 2008, selected countries
(percentage of world total)

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economy
The changing nature of multinational
enterprises (MNEs)
The growth of MNEs from Japan, European nations,
Australia and New Zealand after
World War II
Expected growth of new MNEs from the world's
developing nations
Predominance of US MNEs began to decline in 1990s
The dominance of Japanese MNEs has also fallen
significantly in the last decade.
The rise of mini-multinationals

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economy
The changing world order
The collapse of communism in Eastern Europe presents
a host of export and investment opportunities for
Western businesses.
The economic development of China poses huge
opportunities and risks, in spite of its continued
Communist control.
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The Globalisation debate
Globalisation, jobs and incomes
Globalisation, labour policies and the
environment
Globalisation and national
sovereignty
Globalisation and the worlds poor

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Employment by Industry, 1975 to 2005, per cent
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0
10
20
30
40
50
60
70
80
1975 1985 1995 2005
Ag/mining Manuf Ut/Con/Tran/Com Services


Unemployment Rate, 1978-2006, per cent
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0
2
4
6
8
10
12
1978 1982 1986 1990 1994 1998 2002 2006


Real Average Weekly Ordinary Time Earnings, $2006.
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700
750
800
850
900
950
1000
1050
1100
Male Female


Globalisation, Labour Policies and
Environment
Investment shifts towards countries with little
regulation to protect labour and the
environment
Due to complying with government
regulation is very expensive
Economic progress goes hand in hand with
tougher environmental protect and labour
laws

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Income Levels and Environmental Pollution
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Globalisation and national sovereignty

Unelected bureaucrats from organisations
such as the WTO or IMF making decisions
which effect many aspects of daily life
For instance
whether or not a country can ban hormone
treated meat;
If carcinogenic pesticides can be banned from
its foods
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Globalisation and the worlds poor

The gap between the rich and poor countries
getting wider
Reasons other than globalisation to blame
including corruption, totalitarian regimes,
poor protection of private property, war, debt
etc
Debt relief
Debt relief has been tried before
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Critical Thinking
1. Describe the shifts in the world economy over the last 30 years.
What are the implications of these shifts for international businesses
based in Great Britain? North America? Hong Kong?

2. What are the drivers of globalisation? How have changes in
technology contributed to the globalization of markets and of
production? Would the globalization of production and markets have
been possible without these technological changes?

3. If current trends continue, China may emerge as the world's largest
economy by 2020. Discuss the possible implications of such a
development for:
The world trading system.
The world monetary system.
The business strategy of European and U.S. based global firms
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Opening Case

Ecuadorian Valentine Roses

A) How has participation in the international rose trade helped
Ecuadors economy and its people? How has the rise of
Ecuador as a centre for rose growing benefited consumers in
developed nations who purchase the roses? What do the
answers to these questions tell you about the benefits of
international trade?

B) Do you think governments in the developed world should
place trade sanctions on Ecuador roses if reports of health
issues among Ecuadorian rose workers are verified? What else
might they do to improve the situation in Ecuador?

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Copyright 2011 McGraw-Hill Australia Pty Ltd

PPTs t/a Global Business Today 2e by Hill, Cronk and Wickramasekera

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