Global Economy Final

Questions about Trade impacts on Economic Globalization progress

1. Why the humankind has always been highly interested in the (international) trade growth? 2. Why trade has always been essential for the globalization process? 3. What have been the obstacles to the faster trade growth? 4. Which are the major drivers of trade growth in the modern economic globalization process? 5. The theory of international trade offers (some) answers to the questions above.

Globalization; the regional appreciation differences. Will advancing Globalization have a positive or negative impact overall?

93% positive 7% negative North America: 34% P, 35 % N Europe: 31 % P, 32 % N Asia: 21% P, 24% N Latin America: 5% P, 0% N Sub-Saharan Africa: 5% P, 9% N Middle East/ North Africa: 4% P, 0% N

The eight Millennium Development Goals: goal 3

Goal 3: Promote gender equality and empower women - In Southern Asia, only 74 girls were enrolled in primary school for every 100 boys in 1990. Today, 103 girls are enrolled for every 100 boys. - Women now make up 41% of paid workers outside the agricultural sector, and increase from 35 % in 1990.

The eight Millennium Development Goals: 4

Goal 4: Reduce child mortality - The global under-five mortality rate has declined by more than half, dropping from 90 to 43 deaths per 1,000 live births between 1990 and 2015. - Despite population growth in the developing regions, the number of deaths of children under five has declined from 12.7 million in 1990 to almost 6 million in 2015 globally.

The eight Millennium Development Goals: 5

Goal 5: Improve maternal HEALTH -Since 1990, the maternal mortality ratio has declined by 45% worldwide, and most of the reduction has occurred since 2000. -In Southern Asia, the maternal mortality ratio declined by 64% between 1990 and 2013, and in sub-Saharan Africa it fell by 49%.

The eight Millennium Development Goals: 6

Goal 6: Combat HIV/AIDS, malaria and other diseases - New HIV infections fell by approximately 40% between 2000 and 2013, from an estimated 3.5 million cases to 2.1 million. - Over 6.2 million malaria deaths have been averted between 2000 and 2015, primarily of children under five years of age in sub-Saharan Africa. The global malaria incidence rate has fallen by an estimated 37% and the mortality rate by 58%.

The eight Millennium Development Goals: 7

Goal 7: Ensure environmental sustainability - Ozone-depleting substances have been virtually eliminated since 1990, and the ozone layer is expected to recover by the middle of this century. - Terrestrial and marine protected areas in many regions have increased substantially since 1990. In L. America and the Caribbean, coverage of terrestrial protected areas rose from 8.8% to 23.4% between 1990 and 2014.

The eight Millennium Development Goals: 8

Goal 8: Develop a global partnership for development - Official development assistance from developed countries increased by 66 per cent in real terms between 2000 and 2014, reaching $13 5.2 billion. - In 2014, 79% of imports from developing to developed countries were admitted duty free, up from 65% in 2000.

Volume of World Trade and World Production, 1960-2010

HAVE INCREASED in world exports (greatly increased) and world production -trade creates more business opportunities

Global economic crises (after 2008), income disparities and expectations to solve both : How confident are some states about the current capacities of global leadership to solve severe income disparities?

most countries where not confident (54%) or voted not confident at all (23%) countries such as: North America, Europe, Asia (all 3 voted the highest in not being confident), and then latin america, sun-saharan africa, middle east/ north africa

UN member states

- 1945 : Original 51 Members -1960 : 99 Members Cameroun, Central African Republic, Chad, Congo (Brazzaville), Congo (Leopoldville), Cyprus, Dahomey, Gabon, Ivory Coast, Malagasy Republic, Mali, Niger, Nigeria, Senegal, Somalia, Togo, Upper Volta - 1980 :154 Members Saint Vincent and the Grenadines, Zimbabwe - 2000 :189 Members Federal Republic of Yugoslavia, Tuvalu - 2011 : 193 Members South Sudan - World total number of states: depends on the definition of the state. Most general definition: states are internationally recognized as being sovereign. U.N. Members: 193, U.N. Observer States: 2 Total: 195, 206 states by broader definition. - 2015: UN Members: 193, UN Observer States: 2 , Total: 195

Least developed countries (LDCs-48) 2012

- A Least developed country (LDC) is a country that, according to the United Nations, exhibits the lowest indicators of socioeconomic development, with the lowest Human Development Index ratings of all countries in the world. The concept of LDCs originated in the late 1960s and the first group of LDCs was listed by the UN in its resolution 2768 (XXVI) of 18 November 1971.[1] A country is classified as a Least Developed Country if it meets three criteria:[2][3] 1. Poverty (changeable criterion: three-year average GNI per capita of less than US $992, which must exceed $1,190 to leave the list as of 2012) 2. Human resource weakness (based on indicators of nutrition, health, education and adult literacy) 3. Economic vulnerability (based on instability of agricultural production, instability of exports of goods and services, economic importance of non-traditional activities, merchandise export concentration, handicap of economic smallness, and the percentage of population displaced by natural disasters)

Multinational Enterprise (MNE) or MN Companies/corporations

- A firm that owns and controls operations in more than one country. - The parent firm of the MNE is located in the home country. The home country is the source country for outward FDI. - The MNE has one or more affiliates located in one or more host countries. The host country is the destination country for inward FDI.

Globalization created a new group of economies - BRICS

- BRICS is the acronym for a group of five major emerging national economies; Brazil, Russia, India, China and South Africa - BRICS are historically, and by political, social and economic past entirely different, - BRICS are similar by the fast growth realized in the period of modern globalization. - They are similar in ability to utilize the globalization changes for economic progress. - Presently India (from July 2014) holds the chair of the BRICS group, South Africa hosted the group's fifth summit in 2013. - Indonesia and Turkey have been mentioned as candidates for full membership of the BRICS, while Egypt, Iran, Nigeria and Syria have expressed interest in joining

FDIs - The Host-Country Perspective : Positive Impacts

- Capital formation, - GDP growth enhancement - Transfer of technology and management skills - Regional and sectorial development - Internal competition and entrepreneurship - Favorable effect on balance of payments - Increased employment

Small economy and challenges of globalization

- Challenges for small economies like Slovenia - Production restructuring and reallocation, innovation and activity based competitiveness,... - Globalization and entrepreneurial firm

Modern Trade Theories and Globalization

- Competitive advantage trade theory (or Porter diamond theory) -Concept of competitive advantage of industries is related to concept of comparative advantage of nations but both concepts are not the same. - When explaining how to succeed in international trade and in globalization Comparative Advantage Concept is looking from above (national level), while Competitive Advantage Concept looks from below (companies level).

Groups of nations by development level 2013

- Criteria distinguishing between developed, developing and other economies, are not crystal clear today. - Still today developed are the nations who are in OECD. But some OECD members are from previous developing or transitional countries groups. And some are not having really high GDP/capita. - Former Developing countries -G77 - still exists within the UN, but are divided into sub groups based on economic dynamics and level of development; fast growing (emerging) economies, transitional economies (ex-socialist countries) the least developed countries. - Ex socialist countries are in the transitional group or in the developed countries' group of the OECD. Some are in a new group named BRICS (Brazil, Russia, India, China, South Africa) - Development status especially in the WTO is highly important. Different trade and other rights and advantages are based on developed or developing status of the country.

Globalization and international institutions

- Economic Globalization is on one side a spontaneous process as in fact it was always in the past. - Modern globalization, on the other side, is somehow increasingly organized and controlled process. - This organized nature of modern globalization is mostly attributed to a big number of international organizations, institutions, agreements and economic integrations. A number of them was created after the WW II. Like IMF, IBRD, GATT/WTO, OEEC/OECD, UN specialized agencies; FAO, ILO, WHO, conferences like UNCTAD. Later a number of other institutions were further established; like EBRD (1991) focused on financing the new transitional states, a number of regional development banks, increasing number of RTAs and others. - As a role, old and newer international institution adjust their structures and activities to the new challenges of globalization.

The eight Millennium Development Goals: goal 2

Goal 2: Achieve universal primary education -The primary school net enrolment rate in the developing regions has reached 91% in 2015, up from 83 % in 2000. -The number of out-of-school children of primary school age worldwide has fallen by almost half, to an estimated 57 million in 2015, down from 100 million in 2000.

economic doctrines

- Economic doctrines range from classical to neo-classical, and are combined with liberal or neo-liberal implementation practices. - Keynes developed "state intervention doctrine" which was developed into neo-Keynesian approach being often used as leading macroeconomic guidance till mead eighties last century. It was focused on full employment created by securing of a high aggregate demand level. The doctrine was replaced by neo-liberal supply side economics, or „reganomics", in number of nations at the beginning of today's globalization era. - In last two decades a new doctrine was developed or recognized in the process of globalization. It is often named "Innovation Economic Doctrine." - The new 'globalization" doctrine in fact follows the concepts and ideas contained in Joseph Schumpeter's classic 1942 book Capitalism, Socialism, and Democracy.

Why IEOs are created and why they grew in their numbers?

- Efforts to solve global problems often center on the creation of varied forms of international institutions. - By "institutions," I mean both international rules and international organizations. - We can distinguish THREE types of problems which accompany globalization and prompt calls for international action: (1) coordination problems (ex.: exchange of goods,...), (2) commons problems (globalization and the green house effects,..), and (3) problems of core values, such as human rights (religious, cultural ..differences).

G77; developing countries in 2013

- Fiji holds the G 77 Chairmanship for 2013 - As of 2013, the group comprises all of UN members (along with the Palestinian Authority) - excluding the following: 1. All Council of Europe members (with the exception of Bosnia and Herzegovina); 2. All Organisations for Economic Co-operation and Development members (with the exception of Chile); 3. All Commonwealth of Independent States (full) members (with the exception of Tajikistan); 4. The new UN member South Sudan, along with three Pacific microstates: Kiribati, Palau and Tuvalu.

Infrastructures and globalization

- Flows, networks and relations of the economic globalization are made possible and are regulated by infrastructures. - Infrastructures are the environment of globalization

Innovation Economic Doctrine

- For Schumpeter it was institutions, entrepreneurs, and technological change that were at the heart of economies and economic growth. - He stated: "The essential point to grasp is that in dealing with capitalism we are dealing with an evolutionary process...the fundamental impulse that sets and keeps the capitalist engine in motion comes from: 1.the new consumers' goods, 2.the new methods of production or transportation, 3.the new markets, 4. the new forms of industrial organization that capitalist enterprise creates"

Major state groupings after WW II, belonging to the east or to the west group created different economic, political and international impacts.

- From WW II to approximately 1989 World was divided into: 1. Developed states with capitalistic economic and political system (market based and democratic states) - they were often presented as member states of the OEEC/OECD 2. Socialist states - mostly members of the COMECOM or with other abbreviation CMEA existing from 1949 to 1991. After disintegration of Soviet Union (SU) who was the leader of CMEA in 1991, part of members (eastern European countries became transitional economies) the states formed from SU created market based CIS - Commonwealth of Independent States. 3. Developing countries (nations, DN) - they are and were known as the members of the G77 - group of 77 states formed 1964, later the membership has increased. Most of G77 members were and are politically attached to Nonaligned group of countries.

World Growth

- Global growth moderated in the first half of 2015, and global industrial production - World trade volumes slowed markedly. - Global activity is projected to gather pace in 2016. In advanced economies, the projections suggest a broad-based further strengthening of growth in the second half of 2015 and in early 2016. - In emerging market and developing economies, the pickup in 2016 mainly reflects a gradual improvement in countries in economic distress in 2015.

CONCLUSIONS

- Globalization is a process which might be studied from a number of aspects. - Globalization in last thirty years is strongly accelerated by trade liberalization, technological progress and strengthening of international rules and lows. - Globalization by growth improvement reduces poverty, which is evident from results of the UN millennium development strategy. - Simultaneously globalization enhances development and richness levels differences in and among nations, and between people. - Globalization induced economic growth endangers the stability of natural environment. - Based on such developments UN and nations more and more incline towards achieving of sustainable economic development. - States practice different approaches in adjusting to globalization impacts. - National development strategies are based on different economic doctrines. - National development strategies are increasingly often linked to sustainable development objectives.

Challenges for small economies like Slovenia

- How to improve growth and employment? - Using the globalization impacts for positive change; innovation, competitive environment,.... - Develop own strategy for development based on EU strategic development documents and on EU policies; agriculture, foreign trade,... - Create stable economic and political environment for FDI attraction with the objective of „offering" to investors the entire EU market. - Accept measures to start reducing unemployment of young people, especially by effective utilization of the EU funded programs.

Different development models of nations - what to select in globalization?

- In theory nations might follow different strategic concepts to achieve economic development goals. Major concepts are: 1. Export-led growth 2. Import substitution growth 3. Export substitution growth 4. Mixed Strategy of growth 5. Regional Integrating Strategy of growth - Based on needs to protect environment and following UN activities the strategy of sustainable competitive economic growth is preferred today.

FDIs - The Host-Country Perspective : Negative Impacts

- Industrial dominance - Technological dependence - Disturbance of economic plans - Cultural change - Interference by home government of MNC "Brain Drain"

A waive on Globalization stages

- THOMAS L. FRIEDMAN divides the history of globalization into three periods: 1. Globalization 1 (1492-1800), 2. Globalization 2 (1800-2000) and 3. Globalization 3 (2000-present). He states that: - Globalization 1 involved the globalization of COUNTRIES, - Globalization 2 involved the globalization of COMPANIES - Globalization 3 involves the globalization of INDIVIDUALS GLOBALIZATION 3 IS IN LINE WITH THE CONCEPT OF MODERN GLOBALIZATION which is driven according to Levitt with „homogenizing" of consumers.

Globalization and a need for reforms of infrastructure

- International organizations and international rules are not always best suited in their abilities and tools to support and secure positive globalization developments or to limit the negative once. - In cases of a number of international organizations, agreements or treaties the ideas of necessary reforms in lines with the globalization challenges are often debated. Beside different proposals for the future reforms it is vital to assess a general view (doctrine) that might lead the global and national economies and societies to the best develop achievements for all. One might search among some major (contemporary) economic doctrines.

Product Cycle Trade Theory - Vernon Raymond: Contributions

- It bridges the gap between older trade theories (H-O) and the newer that explain globally competitive markets in which the investment capital, technology, information, firms and ever more individuals are highly mobile across countries. Theory introduces FIRST TIME CAPTIAL- FDI FLOWS INTO THE TRADE THEORY CONCEPT - It focuses on product rather than on country in matching the product by its maturity stage with its national production location to examine competitiveness.

Globalization of the markets by Levitt

- Levitt's idea of the market globalization is explained by the following comment: (see: http://www.lapres.net/levit.pdf ) - The worldwide success of a growing list of products that have become household names is evidence that CONSUMERS the world over, despite deep-rooted cultural differences, are becoming MORE AND MORE ALIKE or, as the author puts it, "homogenized." In consequence, he contends, the traditional MNC's strategy of tailoring its products to the needs of multiple markets may put it at a severe disadvantage vis-a-vis competitors who apply marketing imagination to the task of developing advanced, functional, reliable STANDARDIZED PRODUCTS, AT THE RIGHT PRICE, ON A GLOBAL SCALE.

How does a country become a Member of the United Nations?

- Membership in the Organization, in accordance with the Charter of the United Nations, "is open to all peace-loving States that accept the obligations contained in the United Nations Charter and, in the judgment of the Organization, are able to carry out these obligations". - States are admitted to membership in the United Nations by decision of the General Assembly upon the recommendation of the Security Council.

Product Cycle Trade Theory - Vernon Raymond: Limitations

- Most appropriate for technology-based products. - It is most relevant to products that fall victim to mass production and cheap labor.

International economic organizations

- Most important International Economic Organizations (IEOs) of today are often GLOBAL because they are close to every country around the globe in their membership - Such IEOs started to be created mostly towards the end of WW II and in the years soon after. Before WWI IEOs were limited in number. - Among the first and the very rare was BIS (Bassle, CH) established after the WW I. - Among „oldest" IEOs created after WW II are economic organizations often called specialized agencies of the UN like; IMF, IBRD (WB), UN economic Conferences, ILO, FAO, WHO,.... - They were created on the assumption that good economic achievements of UN member states would create environment of cooperation and peace.

Attitudes towards and regulation of FDIs

- National level regulation of FDI; mostly nations support inflow of FDIs and restrict portfolio investments - FDI regulation globally is not under way yet. The speculative movements of capital might be better controlled after expected IMF reforms and by EU activities (making EU stable financial environment in the global framework)

Globalization- Basic concept

- Over many centuries, human societies across the globe have established progressively closer contacts of different nature - The pace of global interdependence and connectivity among people and states has dramatically increased in last decades. - Unprecedented changes in communications, transportation, and computer technology (IT) have given the process new impetus, made the world more interdependent than ever. - Multinational corporations manufacture products in many countries and sell to consumers around the world. - Money, technology, services and raw materials move ever more swiftly across national borders. Along with products and finances, ideas, people and cultures circulate more freely. - As a result, laws, economies, social movements and institutions are formed more and more at the international level.

Best and worst of GLOBALIZATION

- Pascal Lamy-Director-General, World Trade Organization (Sept. 2005-Sept.2013) said: „The best thing to come out of globalization has been: poverty reduction, and the worst is inequality." - Because globalization is extremely efficient, inequalities within countries and among countries have increased: poverty reduction is absolute, inequality is relative. - if we don't change these inequalities, the social reaction will endanger globalization. - "I come at this issue as a person from the left, and think inequalities in themselves should be addressed. But even if I came from the right, pushing globalization for efficiency, I would want to address the problem, so that populist, sovereigntists, isolationist reactions do not hinder the positive side of globalization."

3. large country and growth into poverty - case of falling ToT

- Production growth towards exportables based on low price elasticity of global demand leads to falling of export prices. - The consumption point C1 of the economy lowers to C7 in spite of growing production.

Basic trade theory - why do we trade internationally

- RISKS and complications related to trade are enlarged when trade is developed over state borders and even more when is developed among far apart partners, leaving on different continents and in different cultural, economic, legal and other conditions. - If risky and complicated - why humankind has always cherished and developed trade and especially the international trade? Obviously because TRADE provides what is not available; goods not at all produced at home (e.g. silk), and cheaper goods and services from abroad. TRADE creates multiple new opportunities for profit making, for better life and (potentially) for more jobs.

TRADE is traditional globalization driver; historic globalization based on trade

- Silky road: example of globalization based on trade created centuries BC. - As in the past the same is today; TRADE IS THE MAJOR DRIVER OF ECONOMIC GLOBALIZATION - Extending 4,000 miles (6,437 kilometers), the Silky Road got its name from the lucrative Chinese silk trade which was carried out along its length, and began during the Han Dynasty (206 BC - 220 AD). Modern China is reviving the concept of Silky Road as part of the modern globalization.

2. Terms of trade and developing countries problems

- Terms of trade (TOT) refers to the relative price of exports in terms of imports and is defined as the ratio of aggregate index of export prices to aggregate index of import prices. It can be interpreted as the amount of import goods an economy can purchase per unit of exported goods. - An improvement of a nation's terms of trade benefits that country in the sense that it can buy more imports for any given level of exports. - The terms of trade may be influenced by the exchange rate because a rise in the value of a country's currency lowers the domestic prices of its imports but may not directly affect the prices of the commodities it exports.

G77; developing countries

- The Group of 77 (G-77) was established on 15 June 1964 by seventy-seven developing countries signatories of the "Joint Declaration of the Seventy-Seven Countries" issued at the end of the first session of the United Nations Conference on Trade and Development (UNCTAD) in Geneva. Beginning with the first "Ministerial Meeting of the Group of 77 in Algeria on 10 - 25 October 1967, which adopted the Charter of Algiers", a permanent institutional structure gradually developed which led to the creation of Chapters of the Group of 77 with Liaison offices in Geneva (UNCTAD), Nairobi (UNEP), Paris (UNESCO), Rome (FAO/IFAD), Vienna (UNIDO), and the Group of 24 (G-24) in Washington, D.C. (IMF and World Bank). - Although the members of the G77 have increased to 134 countries in 2015, the original name was retained due to its historic significance. (http://www.g77.org/doc/members.html ) - On September 24, 2015 the 39th Annual Meeting of Ministers for Foreign Affairs of the Member States of the Group of 77 and China was organized.

Cases of globalization infrastructures

- The all three groups of infrastructures are important for modern globalization. - All three infrastructure groups are changing and most of the changes speed up the processes of modern globalization like: Physical - example: growth of IT and communications, Legal/regulative - examples: increasing impacts of lows and rules of WTO, IMF, OECD, EU, ...., Symbolic - example: English is becoming business and generally major global language or „lingua franca",....

1. UNCTAD - the activities to help less developed nations

- The highest decision-making body of UNCTAD is the quadrennial conference, at which member States make assessments of current trade and development issues, discuss policy options and formulate global policy responses. - The conference also sets the organization's mandate and work priorities.

4. WTO; stagnation in multilateral trade liberalization-limiting globalization?

- The organization WTO is attempting to complete negotiations on the Doha Development Round, which was launched in 2001 with an explicit focus on addressing the needs of developing countries. As of June 2012, the future of the Doha Round remained uncertain: the work program lists 21 subjects in which the original deadline of 1 January 2005 was missed, and the round is still incomplete. - The conflict between free trade on industrial goods and services but retention of protectionism on farm subsidies to domestic agricultural sector (requested by developed countries) and the substantiation of the international liberalization of fair trade on agricultural products (requested by developing countries) remain the major obstacles. - The liberalization stagnation affects negatively international trade growth - process of globalization is slowed down. - 27 November 2014: WTO work is "back on track", says Azevêdo, director WTO;

Nature of Globalization

- The term globalization encompasses a range of social, cultural, political, economic and other changes. - Globalization expands and accelerates the exchange of ideas and commodities over vast distances. It is common to discuss the phenomenon in highly generalized terms, but globalization's impacts are often best understood and felt at the local level. - We can explain globalization as a three-dimensional concept. Globalization is a 1. phenomenon, it is a 2. philosophy and it is a 3. process. These are the three Ps of globalization. Rather than discuss globalization under the disciplinary structure such as economic globalization, political globalization, cultural globalization we can explore all these dimensions within the context of each Ps'.

Theoretical foundations of modern market globalization

- Theodore Levitt (1925- 2006) was an American economist and professor at Harvard Business School. - He is widely credited with coining the term globalization through an article entitled "Globalization of Markets, published in the May-June 1983 issue of Harvard Business Review. - However, as a NY Times article notes, the term 'globalization' was in use well before (at least from 1944) and had been used by some economists already in and after 1981. - However, LEVITT POPULARIZED THE TERM AND BROUGHT IT INTO THE MAINSTREAM BUSINESS AUDIENCE

States' Groupings after the WW II

- Till the end of (formal) existence of countries with nonmarket or with so-called socialist economic and political system (1989) the global economy was divided into two parts. The division was based on two criteria: 1. Economic criteria of development level; based on GDP/capita (not in fact the best criteria) 2. Political attachment criteria of belonging to one or another political „block"; capitalist or western block and socialist or eastern block of nations.

Globalization's future: a sustainable competitiveness

- We define SUSTAINABLE COMPETITIVENESS as the set of institutions, policies, and factors that make a nation productive over the longer term while ensuring social and environmental sustainability. - Social sustainability, in turn, is defined as the institutions, policies, and factors that enable all members of society to experience the best possible health, participation, and security; and that maximize their potential to contribute to and benefit from the economic prosperity of the country in which they live. - Environmental sustainability is a result of the institutions, policies, and factors that ensure an efficient management of resources to enable prosperity for present and future generations.

Risk of missing the vital change in the global business environment

- We live in world which is changing in all aspects faster than ever. - New general globalization RISK is created: Risk of being left behind following missed or wrong information on global business environment change. It has two sub risks: Risk of missing new business opportunities Risk of losing our assets both increasing relative to our ignorance level of the global business environment changes - WHAT to do to reduce risks? On national, company or individual levels? Suggestions? Ideas?

Globalization; crisis and EU

- Weak EU and weak € could help to create the further instability in global economy. Idea of solving the EU problems is mostly based on establishing the Banking Union - supervisory mechanism has started to work Nov. 2014. - Banking Union has dominated the European legislative agenda for the past few years, but why is it so important? - The proposals aim to break the toxic link between bank debt and sovereign debt and to prevent a repeat of the crisis through the implementation of four central pillars: A) improved bank regulation; B) centralized bank supervision (started Nov. 2014) ; C) a harmonized system for restructuring or closing down troubled banks; D) and the protection of small depositors.

Globalization and labour market

- developed countries often say that globalization is harmful based on "race to the bottom" with regard to the level of salaries. - In the 19th and first part of 20th century the migration of low qualified labour force was from less to more developed countries. Today migration of highly qualified labour from less developed to more developed states is growing. Low qualified workers often are not allowed to migrate to developed nations. - Low qualified working posts in developed nations are decreasing in numbers based on effects explained by theory of product cycle.

Internationalization strategies for entrepreneurial firms ENTERING FOREIGN MARKETS

- direct exports - franchising/licensing - foreign direct investment (through strategic alliances, green-field wholly owned subsidiaries, and/or foreign acquisitions

Internationalization strategies for entrepreneurial firms STAYING IN DOMESTIC MARKETS

- indirect exports (through export intermediaries) - supplier of foreign firms -Franchisee/licensee of foreign brands - alliance partner of foreign direct investors -harvest and exit (through sell-off to and acquisition by foreign entrants)

China and globalization

- is becoming the world's largest economy, by a number of indictors, including the GDP level

future challenges of globalization

- trade growth (goods, services, money, capital, knowledge) was and is one of the major economic globalization drivers. - As the pace of globalization continues to increase, new opportunities and challenges will arise for global leaders and communities. - While globalization has brought immense benefits to many sectors, certain countries and individuals remain vulnerable, their interests should be protected and promoted in the environment of the ec. globalization. - How can national and international society best deal with the challenges that globalization creates?

Porter: Competitive advantages of nations and companies

-Four major elements of Porter's competitiveness diamond are interrelated by the formal (government) and market (changes) environments. 4 MAJOR ELEMENTS: 1. factor conditions 2. related and supporting industries 3. demand conditions 4. firm strategy structure and rivalry

Globalization; evidences of economic achievements and of its problems

-GDP and other Data; global and by state groups - Concept of Competitive advantages and globalization; -Porter model of international trade, -Production Cycle Theory : Raymond Vernon; a response to limitations of the H-O theoretical model to explain the observed (modern) patterns of international trade, - Globalization and states' development level differences, -Major groups of states; differences among states, -The globalization infrastructure; role of International economic organizations and Institutions

Production cycle Theory and market competitiveness

-Initial stage: new product, production only in most advanced state - CLOSE TO MONOPOLY SITUATION, price and quality are not standard and highly important for market success -Second stage: More developed countries produce product: COMPETITION IS GROWING GLOBALLY, price and quality are getting more standard and the level is more important for market success. Number of competitors is growing - Final stage: Production is standardized and (partially) MOVED TO LESS DEVELOPED COUNTRIES: number of competitors decreasing, cost and LOW PRICE with standard or high quality are the MAJOR COMPETITIVE CRITERIA FOR MARKET SUCCESS

The missing opportunities risk in the  globalized world

-Risk of missing the business opportunities is always present. Risk is enhanced by opportunities created by globalization. -The missing opportunity risk is generally increased with low level of relevant information or knowledge about the essential elements of your job or business. - Globalization multiplies the opportunities missing risk by accelerating knowledge and information growth.

Global economy and sustainable development

-Sustainable development is a process of "Development that meets the needs of the present without compromising the ability of future generations to meet their own needs" according to the Brundtland Report, 1987, accepted by UN. - Such development is becoming more and more appreciated and needed. A number of countries implement such growth concepts like Swiss- and others.

Globalization creates new conditions for a national and business success

-The concept of NATIONAL COMPARATIVE ADVANTAGES is changed into the concept of NATIONAL AND BUSINESS COMPETITIVE ADVANTAGES

Globalization and increasing role of IEO- international economic organizations

-The current period of globalization brings with it calls for international coordination and collective action. - Expanding markets leads to the deepening interdependence of economies and the growing demand for coordination in a range of regulatory areas including food safety, banking, and product standards. -The increasing speed and decreasing cost of global communication depends in large part on coordinated international action to ensure network compatibility. -Global environmental problems such as climate change are also prominent candidates for collective action on an international scale. - As the fortunes and fates of people across the globe become more closely linked, continued international action will be needed to address a variety of global problems

The globalization of today - when it started?

-The origins of globalization are subject of on-going debate. -Though several scholars situate origins of globalization in the modern era, others take it as a phenomenon with a long history. - Some authors have argued that stretching the beginning of globalization far back in time renders the concept wholly inoperative and useless for economic or political analysis. - Economic globalization of newer era at least is different from eventual „older" globalization forms because of unprecedented broad and fast human technological progress that has started after WW II but most strongly after the end of the SEVENTIES of the twenties century.

Globalization

-is a relatively new term used to describe a very old process. -It is a historical process that began with our human ancestors moving out of Africa to spread all over the globe. In the millennia that have followed, distance has been largely overcome and human-made barriers lowered or removed to facilitate the exchange of goods and ideas. -This increasing integration of the world or 'globalization' has enriched life but also created different new problems

EFFECTS OF GLOBALIZATION AMONG 25 STATES

-mostly positive -negative perceptions seen in countries such as: Argentina, France, Spain, Russia, Japan, Turkey

Foreign Direct Investment (FDI)

1. Flow definition: Flow of funding provided by investors (usually firms) to establish or acquire foreign companies or to expand or finance existing foreign companies that the investors own. - Key is sufficient ownership to control or influence the management of the foreign company. 2. Stock definition: Total value of existing funding (equity and debt) of foreign companies that has been provided by investors that own these foreign companies.

Modern globalization infrastructures

1. Physical (for example, travel and communication structures, that are developed and improved strongly lately), 2. Legal/regulative (for example, common laws or regulations, rules and activities of international organizations, agreements, integrations,...) 3. Or symbolic (common culture, understandings, tastes, religions, ethics, etc.)

Economic globalization and development gaps

1. UN Strategy against poverty and 2. Sustainable global development perspectives

Questions about International Trade specifics and its impacts - theoretical approach

1. Why do countries trade? What is the basis for trade, especially the product (commodity) composition? 2. What are country's overall gains (or losses) from trade? 3. What are the trade impacts on country's economic structure and economic growth? Aggregate production and consumption structures change, trade influences economic growth rates. 4. What are the trade impacts on the incomes distribution within the country? 5. Who are the Winners or who are the Losers created by international trade impacts?

Interpretations of the concept of „economic globalization" : BAIROCH PAUL 1996

A larger significance of the export sector within national economies.

Interpretations of the concept of „economic globalization" : BARNET RICHARD, CAVANAGH JOHN (1994)

A new era of global competition, which, like a bulldozer, removes everything from its path

Interpretations of the concept of „economic globalization" : CABLE VINCENT 1995

A trade regime where the tendency towards integration and the pressure of competitiveness has given rise to mega markets

Additional drivers of the modern globalization

After the 1980's the MARKET ECONOMY BECAME A GLOBAL SYSTEM. Especially after 1989, when by fall of Berlin Wall, majority of previously world's non market economies /socialist economies/ started a transition to market economic system. -URUGUAY ROUND of the GATT multilateral trade negotiation (1986-1994) created WTO, with strongly INCREASED MULTILATERAL TRADE LIBERALIZATION (goods and services) - ECONOMIC INTREGRATIONS (RTAs), LIBERALIZING REGIONAL TRADE, have started to expand especially after the last part of eighties. The process is still dynamic, increasing trade and capital movement liberalization among RTA's member states. - TECHNOLOGICAL PROGRESS in production, transport, communication, medicine, biotechnologies and in many other fields stared to expand by the rates that have never seen before in history of human kind.

legal infrastructures

Among the globalization's legal infrastructure elements are three major groups: 1. International economic-political ORGANIZATIONS, 2. International economic AGREEMENTS related to markets, production, purchasing and prices 3. International TREATIES (more binding that agreements) establishing different forms of economic integrations (RTAs in the WTO jargon).

Interpretations of the concept of „economic globalization" : BLANK STEPHEN 1994

Geopolitics, product of the triumph of neo-liberalism, capable of externalizing the nation policies at a global scale

Globalization and sustainable ecology: Do you agree or disagree that human development is becoming more ecologically sustainable?

Business sector: - Strongly agree: 3% - Agree: 47% - Disagree: 41% -Strongly Disagree: 9% International Organizations: - Strongly agree: 2% - Agree: 33% - Disagree: 50% -Strongly Disagree: 9% Civil Society & Other: - Strongly agree: 0% - Agree: 30% - Disagree: 50% -Strongly Disagree: 14% NGOs: - Strongly agree: 8% - Agree: 10% - Disagree: 57% -Strongly Disagree: 10% GOV : - Strongly agree: 4% - Agree: 52% - Disagree: 41% -Strongly Disagree: 3% University and Think Tank: - Strongly agree: 3% - Agree: 41% - Disagree: 48% -Strongly Disagree: 8% MOST DISAGREE THAT HUMAN DEVELOPMENT IF BECOMING MORE ECOLOGICALLY SUSTAINABLE. - people only believe the government is becoming more ecologically sustainable (but not by much)

Multilateral trade liberalization and economic globalization

Different positions among groups of states: 1. UNCTAD and the list developed countries 2. Terms of trade, the least developed, BRICS 3. Large country and growth into poverty 3. WTO multilateral trade liberalization stagnated in last ten years

The eight Millennium Development Goals: goal 1

Goal 1: Eradicate extreme poverty and hunger Extreme poverty has declined significantly over the last two decades. In 1990, nearly half of the population in the developing world lived on less than $1.25 a day; that proportion dropped to 14 per cent in 2015. Globally, the number of people living in extreme poverty has declined by more than half, falling from 1.9 billion in 1990 to 836 million in 2015. Most progress has occurred since 2000.

EU - unemployment problems

EU started to recognize the growing problem of structural and increasing unemployment in the beginning of nineties last century. EU has been not really successful in fighting the problem as comparing of data shows. - In theory and practice we see divers concepts whether the globalization is or is not the cause for employment problems in some developed and EU nations. - Flowing product cycle theory and standardized consumers concept by Lewitt, we may believe that movement of standardized productions to less advanced nations - seeking low cost/low price - creates unemployment in more advanced nations. - Such negative impact could be reduced by; using the concept of Economic innovative doctrine in practice, not just formally (case of EU strategies), and by creating awareness of necessary individual knowledge increase and flexibility of development.

RISKS OF GLOBALIZATION

Likelihood: (1 being the most likely) 1. Severe income disparity 2. chronic fiscal imbalances 3. rising greenhouse gas emissions 4. water supply crisis 5. mismanagement of population ageing Impact: (1 having the greatest opportunity for a large impact) 1. Major systemic financial failure 2. Water supply crisis 3. Chronic fiscal imbalances 4. diffusion of weapons of mass destruction 5. failure of climate change adaptation

Interpretations of the concept of „economic globalization" : RODRIK DANI 1997

The end to the keynesian economy and its international market strategies; as a new form of economic development, in which the role of the state must be redefined.

Competitive advantage trade theory (or Porter diamond theory)

The theory of competitive advantage of industries among different nations is based on four groups of influences, that form a "diamond" of competitively.

UN strategy to reduce inequalities

What are the Millennium Development Goals? - The eight Millennium Development Goals (MDGs) - which range from halving extreme poverty to halting the spread of HIV/AIDS and providing universal primary education, all by the target date of 2015 - form a blueprint agreed to by all the world's countries and all the world's leading development institutions. They have galvanized unprecedented efforts to meet the needs of the world's poorest

MOST GLOBAL IEO?

UN! The UN has 4 main purposes: 1. To keep peace throughout the world; 2. To develop friendly relations among nations; 3. To help nations work together to improve the lives of poor people, to conquer hunger, disease and illiteracy, and to encourage respect for each other's rights and freedoms; 4. To be a center for harmonizing the actions of nations to achieve these goals.

UN conferences on sustainable global development 2015

United Nations Sustainable Development Summit; 25 - 27 September 2015, New York The United Nations summit for the adoption of the post-2015 development agenda was held from 25 to 27 September 2015, in New York and convened as a high-level plenary meeting of the General Assembly.

Interpretations of the concept of „economic globalization": DAHRENDORF RALF (1995)

free movement of capital, where business agents everywhere are able to deposit and invest their money where they wish and are able to do so; a redefined world in which we are all interdependent in a global market.