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What is
Globalization?
Globalization is the process by which ideas, knowledge,
information, goods, and services spread around the world.
In business, the term is used in an economic context to
describe integrated economies marked by free trade, the
free flow of capital among countries, and easy access to
foreign resources, including labor markets, to maximize
returns and benefit for the common good.
3 components of economic globalization
Academic literature commonly subdivides
globalization into three major areas

Economic Globalization
Cultural/Social Globalization
Political Globalization
Economic Globalization
It refers to the widespread international movements of
goods, capital, services technology, and information.
Economic Globalization primarily comprises the
globalization of:

1. Production 6. Regimes
2. Finance 7. Institutions
3. Markets 8. Corporations
4. Technology 9. Labour
5. Organizational
Economic Globalization is one most often mentioned in
the media.
It is associated with massive amounts of financially
traded daily on the different stock markets around the label
"NEW ECONOMY".
Economic Globalization
In order to monitor the economy, 3 economic institutions were created.

1. The International Monetary Fund

(IMF) --- would oversee the 2. The International Bank for Reconstruction and
international monetary system; Development (IBRD) later named WORLD BANK
(WB) --- would provide loans for European

reconstruction but later

3. The General Agreement on Tariffs and
expanded its activities to the
Trade (renamed, of the WORLD TRADE
developing world.
ORGANIZATION in
1992) --- would oversee multilateral trade
agreements.
Cultural Globalization
Refers to the transmission of ideas, meanings, and values across national borders.

1. Migration is an important aspect of cultural globalization.

This process has been going on for several centuries, with languages, religious beliefs, and values being
spread by military conquest, missionary work, and trade.

2. Food is the most obvious example of cultural globalization.

Food consumption is an important aspect of culture and most societies around the world have diets that are
unique to them, however, the cultural globalization of food has been promoted by fast-food giants such as
McDonald's, Coca-Cola, and Starbucks.

3. Sport is another fairly obvious example of cultural globalization.

All the international sporting events - most notably the World Cup and The Olympics which binds millions
together in shared, truly global, 'leisure experience'.
Cultural Globalization
1. Converging Global Consumption Patterns 2. Homogeneity
Today you can go to pretty much any major city in the world and Comes into society in several ways - ethnically(Japanese),
share in a similar 'consumption experience'. More and more in Asia religiously(many Arabs), culturally(Indians), politically(communism).
and South America are coming to enjoy a high-consumption lifestyle. The study has shown that the most prominent type of homogeneity is
Central to this is the growth of similar styles of shopping malls, and ethnicity, where everybody shares similar physiological
leisure parks which provide a homogenous cultural experience in characteristics and cultural behavior.
different regions across the world.

3. Financial Homogeneity tt. The Global Village/Global Consciousness

It exists in many countries. It was prevalent in many communist
countries- this type of homogenous society is in decline now a day. Individuals and families are now more directly plugged into the
news from the outside world - some of the most gripping events of
North Korea is a great example of financial homogeneity, at an extreme
the past decade have unfolded in real-time in front of a global
level, another good example is Scandinavian countries, where the
government makes sure that every citizen of their country enjoys high-level audience.
living standards.
Cultural Globalization
DETRADITIONALISATION- In his classic 1999 text, Runaway World, Anthony Giddens
argues that one consequence of globalization is detraditionalization - where people question their
traditional beliefs about religion, marriage, gender roles, and so on.
GLOBAL RISK CONSCIOUSNESS- Ulrich Beck (1992) argues that a fundamental feature of
globalization is the development of a global risk consciousness, which emerges due to shared global
problems which threaten people in multiple countries.

Examples:
Threat of terrorism International
nuclear war
The threat of global pandemics
The rise of organized crimes funded primarily through international drug trafficking
The threat of planetary melt-down due to global warming.
Political Globalization
Examples of Political Globalization:
The globalization of political refers to the absence of the absolute sovereignty of
a state’s political borders over a certain area as well as increased interaction between the 1. European Union- The European Union is a trade and treaty bloc
systems of government and increased external intervention and interaction on the basis comprising 27 nation-states on the continent of Europe. It is the
of democracy, non-governmental organizations, human rights, and freedoms. successor of several other political agreements established after World War 2 to
help integrate the European continent after the war.
2. NATO - The North American Treaty Organization is another
multi-national political treaty established after World War 2.
Advantages Of Political Disadvantages Of Political NATO’s primary goal is to contain Russian aggression by creating a military pact.
Globalization: Globalization: If one NATO nation is attacked, then the rest will (supposedly) come to their
1. Establishment of International Norms - 1. Loss of Power at the Nation-State Level - defense. This deters potential Russian aggression.
When nation-states sign treaties with When nation-states make multinational
international bodies, it’s an agreement to agreements, they often make concessions in 3. Belt and Road Initiative - The Belt and Road Initiative is a trade
operate within a set of norms and order to reach a middle ground that’s initiative established by China designed to spread China’s
satisfactory to all parties. They also sign off on
standards that all signatories will adhere to. sphere of influence across Asia and the Middle East.
certain norms and standards that restrict their
2. Ease of Movement - abilities to unilaterally take action.
Often, political agreements between nations 2. Levels of Bureaucracy -
4. War Games - Many allied nations engage in yearly war games in a bid to
lead to the relaxing of the movement of labor Multinational political agreements strengthen military ties and protect their interests.
across boundaries. This can lead to can add extra layers of
immigration and emigration opportunities for bureaucracy to the everyday 5. NAFTA - NAFTA was a flashpoint of anti-globalization sentiment in
millions of people. activities of businesses and citizens. For the 1990s because it was seen to decrease labor
example, many global political agreements put in
3. Ease of Trade - standards and would lead to the exodus of blue-collar jobs from the United States.
place standards that you need to ‘tick off’ before
One of the key goals of political globalization
sending a product to market.
is to create better trade routes around the
world (in effect, to support and promote 3. Decreased Political Accountability One
economic globalization). of the biggest critiques of bodies like
the WTO, the EU, and United Nations is
that they
are full of unelected bureaucrats.
 bal Ec o n
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What is the Global Economy?
The global economy refers to the interconnected worldwide economic activities that take place
between multiple countries. These economic activities can have either a positive or negative impact on
the countries involved.

The global economy comprises several characteristics, such as:

Globalization: Globalization describes a process by which national and regional economies, societies, and cultures have become
integrated through the global network of trade, communication, immigration, and transportation. These developments led to the
advent of the global economy. Due to the global economy and globalization, domestic economies have become cohesive, leading
to an improvement in their performances.
International trade: International trade is considered to be an impact of globalization. It refers to the exchange of goods and
services between different countries, and it has also helped countries to specialize in products which they have a comparative
advantage. This is an economic theory that refers to an economy's ability to produce goods and services at a lower opportunity
cost than its trade partners.
International finance: Money can be transferred at a faster rate between countries compared to goods, services, and people;
making international finance one of the primary features of a global economy. International finance consists of topics like
currency exchange rates and monetary policy.
Global investment: This refers to an investment strategy that is not constrained by geographical boundaries. Global
investment mainly takes place via foreign direct investment (FDI).
 Why is the global economy important?
We can understand the importance of the global economy by looking at it in relation to emerging
markets:

Economic importance at a micro and macro level: Long-term world economic outlook:
The increase in the world’s population has led to emerging markets According to financial and economic projections based on demographic trends and
growing economically, making them one of the capital productivity models, the GDP in emerging market economies in 2019 is
primary engines of world economic growth. The growth and resilience shown likely to keep increasing at a positive rate. According to an emerging markets
by emerging markets are a good sign for the world economy. Before delving economic forecast for 2019 conducted by Focus Economics, the economy is set to
increase by 7.5% in India, 6.6% in the Philippines, 6.3% in China, 5.3% in
into the next point, you need to understand the concept of microeconomics. It
Indonesia, 5.1% in Egypt, 4.9% in Malaysia, 3.8% in Peru and 3.7% in Morocco.
refers to the study of the behavior of households, individuals, and firms with
respect to the allocation of resources and decision-making. In simpler terms,
this branch of economics studies how people make decisions, what factors
affect their decisions, and how these decisions affect the price, demand, and
supply of goods in the market. Therefore, from the perspective of
microeconomics, some of the largest firms with high market value and a few
of the richest individuals in the world hail from these emerging markets,
which has helped in the higher distribution of income in these countries.
However, many of these emerging countries are still plagued by poverty, and
work still needs to be done to work towards eradicating it.
 Who controls the global economy?
Although governments do hold power over countries' economies, it is the big banks and large corporations that
control and essentially fund these governments. This means that the global economy is dominated by large
financial institutions.

Benefits of Global Economy

Benefits Costs
Factors affecting the global economy
According to the latest economic news, here are
Economies of scale/lower prices Environmental costs
some of the key factors that influence and affect how
well the global economy works:
Increased global investments Tax competition and avoidance

Natural resources;
Free movement of labour Brain drain from some countries
Infrastructure;
Population; Labour;
Human capital;
May reduced Global inequality Less cultural diversity

Technology;
Law.
 Ket I nt eg r ati o
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 MarKet integration occurs when prices among different
locations or related goods follow similar patterns over a For example, if the
long period of time. Groups of goods often move demand for baby dolls
proportionally to each other and when this relation is very within a given
clear among different marKets it is said that the marKets
geographical market were
are integrated.
to suddenly be reduced by
50%, there is a good
chance that the demand for
baby doll clothing would
What is the impact of marKet integration on the global
economy? also decrease in proportion
Economic integration can reduce the costs of trade, improve the availability within that same
of goods and services, and increase consumer purchasing power in member geographical market.
nations.
Employment opportunities tend to improve because trade liberalization
leads to market expansion, technology sharing, and cross-border
investment.
 Reasons for Market Integration

To remove transaction costs

Foster competition

Provide better signals for optimal generation and consumption decisions.

Improve security of supply

Theoretically one can integrate two markets without interconnection.

The advantages include increasing market share, reducing

competition, and creating economies of scale. Disadvantages
include regulatory scrutiny, less flexibility, and the potential to
destroy value rather than create it.
 I nt er s t at e
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 What is the Global
Interstate System? It is the whole system of human interactions. The modern
world-system is structured politically as an interstate system - a
system of competing and allying states. A political scientist
commonly calls this the international system, and it is the main
focus of the field of International Relations.
The institution that govern International Financial
International Relations Institutions:
1. Each government pledges World Bank International
United Nation itself to employ its full Monetary Fund
United States President FRANKLIN resources, military or economic, Asian Development Bank
ROOSEVELT coined against those members of the African Development Bank
the name united nations that was used tripartite pact and its adherents
in the declaration of United Nation on with which such government is
January 1st 1942. UN means allies to at war.
fight against Axis Powers in the 2. Each government pledges
Second World War II. Only 26 itself to cooperate with the
nation's representatives pledge their governments signatory hereto
government to: and not to make a sperate
armistice or peace with the
enemies.
 Trade Agreement
It is when two or more nations agree on the terms of trade between them. They determine the
tariffs and duties that countries impose on imports or exports. All trade agreements affect
international trade.

Pros Cons

Increased Economic
Growth Increased job outsourcing

Lower government
spending Poor working conditions

Degradation of national
Technology transfer resources

Import are goods and services produced in a foreign country Exports are goods and services that are made in a country and
and bought by domestic residents. sold outside its borders. That includes anything shipped from a
That includes anything shipped into the country even if it's by domestic company to its foreign affiliate or branch.
the foreign subsidiary of a domestic firm.
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 Why we need Global Governance:
What is National policies has a direct effects on a country.
Good or bad.

Global Its global effects on other countries cannot be

ignored.
Global governance stresses on cooperative forms of
Governance? conflict management.
It helps nations to develop their capacity to deal with
the challenges of globalization.
Global governance Global governance includes citizens' participation in
encompasses activities that the global decision making.
transcend national
boundaries at the Making global governance work is a defining
international, transnational, challenge of our time, given that too often
and regional levels and is international leaders fail to agree on, let
based on rights and rules alone pursue, concerted action to address
that are enforced through a pressing transnational problems at the
combination of economic and intersection of peace, security and justice.
moral incentives.
Thank you!