Globalisation

Question 1

4 Indicators of Globalisation

Answer 1

1. FDI
2. Trade
3. Foreign Monetary Investment
   4.Migration

Question 2

Global FDI investment rates 2021 + 22

Answer 2

2021: 64% increase
2022: 12% fall

Question 3

World’s Top MNE’s ranked by foreign assets (2022)

Answer 3

Toyota - Japan - 69% sales outside uK
Shell plc - UK - 92% sales outside UK
TotalEnergies SE - France - 91% sales outside UK

Question 4

Growth/decline in World Trade (2005-2022)

Answer 4

2007/8 - financial crisis problem across the world causing trade to drop

2020/21 - Covid-19 crisis

Question 5

Migration

Answer 5

• Is a key indicator of globalisation
• Asia contributes to most of the migration in the world - 104 million people in 2015
• As of 2020, most migrants in US, Germany and Saudi Arabia

Question 6

Global versus National markets

Answer 6

• Variations in tastes, preferences, culture, business systems and laws.
• Businesses have to vary and adapt their strategies.

Question 7

Ghemawat (2001) theory

Answer 7

• Ignoring distance between markets is dangerous
• CAGE framework: Geographic, Economic, Cultural, Administrative.

Question 8

CAGE examples

Answer 8

Cultural: different languages, religions
Admin: political hostility, government policies
Geo: physical remoteness, size of country, climate
Economic: consumer income, natural resources, labour

Question 9

Globalization or Regionalisation?

Answer 9

• Regionalisation and regional multinational corporations can be a middle way to avoid risks of globalization.
• Most multinational activity is limited to the home’s region.
• Main integration we see happens between certain dominant regions in the world.

Question 10

Regionalisation - The Triad

Answer 10

Europe - 70% intra-trade
NA - 38% intra-trade
Asia - 57% intra trade

trade and FDI mainly within these 3 regions with Middle East/Africa barely contributing.

Question 11

Regional Economic Integration

Answer 11

• Involves the creation of agreements between countries in a geographic region to reduce tarrif and non-tarrif barriers.
• Free flow of goods, services and factors of production between each other.

Question 12

Is regional economic integration a good thing?

Answer 12

Some worry it will lead to a world in which regional trade blocs compete against each other.

Question 13

Levels of Regional Economic Integration

Answer 13

(Peng and Meyer, 2016)

Free trade area - Removal of intragroup tariffs

Customs union - common external tariff

Common market - free movement of goods, people and capital

Economic union - common economic policies

Political union - integration of political and economic affairs.

Question 14

Political integration

Answer 14

• Not just about trade and FDI but also about security/defence paths between countries
• Countries come together that share certain political aspirations
• Do economic and political blocs integrate or divide the world? - divide because a bloc is where you share values and the rest are excluded.

Question 15

Implications of political integration

Answer 15

• Pitches countries against each other, therefore threat of conflict.
• Spills over into bilateral trade and investment policies and agreements - could be an adv or disadvantage.

Question 16

Drivers of globalisation

Answer 16

1. political/regulatory factors: declining trade barriers
2. tech factors: transportation tech, communications

Question 17

Economic catalysts of globalisation

Answer 17

• Growth opportunities: outgrown home market
• Quest to cut costs - cheap places to produce
• Search for natural resources.

Question 18

Globalisation benefits

Answer 18

• Access to markets - faster growth and increased revenues
• Access to cheaper supplies
• Economies of scale - lower costs
• Access to quality inputs
• Access to rare natural resources

Question 19

Globalisation costs

Answer 19

• Increased competition - business failure?
• Risky environment
• Complexity - lots of variables - are US/UK policies beneficial to you?
• Dependancy