globalization (final) Flashcards
define globalization
refers to the shift towards a more integrated and interdependent world economy OR the interconnectedness between countries
drivers of globalization
- lowering trade barriers
- transportation
- production techniques
- technological advancements
examples of technological advancements
- internet
- AI
- Social media
- E-commerce
- banking
what did technological advancements help in?
- communication
- payment
- education
- better production
what moves in/out of borders
- resources
- goods
- services
- investments
- culture
- politics
why do countries trade together?
to keep peace
what are aspects of globalization?
- globalization of market
- globalization of production
what is globalization of markets?
merging distinct and separate national markets into one large global market
what are the drivers of globalization of markets?
- lower trade barriers
- tastes and preferences of consumers are becoming more similar due to international trends
barriers of globalization of market
- different legal regulations
- different taste preferences
- different distribution channels
- different cultural norms
how do companies adapt to the differences/overcome the barriers of globalization of market
- marketing strategies
- product features
- operating practice
real-life examples of globalization of the market
Mcdonalds has a set menu for every country based on local taste and preference. ex. Mcfalafel
what do global markets focus on?
industrial goods (raw material) rather than consumer goods
why do global markets focus on industrial goods?
- standardization
- more stability and predictability because it’s B2B
what has the internet helped in?
helped hospitals outsource some radiology work to India. MRI scans done at night in the US are sent to india to be interpreted while it’s nighttime in USA
how is the lowering of trade barriers a driver of globalization?
- the reduction of tariffs and quotas make it easier and cheaper to trade between countries
- It encourages countries to specialize in what they’re good at, therefore having a competitive advantage
how is transportation a driver of globalization?
container shipping and air freight have significantly reduced costs and time to move goods across borders
how are production techniques a driver of globalization?
new production techniques like automation and JIT have improved efficiency and reduced costs
how are technological advancements a driver of globalization
improvement in technology, especially communication and IT, have changed how a business operates
how did technological advancements change how businesses operate?
- help manage operations globally
- reach customers through e-commerce
- streamline logistics and supply chain
define globalization of production
outsourcing goods/services from different countries to take advantage of lower costs and better factors of production
advantages of globalization of production
- lower cost of production
- improved quality of functionality
- high efficiency
real-life example of globalization of production
Apple designs phones in the U.S. but makes them in China, where it’s cheaper to build.
Institutions that helped globalization
- UN
- GATT
- WTO
- WB
- IMF
What is the UN
global insitution that helps promote international peace and security
how did UN encourage globalization?
- create a stable environment to conduct international trade and investment
- created rules to ensure countries, governments, and people don’t misuse their power and act fairly
- provide a forum for exchange of views among member countries to share ideas and agree on actions that need be taken at a national, global, and regional level
what is the GATT
legel agreement between many countries
purpose of GATT
promote international trade and lowering of trade barriers
features of the GATT
- helped boost economic recovery after WW2
- it’s a legal agreement but functions as an organization
- the WTO was created in this
what is the WTO?
- The WTO replaced GATT
- it’s an international organization that helps countries trade with each other smoothly, fairly, and freely.
- It sets the rules for global trade and ensures everyone follows them.
- members need to apply for membership
responsibilities of the WTO
- make sure nations follow rules written in trade agreements signed by members
- facilitates multinational agreements between members
why was the WB made
to promote economic development
what did the WB focus on
making low-interest loans to governments in poor countries that want to make significant infrastructure investments
what is the IMF?
it’s referred to as a member of last resort. it provides financial support to nations with an economic crisis or currencies that are losing value against other nations
what does IMF require?
nations to follow specific economic policies to re-stablize and grow their economy
define international trade
when a firm exports goods/services to consumers in another country
define FDI
when a firm invests resources in a business outside it’s home country
what are the changing demographics of the global economy?
- changing world output
- change in investment patterns
- change in multinational companies
- change in new world order
explain changing world output
increase in the amount of output exported
how do emerging countries play a role in changing world output?
- BRIC countries are growing more rapidly
- developing nations may account for 60% of world economic activity by 2025
- emerging countries contribute more to world GDP
- economies shift towards more high-value/high-tech products
explain change in investment patterns
Investment is increasing in emerging countries, which is driven by growth and higher returns.
why are emerging nations more attractive to FDI?
they develop infrastructure and improve business requirements
explain the change in multinational companies
more multinational companies are emerging from developing countries, bringing competition
explain the change in new world order
with emerging economies gaining power and influence in international organizations, there is a geopolitical shift
advantages of globalization
- better and cheaper products
- increase in competition
- culture exchange
- international trade
- higher gdp, more economic growth
disadvantages of globalization
- loss of jobs
- loss of identity
- income inequality
- small companies can’t compete with multinationals
