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7 . Globalization

7 . Globalization. “The process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture” (Wiki) Characteristics of globalization: Losers and winners (?) Crises and integration Openness and trade

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7 . Globalization

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  1. 7. Globalization • “The process of international integration arising from the interchange of world views, products, ideas, and other aspects of culture” (Wiki) • Characteristics of globalization: • Losers and winners (?) • Crises and integration • Openness and trade • FDI / Offshoring and Outsourcing • Technology and migration flows

  2. 7. Globalization • Characteristics of globalization (continued): • Losers and winners (?) • - Positive: economic growth, higher incomes, new jobs • - Negative (?): (sharp) inequality, might do harm to rising industries, environment, cultural decay of man • Economics is not a zero-sum game! • Crises and integration • Now much more integrated but... How much room still left?

  3. 7. Globalization Source: TK, cited in Ghemanwat “World 3.0”.

  4. 7. Globalization • Openness and trade • - Exports and imports rose • - Developing countries experienced a recent surge • Openness and economic growth • Smaller countries more dependent • Trade barriers down

  5. 7. Globalization

  6. 7. Globalization Average tariffs through time Source: Busse, HWWA-Discussion paper 1216, 2001

  7. 7. Globalization • FDI • When a firm invest in a foreign country (MNEs) • Greenfield (new) or acquisition/merger (ongoing) • Sustained growth of FDI from the 1990s and on • Especially in developing countries • Changing nature of trade (lower wages) • Growing importance of Asia / China • To circumvent trade barriers • To be closer to major customers

  8. 7. Globalization FDI Worldwide Data source: UNCTAD 10

  9. 7. Globalization • Offshoring and Outsourcing • Offshoring: relocation of activities abroad; outsourcing: externalization of activities to a third party provider • From less complex (manufacturing) to knowledge-intensive activities (product development) • Unexploited pools of talents (India and China) • Internet • Both practices have been growing in recent times • Manufacturing sector more prominent • Materials (production) offshoring more important • Employment effects are negligible (short and long run) • Productivity effects are possible (short and long run)

  10. 7. Globalization

  11. 7. Globalization

  12. 7. Globalization • Technology and migration flows • Transport and communication costs significantly reduced • People more mobile nowadays • People more skillful today (education, experience, languages, internet, etc.) • Are countries stricter regarding immigration laws? • Whole families more likely to move and adapt (expats) • Mobility still influenced by deeply rooted cultural factors

  13. 7. Globalization Transport and telecommunication Source: Busse, HWWA-Discussion paper 1216, 2001

  14. 7. Globalization Source: WEO, 05/1997

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