International Business Chapter 1 Globalization May 15Globalization: the shift toward a more integrated and interdependent world economyThe world is moving away from self-contained national economies toward and interdependent, integrated global economic systemGlobalization of Markets:Historically distinct and separate national markets are mergingNo longer makes sense to talk about the “German Market” or the “American Market”Term used now is “Global Market” Falling trade barriersConsumer tastes and preferencesPromoting trends of same products offered worldwideFactors of production: land, labor, energy and capitalCompanies can lower their overall cost structure and improve the quality of functionality Global Institutions:Help manage, regulate and police the global market placePromote the establishment of multinational treaties to govern the global business system Examples of Global Institutions:General Agreement on Tariffs and Trade (GATT)The World Trade Organization (WTO)The International Monetary Fund (IMF): maintains order in the monetary systemThe World BankThe United Nations (UN): maintains international peaceThe G20: forum through which major nations tried to launch a coordinated responseEXTRA CREDIT: (?) Asian perused policies know as export promotion industrialization. This national level strategy is supposed to produce world class products that are exportable. Policies that Asian tigers perused with an artificially low exchange rate. Import substitution protect the local economy and produce locally what other countries want to export. As a result of this the consumers of Latin America had quality products at a high price.