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The IMF and The World Bankin the Globalization Era
What is Globalization?
•Economic "globalization" refers to theincreasing integration of economies aroundthe world, particularly through the movementof goods, services, and capital across borders.•The term sometimes also refers to themovement of people (labor) and knowledge(technology) across international borders.There are also broader cultural, political, andenvironmental dimensions of globalization.
•The term "globalization" began to be usedmore commonly in the 1980s, reflectingtechnological advances that made it easierand quicker to complete internationaltransactions—both trade and financial flows.
•It refers to an extension beyond nationalborders of the same market forces that haveoperated for centuries at all levels of humaneconomic activity—village markets, urbanindustries, or financial centers.
•Globalization means increased interconnectivity andinterdependence with the economies of the entireworld.•It encompasses–international trade, investment, and finance – helping inaugmenting the national incomes of economies.Technologies got transferred in a manner that fosteredbetter communication. It also speaks of the globalenvironment,–untapped potential across economies and employmentopportunities that led to better economic integration.
•There are countless indicators that illustratehow goods, capital, and people, have becomemore globalized.•The value of trade (goods and services) as apercentage of world GDP increased from 42.1percent in 1980 to 62.1 percent in 2007.
Foreign direct investment increased from 6.5percent of world GDP in 1980 to 31.8 percent in2006.The stock of international claims (primarily bankloans), as a percentage of world GDP, increasedfrom roughly 10 percent in 1980 to 48 percent in2006.The number of minutes spent on cross-bordertelephone calls, on a per-capita basis, increasedfrom 7.3 in 1991 to 28.8 in 2006.The number of foreign workers has increased from78 million people (2.4 percent of the worldpopulation) in 1965 to 191 million people (3.0percent of the world population) in 2005.
Proponents of Globalization•Benefits of Globalization
•The growth in global markets has helped topromote efficiency through competitionandthedivision of labour•Global markets also offer greater opportunityfor people to tap into more diversified andlarger markets around the world.
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•The broad reach of globalization easily extends todaily choices of personal, economic, and politicallife.•For example,–greater access to modern technologies, in the world ofhealth care, could make the difference between lifeand death.