Lecture 1 - Lecture 1 Globalization Outline A. B. C. D. E....

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Lecture 1 Globalization
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2 Outline A. Globalization B. Evidence of Globalization C. Globalization of Markets D. Globalization of Production E. Emergence of Global Institutions F. Drivers of Globalization G. H. Changing Demographics of Global Economy
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3 A. Globalization Shift towards a more integrated & interdependent global economy system Closer integration of countries and people of the world which has been bought about by enormous reduction of costs of transportation and communications and the breaking down of artificial barriers to flows of goods and services, capital , knowledge and people across borders
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4 B. Evidence of Globalization World trade increase more than: 20-fold up from ’50 to ’98 27-fold up between ’70 and ’05 FDI annual flows grew more than: 10-fold between ’84 and ’98 50-fold from ’75 to ’00 Dropped nearly 50% between ’00 and ’03 SARS 911 Source: Global Business Today (P.13)
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5 B. Evidence of Globalization FDI bilateral treaties increased more than 10-fold between ’80 and ’02 64,000 parent companies (2002) operated away from home markets through 870,000 subsidiaries produced US$11 trillion in global sales & 25% of global output US, Japanese, Western European companies are the major investors in Europe, Asia, & North America
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6 B. Evidence of Globalization Share of world output and exports (%) Share of world output and exports (%) 1963 output 1997 output 2005 output 1998 exports 2005 exports United States 40.3 20.8 20.1 12.7 10.1 Japan 5.5 8.3 6.4 7.3 5.3 Germany 9.7 4.8 4.1 10 9.0 France 6.3 3.5 3.0 5.7 4.4 United Kingdom 6.5 3.2 3.0 4.5 4.5 Italy 3.4 3.2 2.7 4.5 3.6 Canada 3 1.7 1.8 4.0 3.4 China NA 11.3 15.4 3.4 6.7 Source: Global Business Today (P.18)
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7 C. Globalization of Markets Distinct & separate markets merging into a global marketplace Process: Global communication Reducing cultural distance between countries converge onto the global norm Firms produce standardized products worldwide Emergence of global market for consumer products Examples: Coca Cola, PlayStations
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8 C. Globalization of Markets Benefits: Implications: Example: IKEA (Global Business Today: P. 3, 4 and 7) Produce standardized
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Lecture 1 - Lecture 1 Globalization Outline A. B. C. D. E....

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