Four trends are important: 1. The Changing World Output and World Trade Picture -As emerging economies grow, a further relative decline in the share of world output and world exports accounted for by US seems likely -Reflects growing economic development and industrialization of the world economy 2. The Changing Foreign Direct Investment Picture (increasing): you’re actually going into a foreign area to sell -As barriers to free flow of goods, services, and capital fell, and as other countries increased their shares of world output, non-US firms increasingly began to invest across national borders 3. The Changing Nature of the Multinational Enterprise - Multinational enterprise (MNE): any business that has productive activities in two or more countries -Trends since 1960s show rise of non-US multinationals and growth of mini-multinationals 4. The Changing World Order -Democratic revolutions sweeping Communist world, create new opportunities for international businesses -China and Latin America are moving toward greater free market reforms How Will the Global Economy of the 21 st Century Look? World is moving toward a more global economic system But globalization is not inevitable -Signs of a retreat from liberal economic ideology in Russia and Venezuela Globalization brings risks -Financial crisis that swept through South East Asia in late 1990s -Recent financial crisis that started in US in 2008 and moved around world The Globalization Debate Supporters believe that increased trade and cross-border investment mean lower prices for goods and services, greater economic growth, higher consumer income, and more jobs Critics worry that globalization will cause job losses, environmental degradation, and the cultural imperialism of global media and MNEs Globalization, Jobs, and Income
Critics argue that falling barriers to trade are destroying manufacturing jobs in advanced countries
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- Fall '12