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What About Globalization? Stefania Reginelli Universita’ Politecnica delle Marche May 14th, 2005 Definition “Globalisation is a process by which the market and the production of different countries started being more dependent of each other after the creation of the market of goods, services, capital and technology. It is not a new phenomenon, but it began many years ago.” (European Commission’s Annual Economic Report, 1997) Principal Causes Technological Progress Political and Institutional Changes Principal Causes Technological Progress Political and Institutional Changes The Three Stages of Technological Progress 1st stage: from 1870 to the end of XIX century 2nd stage: from 1945 to 1980 3rd stage: started at the end of XX century 1st stage: Technological Discoveries Faster and stronger ships with iron body and submerged screw were created in 1870 The Suez Canal was opened in 1869 Trans-Atlantic telegraphic services were created to connect London to New York in 1866 and Melbourne to Buenos Aires in 1872 2nd stage: Technological Discoveries The telephone: a new means of communication 3rd stage: Technological Discoveries Internet technology Globalization: not a neverending process Globalization stopped by: The two World Wars The 1929’s Depression The Protectionism Worldwide GDP 1870 1914 1950 1980 2000 Principal Causes Technological Progress Political and Institutional Changes Major Examples De-Regulation Opening of ex-Socialist countries to international market and to international investment and exchanges Major Consequences Reduction in the costs of deals More flexibility to enterprises Development of sub-supply Specialisation on different production stages • Competition increases • Prices are lower • Companies become international International Enterprises and Hosting Countries Can the activity of International enterprises have a positive influence on hosting countries? International Enterprises and Hosting Countries (cont’d) The effects depend on many conditions: how international companies enter the economy of foreign countries the goal of international enterprises the characteristics of the exported production activity the characteristics and the structure of the economical system in which the tecnological innovations are introduced Main Problems International enterprises sometimes do not export R&D and technological production Hosting countries become dependent on international companies This calls for: MARKET CONTROL SUSTAINABILITY A Famous Quote… “The rapid process of globalisation of economic system needs to estabilish who is responsible for welfare and for the exercieses of the social right. Free market is not able to do such a thing on its own. There are a lot of human needs that free market doesn’t consider” (Giovanni Paolo II January 1st, 1999)