Download Figure 1.1

Globalization
Chapter 1
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Global Telecommunications
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1-1
Globalization
The shift towards a more integrated and
interdependent world economy.
Two components:
The globalization of markets.
The globalization of production.
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1-2
Global Drivers
Positive
Technology
Negative
Culture
Open Markets
Market Barriers
Economic Integration
National Barriers
Peace
War
Corporate Strategy
Corporate
Strategy
Global Focus
Local Focus
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1-3
Globalization of Markets
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1-4
Global Production
Swan Optical
Manufacturing
Design
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1-5
Growth of World Trade and
World Output
2000
1800
1600
1400
1200
1000
800
600
400
200
0
1950=100
Trade
GDP Volume
1950
1960
1970
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1980
1990
1997
Figure 1.1
1-6
Impact of GATT Tariff Rates
Average Tariff Rates on Manufactured Products % of Value
50
45
40
35
30
25
20
15
10
5
0
France
Germany
Italy
Japan
Holland
Sweden
Britain
United States
1913
1950
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1990
2000
Table 1-1 in text
Table 1.1
1-7
The Shrinking Globe
Figure 1.2
1500 -1840
Best average speed of
horse-drawn coaches
and sailing ships, 10
mph.
1850 - 1930
1950s
Propeller
Steam locomotives aircraft
average 65 mph.
300 - 400
Steamships average mph.
36 mph.
©The©The
McGraw-Hill
Companies,
Inc., 2000 Inc., 2000
McGraw-Hill
Companies,
1960s
Jet
passenger
aircraft,
500 - 700
mph.
1-8
The Changing Pattern of World Output and
Trade
Country
United States
Japan
Germany
France
United Kingdom
Italy
Canada
China
S. Korea
Share of World Share of World Share of World
Output 1963 Output 1996
Exports 1997
40.3%
20.8%
12.6%
5.5%
8.3%
7.76%
9.7%
4.8%
9.9%
6.3%
3.5%
5.46%
6.5%
3.2%
4.94%
3.4%
3.2%
4.76%
3%
1.7%
3.81%
NA
11.3%
2.85%
NA
1.7%
2.45%
Table 1.2
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1-9
Percentage Share of Total FDI Stock
1980-1996
50
45
40
35
30
25
20
15
10
5
0
1980
1985
1990
1994
1996
USA
UK
JPN
Figure 1.3
©The McGraw-Hill Companies, Inc., 2000
GER
FR
Neth
ODC
Dlvng
Econ
1-10
FDI Inflows
1980-1996
$B
400
350
300
World
250
Dev Ctry
200
Dlvg Ctry
150
USA
100
China
50
0
1985- 1991
90
1992
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1993
1994
1995
1996
1997
Figure 1.4
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The National Composition of the Largest
Multinationals
Of the Top 260 in 1973
1997
United States
Japan
Britain
France
Germany
126 (48.4%)
9 (3.5%)
49 (18.8%)
19 (7.3%)
21 (8.1%)
Of the Top 500 in
162 (32.4%)
126 (25.2%)
34 (6.8%)
42 (8.4%)
41 (8.3%)
Table 1.3
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1-12
Globalization - Pro
Lower prices for goods and services.
Economic growth stimulation.
Increase in consumer income.
Creates jobs.
Countries specialize in production of goods and
services that are produced most efficiently.
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1-13
Globalization - Con
Destroys manufacturing jobs in wealthy,
advanced countries.
Wage rates of unskilled workers in
advanced countries declines.
Companies move to countries with fewer
labor and environment regulations.
Loss of sovereignty.
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1-14
International vs Domestic Business
Countries are different.
Range of problems are wider and more
complex.
Government intervention in trade and
investment creates problems.
International investment is impacted by
different currencies.
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1-15
Sovereignty and the WTO
“Under the new system, many decisions that affect billions of
people are no longer made by local or national governments
but instead, if challenged by any WTO member nation, would
be deferred to a group of unelected bureaucrats sitting behind
closed doors in Geneva.” -Ralph Nader-
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Differences Between
International and Domestic
Businesses
Countries are different.
The range of problems are wider and more
complex.
The intervention of governments that may
limit international trade and investment.
The need to convert into different
currencies.
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1-17