GLOBALIZATION OF ECONOMIC RELATIONS POWER POINT

GLOBALIZATION OF ECONOMIC RELATIONS POWER POINT

1. CHAPTER 4: THE GLOBALIZATION OF ECONOMIC RELATIONS

2. Economic Globalization is a historical process, the result of human innovation and technological progress. It refers to the increasing integration of economies around the world, particularly through the movements of goods, services, and capital across borders.

3. INTERCONNECTED DIMENSIONS OF ECONOMIC GLOBALIZATION The Globalization of Trade of Goods and Services when a country exports more than it imports, it runs a trade surplus. When a country imports more than it exports, it runs a trade deficit. Comparative advantage, the advantage in the production of goods enjoyed by one country over another when that good can be produced at lower cost in terms of other goods than it could be in the other country.

4. The Globalization of Financial and Capital Markets a country enjoys an absolute advantage over another country in the production of a good than the other country does. Trade barriers also called obstacle to trade, take many forms. The three most common are tariffs, export subsidies, and quotas.

5. Tariff - is a tax on imports. Export subsidies- is a government payments made to domestic firms to encourage exports. Quota- is a limit on the quantity of imports.

6. The Globalization of Technology and Communication capital is not the only factor of production required to produce output, labor is equally important. Technology transfer and communication have become part of manpower training in must agricultural countries.

7. The Globalization of Production production is the process which inputs are combined and transformed into output. Production technology relates inputs to outputs.

8. DISTINCTION OF GLOBALIZATION FROM INTERNATIONALIZATION Dicken (2004) distinguished economic globalization from internationalization by stating that the former is functional integration between internationally dispersed activities which the latter is about the extension of economic activities of nation states across borders. Hence, economic globalization is more on a qualitative transformation than just quantitative change.

9. Reich (1991) agrees that globalization transforms the national economy into a global one because for him there will be no national products or technologies, no national corporations, no national industries. Ohmae (1995) declared that states ceased to exist as primary economic organization units in the wake of a global market. On the contrary, Boyer & Drache (1996) admit that globalization is reducing the role of the nation state as an effective manager of the national economy. For them the state is the main shelter from the perverse effects of a free market economy.

10. Milner & Keohane(1996) they admit that the national economic policies and the structure of domestic institutions of states are not uniformly influenced by globalization. Freenstra (1998) New actors such as the United Nation(UN), non-governmental organization (NGOs) in a manner produces their new entrants as well in terms of economic globalization. Transnational corporation (TNCs) are some of the major players of the economy today. Business analysis says that TNCs are constantly evolving as they view that while economic integration is becoming more intensive, production disintegrates due to the outsourcing activity of multinational. According to Gereffi (1999), this move induced to develop the concept of global commodity chains; an idea that reflects upon the increasing importance of global buyers in a world of dispersed production.

11. The World Trade Organzation And GATT The General Agreement on Tariff and Trade - In 1947, 23 nations, including United States signed the General Agreement on Tariff and Trade (GATT). The 5Oth year of General Agreement on Tariffs and Trade was celebrated in 1997. GATT is a treaty among 123 nations whose goverment agreed, at least in principle, to promote trade among members.

12. • GATT is intended to be a multilateral, global initiative, and GATT negotiators did succeed in liberalizing world merchandise trade. • GATT had no enforcements power (the losing party in dispute was entitled to ignore ruling), and the process of dealing with disputes sontines stretch on for years. That is why some critics referred to GATT as the "general agreement talk and talk."

13. GATT was based on three principles • Equal, nondiscriminatory trade treatment for all member nations; • The reduction of tariffs by multilateral negotiations; and • The elemination of import quotas • Since the Second World War, member nations have completed "rounds" of GATT negotions to reduce trade barriers.

14. The World Trade Oraganization The successor to GATT, the World Trade Organization (WTO), cane in existence on January 1, 1995 The WTO provides a forum for trade-related negotiations. The WTO has a Dispute Settelement Body (DSB) that meditates complains about trade barriers and other issues between WTO members.

15. One of the WTO's first major tasks was hosting negotiations on the General Agreement on Trade in Services, in which 76 signatories made binding market access commitments in banking, securities, and insurance. Trade ministers representing the WTO members nations meet annually to work on improving world trade. For the year 2000, zero tariffs are now slated for 500 products, ranging from calculators, fax machines, and CD ROM drives to computer keyboara and ATM Machines.

16. The United States, Canada and several Asian countries benefitted the most because they are home for companies that command 80 percent of world trade in high-tech products. The agreement resulted in lower prices for businesses and consumers, especially in Asia and Europe, where tariffs had been relatively high.

17. Preferential Trade Agreement • A preferential trade agreementis a trading bloc that gives preferentialaccess to certain products from the participating countries. This is done by reducing tariffs but not by abolishing them completely.

18. Free Trade Areas A free trade area is formed when two or more countries agree to abolish all internal barriers to trade among themselves. Countries that belong to FTA can do and maintain independent trade policies with respect to non-FTA countries.

19. Customs Union A customs union represent the logical evolution of a free trade area. In addition to eliminating internal barriers to trade, members of a customs union establish common external union.

20. Common Market A common market is the next step in the spectrum of economic integration. In addition to the removal of barriers to trade and establishments of common external barriers. The common Market allows for free movements of factors of production, including labor, capital, and information.

21. North American Free trade Agreement (NAFTA) The North American Free Trade Agreement is a treaty between Canada, Mexico and the United States. That makes NAFTA the world's largest free trade agreement. ... The three signatories agreed to remove trade barriers between them. By eliminating tariffs, NAFTA increases investment opportunities. NAFTA was negotiated among the United States, Canada and Mexico for the purpose of removing barriers to the exchange of goods and services among the three countries.

22. Andean Community The Andean Community , formerly Andean Pact, was formed in 1969 to accelerate development of member states Bolivia, Colombia, Ecuador, Peru, and Venezuela through economic and social integration. Members agreed to lower tariffs on intragroup trade and work together to decide what products each country should produce.

23. Asia Pacific The Asia-Pacific Trade Agreement(APTA), previously known as the Bangkok Agreement and renamed 2 November 2005, was signed in 1975. ... Seven Participating States- Bangladesh, China, India, Lao PDR, Mongolia, Republic of Korea, and Sri Lanka are the parties to the APTA.

24. • APTA objective is to hasten economic development among the seven participating states opting trade and investment liberalization measures that will contribute to intra-regional trade and economic strengthening through the coverage of merchandise goods and services, synchronized investment regime and free flow of technology transfer making all the Participating States to be in equally winsome situation.

25. The Association of Southeast Asian Nations(ASEAN) ASEAN is a flagship preferential trade agreement in the Asia Pacific Area. ASEAN established in 1967 as an organization for economic, political, social, cultural cooperation among its members. The six original members are Brunei , Indonesia, Malaysia, Philippines, Singapore, and Thailand.

26. The European Union The six original members of the European Union are Belgium, France, Holland, Italy, Luxembourg, and West Germany. The objective of the EU member countries is to harmonize national Laws and regulations so that goods, services, people, and eventually money can flow freely across national boundaries.

27. The Middle East The Middle East includes 14 countries namely Afghanistan, Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, United Arab Emirates, and The Reunified of Yemen. The ultimate goal is a fully developed customs union; however, real progress integration has been slow.

28. Gulf Cooperation Council (GCC) The (GCC) which was established in 1981 in Riyadh, in May 1981 by Bahrain, Kuwait, Oman, Saudi Arabia, Qatar, and the United Arab Emirates. The purpose of the GCC is to achieve unity among it's members based on their common objectives and their similar political and cultural identities, which are rooted in Islamic beliefs. Presidency of the council rotates annually.

29. Ecomomic Cooperation of West African States It was signed in 1975 by 15 states with the object of promoting trade, cooperation and self-reliance in West Africa. The member countries agreed to establish a free trade area for unprocessed products and handicrafts.

30. South African Development Community (SADC) In 1992, the SADC superseded the South African Development Coordination Council as a mechanism by which the region's balck-ruled stated could promote trade, cooperation, and economic integration.

31. Organization of the Petroleum Exporting Countries (OPEC) It is an intergovernmental organization of oil-exporting developing nations that coordinates and unifies the petroleum policies of it's member countries.

32. The Bretton Woods System In July 1944, delegates from 44 countries gathered in Bretton Woods, New Hampshire to start negotiations about a new international monetary regime in the framework of the United Nations Monetary and Financial Conference. The delegates of 44 countries maintained to agree on adopting new peg system the gold-exchage standard.

33. DEVELOPING COUNTRIES & INTERNATIONAL TRADE When the united nations conference on trade and development (UNCTD) came into being in 1964 that was the first major change in the state of affairs of developing nations. -Promote trade and cooperation between the developing and developed nations.

34. The developed countries were expected to open their markets. Developing countries have opened up their service markets, their exports of agricultural products are still blocked by advanced nations.

35. SOME KEY TRADE FACTS A trade deficit and surplus occurs when imports exceed exports. Canada is the United States most important trading parted quantitatively. China has become a major international trader, with an estimated $2.05 trillion of exports in 2012. International trade is often at the centre of debates over economic policy.

36. TRADE BARRIERS & EXPORT SUBSIDIES Tariffs are excise taxes or “DUTIES” on the physical quantities of imported goods. Revenue tariff is usually applied to a produced domestically. Protective tariff is implemented to shield domestic producers from foreign competitions. Import Quota is a limit on quantities or total values of specific items that are imported in some period. Export Subsidy consists of a government payment to a domestic product or export goods and is designed to aid that producer .

37. THE WORLDS BIGGEST ECONOMIES 2018 (in trillion US$) RANK AND COUNTRY 2017 2018 1. United States 18 20.4 2. China 11 14 3. Japan 4.4 5.1 4. Germany 3.4 4.2 5. United Kingdom 2.9 2.94 6. France 2.4 2.93 7. India 2.1 2.85 8. Italy 1.8 2.18 9. Brazil 1.8 2.14 10. Canada 1.6 1.8

38. The McDonaldization of Society George Ritzer introduced the concept of McDonaldization with his 1993 book, The McDonaldization of Society. Since that time the concept has become central within the field of sociology and especially within the sociology of globalization.

39. According to Ritzer, the McDonaldization of society is a phenomenon that occurs when society, its institutions, and its organizations are adapted to have the same characteristics that are found in fast food chains. These include efficiency, calculability, predictability and standardization, and control. According to Ritzer, changes within science, economy, and culture have shifted societies away from Weber's bureaucracy to a new social structure and order that he calls McDonaldization. As he explains in his book of the same name, this new economic and social order is defined by four key aspects.

40. Efficiency entails a managerial focus on minimizing the time required to complete individual tasks as well as that required to complete the whole operation or process of production and distribution. Calculability is a focus on quantifiable objectives (counting things) rather than subjective ones (evaluation of quality).

41. Predictability and standardization are found in repetitive and routinized production or service delivery processes and in the consistent output of products or experiences that are identical or close to it (predictability of the consumer experience). Finally, control within McDonaldization is wielded by the management to ensure that workers appear and act the same on a moment-to-moment and daily basis. It also refers to the use of robots and technology to reduce or replace human employees wherever possible.

42. The Downside of McDonaldization After laying out how McDonaldization works in the book, Ritzer explains that this narrow focus on rationality actually produces irrationality. He observed, "Most specifically, irrationality means that rational systems are unreasonable systems. By that, I mean that they deny the basic humanity, the human reason, of the people who work within or are served by them." Many have no doubt encountered what Ritzer describes here when the human capacity for reason seems to be not at all present in transactions or experiences that are marred by a rigid adherence to the rules and policies of an organization.