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BREXIT Unit 1 IBE.pptx

  1. Economic globalization • Introduction:- • The process of integration and interlinking of the various economies of the world because of the cross border movement of foreign capital, the rapid spread of technologies, commodities, products and services is defined as the economic globalization. • The two critical forces for economic globalization are the marketization and the rapid growing information importance in all types of productive activities. • The key agents of economic globalization have been Multinational Companies.(MNC).
  2. FEATURES OF ECONOMIC GLOBALISATION • 1. Emergence of Global Commodity Chains:- • As there are more multinational networks ranging from the raw materials to end users, production is gradually globalised. • 2. Role of Transnational Corporations is Particularly Important:- • Transnational companies are those that have production facilities in more than one country. • The orientations of these companies are international products and markets. • Some of these organizations are global brands like Mc Donald’s, Coco- Cola, Pepsi, Reebok ,etc. • The annual revenue of giant TNC’s is higher than the middle income country’s economic output.
  3. • 3. Global Economy is Post Industrial:- • Rather than tangible, physical products like cars, food or clothing, they are more likely to be based on information or electronics like information services or music and films and as a result it is increasingly weightless. • 4. Electronic Economy Underpins Globalization:- • The world of finance has also gained through technology. • Banks and financial corporations can now do large financial transactions across national boundaries in a matter of seconds. • The economic crises can be triggered by the transfer of a large sum of capital.
  4. Consequences of economic globalization • 1. Increase North South Divide:- • In 1999, UN published a report which states that less than 20 developing countries have been benefited from economic globalization. • From 1960 to current the difference of per capita income between the poorest and richest country has been increased to 70 times from 30 times. • 2. Weakened Macroeconomic Control:- • The economic safety and financial stability of developing nations has been enormously impacted by a large global floating capital volume with a quick financial assets expansion, continuous financial instruments innovation and the trend of global capital privatization.
  5. • 3. Increased Financial Vulnerability:- • Perhaps the international finance field and especially the issue of short term capital flows, financial crises and the cross national dissemination of those crises most vividly demonstrates this combination of rapid globalization of economies. • 4. Shift in Production Facilities:- • The nature of global product cycle is also changed and also the global location of manufacturing becomes more fluid because of the economic globalization. • Now because of fewer restrictions on foreign direct investments and global trade, the location of new product manufacturing tends to be changing more to less developed nations from the developing nations. • 5. Increased External Demand Vulnerability:- • Global specialization in manufacturing is nurtured by economic globalization. • With increasing globalization, a high extent of specialization occurs in nations producing few resources with few differences.
  6. • 6. Environmental Degradation:- • Especially, in the developing world, one of the consequences of economic globalization is environmental degradation. • This is because it generates demand for economic reform, industrialization and urbanization in countries with limited ability to ensure adequate conservation of the environment. • 7. Diminishing Employment:- • In various sectors employment opportunities, particularly for the skilled employees has been increased by the arrival of international companies in developing nations. • The requirements for unskilled workers are lessened and unemployment is increased in those sectors.
  7. • 8. Widening disparity in Incomes:- • The gap in wages between the educated and uneducated workers has been increased along with reduction in entire poverty and unemployment because of the entry of foreign firms and foreign capital. • As the developing country’s financial health improves, the level of education increase over the longer term but some poorer will become more poor in short term.
  8. PREVENTION OF NEGATIVE CONSEQUENCES OF ECONOMIC GLOBALIZATION • 1. Bigger Role of International Organization:- • In the economic globalization process the most critical role should be played by the global economic organization. • The vacancy of an agency for global economic supervision and control as well as the lagging behind the implementation of a regulatory framework is in contrast with accelerated economic globalization rate.
  9. • 2. Safeguarding the interests of Developing Countries:- • In the context of creating a new global economic system, the developing nation’s interests should be secured and their voices broadened. • The economic globalization trend that came into being and has evolved under circumstances that have not yet radically altered the old global economic order. • 3. Economic Reforms:- • The process of re-adjusting structure of economy and economic system reform needs to be intensified. • In the economic globalization era, the global competition is the competition on enterprise processes and economic systems.