Globalization

 Meaning of globalization (mondalisation)

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 Why globalization
 Features of globalization
 Measurement of globalization
 Method and essential condition
 Advantage of globalization
 Disadvantage of globalization
 Impact of globalization on India
 Impact of globalization on under developing &
developing countries
 Meaning of GLOBALIZATION
“The whole world is market and everybody is buyer and seller.” taken from
W.S.

• a “borderless” world as goods, services, cultural products and ideas

travel across borders with relative ease.
• Vasudhaivh kutumbkum (the whole world is a family)
• “ the growing economic interdependence of countries worldwide
through increasing volume and variety of cross-border transactions
in goods and services, free international capital flows, and more
rapid and widespread diffusion of technology”. According to I.M.F
• Globalization in a literal sense is international
integration .
• refer to the expansion of economies beyond national borders
 Why globalization
• Factors to increase globalization-
1. Industrialization
2. Endless need
3. Worldly problem- Natural 2. Social
4. Communication networks
5. Collapse of communism
6. Growth of economics corporation (WTO,IMF,UNO etc.) free trade
 Method to measure globalization

• By using trade volume (export-import)

Endogenous variables are also part of e-i

• Non-tarrif barriers ratio

(trade tarrif may vary by year)
 Advantage
• Increased free trade between nations.
• Increased liquidity of capital allowing investors in
developed nations to invest in developing
nations.
• Corporations have greater flexibility to operate
across borders.
• Global media ties the world together.
• Increased flow of communications allows vital
information to be shared between individuals
and corporations around the world .
 Advantages
• Greater ease and speed of transportation for goods and
people.
• Reduction of cultural barriers ,increases the global
village effact.
• Spread of democratic ideals to developed nations .
• Greater interdependence of nation-states.
• Reduction of likelihood of war between developed
nations.
• Increases in environmental protection in developed
nations.
• Technology transfer from developed to developing
countries.
 Disadvantage of globalization
• Brain-drain
• Pollution
• Exploitation of natural resources
• Economic disruptions by other nations
• Greater chance of reactions for globalization being violent
in an attempt to preserve cultural heritage. (racial tension)
• Greater risk of diseases.
• Spread of materialistic lifestyle and attitude that sees
consumption as the path to prosperity.
• International bodies like the WTO infringe on national and
individual sovereignty.
……..Disadvantage of globalization
• Increase in the chances of civil war within
developing countries and open war between
developing countries as they vie for resources.
• Great competition for domestic companies in
developing countries.
• Investors have control on politics of country.
 Impact of globalization on India
• Evaluation of L.P.G.
• Opportunities in BPO,KPO,IT etc. sector
• International expansion of Indian companies,
products
• Increase in the manufacturing and export
• It reduces the poverty from 40% to 25%.
• It increased the FDI.
• It increased the competition for domestic
companies.
 Global forces affecting firms
Globalization of The rise of China
competition and India

The emergence of
Reform and
the knowledge,
governance Firm innovation, creative
pressures
economy

Resource The Internet/ IT

prices revolution
 World merchandise trade has been
growing much faster than world output

9000
8000
7000
6000
5000 GDP
4000 Exports
3000
2000
1000
0
1960 1966 1972 1978 1984 1990 1996 2002

Source: World Bank