introduction to globalization. what is globalization in general? hendrick van den berg: a process...

IntroductionIntroduction to Globalizationto Globalization

WhatWhat is Globalization in General?is Globalization in General?

Hendrick van den Berg: A Process that Hendrick van den Berg: A Process that expands international trade, investment, and expands international trade, investment, and migration relative to national output, migration relative to national output, investment, and population growth investment, and population growth

Thomas Friedman: The defining international Thomas Friedman: The defining international system that replaced the Cold War system that replaced the Cold War

World becoming smaller and fasterWorld becoming smaller and faster Increasing irrelevance of national bordersIncreasing irrelevance of national borders Flat worldFlat world

The Lexus and the Olive TreeThe Lexus and the Olive Tree Friedman’s 6 Dimensions (6 Ds)Friedman’s 6 Dimensions (6 Ds)

– PoliticsPolitics– CultureCulture– National SecurityNational Security– Economic & Financial MarketsEconomic & Financial Markets– TechnologyTechnology– EnvironmentalismEnvironmentalism

1. Political Changes1. Political Changes

Eastern EuropeEastern Europe– Berlin wall falls (November 9, 1989)Berlin wall falls (November 9, 1989)– Soviet Union breaks upSoviet Union breaks up– NATO expandsNATO expands– EU enlargesEU enlarges

ChinaChina– Openness (FDI, technology transfer, education)Openness (FDI, technology transfer, education)– Outsourcing of productionOutsourcing of production– Economic progress has shifted power toward citizensEconomic progress has shifted power toward citizens

IndiaIndia– OpennessOpenness– Outsourcing of services (English)Outsourcing of services (English)– Economic progress has shifted toward citizens in certain localitiesEconomic progress has shifted toward citizens in certain localities

2.2. CulturalCultural ChangesChanges

English spoken “everywhere”English spoken “everywhere” Internet allows current information to allInternet allows current information to all

– Hard for non-democratic governments to control Hard for non-democratic governments to control informationinformation

– Citizens see how others live and want it for Citizens see how others live and want it for themselvesthemselves

Empowerment of individualsEmpowerment of individuals– Phones access internetPhones access internet

3. National Security3. National Security

Breakup of Cold War SystemBreakup of Cold War System ““Empowered” individualsEmpowered” individuals

– WTO Millennium Round Protests in Seattle, WAWTO Millennium Round Protests in Seattle, WA– Eventually round resumed in Doha, QatarEventually round resumed in Doha, Qatar– TerroristsTerrorists

Osama bin LadenOsama bin Laden

4.4. EconomicEconomic and Financial Effectsand Financial Effects

Freer trade since 1947Freer trade since 1947– GATT/WTO dominance by US & ECGATT/WTO dominance by US & EC– System bias in favor of developed countriesSystem bias in favor of developed countries

Increased power for some multinational Increased power for some multinational corporationscorporations– Mergers & acquisitions (M&A)Mergers & acquisitions (M&A)

4. Economic and Financial Effects4. Economic and Financial Effects

Freer movement of capital (esp. since Freer movement of capital (esp. since 1970s)1970s)– TypesTypes

Foreign direct investmentForeign direct investment Financial investmentFinancial investment

– FactorsFactors Changes in rules by countriesChanges in rules by countries Technology allows instantaneous movement of Technology allows instantaneous movement of

capitalcapital

5. Technology5. Technology

Personal computersPersonal computers Software increasing productivitySoftware increasing productivity

– WorkersWorkers– Office staffOffice staff

Internet (hardware)Internet (hardware) World Wide Web (software)World Wide Web (software) Result: personal empowermentResult: personal empowerment

6. Environmentalism6. Environmentalism

Increased awareness of environmental Increased awareness of environmental issuesissues– Pictures and information on webPictures and information on web

Mobilization & coordination of environmental Mobilization & coordination of environmental activistsactivists– Seattle & Millennium RoundSeattle & Millennium Round

WhatWhat are Globalization’s Results?are Globalization’s Results?

– Increased prosperityIncreased prosperity Real per capita GDP (GNP) growth (average income)Real per capita GDP (GNP) growth (average income)

– +0.0001% per year for 200,000 years!+0.0001% per year for 200,000 years!– +0.05%, 1000-1820+0.05%, 1000-1820– +0.5%, 1820-1870 (industrial revolution)+0.5%, 1820-1870 (industrial revolution)– +1.3%, 1870-1913 (era of globalization)+1.3%, 1870-1913 (era of globalization)– +0.91%, 1913-1950 (isolationism & war)+0.91%, 1913-1950 (isolationism & war)– +2.93%, 1950-1973 (openness, again)+2.93%, 1950-1973 (openness, again)– +1.21%, 1820-1998+1.21%, 1820-1998

Globalization’sGlobalization’s Results, cont.Results, cont.

– DemocratizationDemocratization More individual control over own choicesMore individual control over own choices More information via technology (internet)More information via technology (internet) More & varied opportunitiesMore & varied opportunities

Globalization’sGlobalization’s Results, cont.Results, cont.

But…But…– Traditional lifestyles threatenedTraditional lifestyles threatened– Less stabilityLess stability– Lack of ability to control own livesLack of ability to control own lives

Increased competitionIncreased competition Increased dominance of large corporationsIncreased dominance of large corporations

World population in historic perspective

425265170

6057

0

1000

2000

3000

4000

5000

6000

-500 0 500 1000 1500 2000year

po

pu

latio

n (

mill

ion

)

Mongol invasions

Black death

30 years w ar, Ming collapse

Data sources: Kremer (1993, table 1) and U.N. World Population Prospects: The 2000 Revision (for the estimate of the year 2000; see http://www.un.org/popin.data.html )

© van Marrewijk, 2005© van Marrewijk, 2005

World population; UN projection

8919

0

2000

4000

6000

8000

10000

1800 1850 1900 1950 2000 2050

year

popu

latio

n (m

illio

n)

high estimate

low estimate

realisation projection

Data sources: Kremer (1993, table 1) and U.N. World Population Prospects: The 2002 Revision, see http://www.un.org/popin.data.html


Data source: Worldbank development indicators CD-ROM 2002. Data are for 177 countries; observations for Japan and the USA are outside the shown range; the dotted line is a 45 line.

Deviation between GDP and GNP, billion current $, 2000

0

500

1000

1500

2000

0 500 1000 1500 2000GDP

GN

P

Germany

United Kingdom

France

Italy

CanadaSouth Korea

Australia


GDP per capita, purchasing power parity correction (2000)

0

10000

20000

30000

40000

0 10000 20000 30000 40000GDP per capita PPP

GD

P p

er c

apita

cur

rent

$

USA

Japan

Russia


World GDP per capita (1990 international $), logarithmic scale

5,709

435444 667

1820100

1,000

10,000

0 500 1000 1500 2000

Data source: Maddison (2001, Table B-21)


Logarithmic graphs

1

10

100

1,000

10,000

1950 1960 1970 1980 1990 2000

A1

A3

B1

B2

B3

C1 C3


Leaders and laggards in GDP/capita; index relative to world average

0

100

200

300

400

500

1500 1600 1700 1800 1900 2000

Italy

Netherlands

United Kingdom

United States

Africa

China

Western Offshoots

Data source: own calculations based on Maddison (2001, table B-21).


Carrying capacity of merchant fleets, 1470-1780

0

200,000

400,000

600,000

800,000

1,000,000

1470 1570 1670 1780

Netherlands Germany Britain France Italy, Portugal, Spain

Source: Maddison (2001, p.77). Absence of a bar in a year for a particular country or group of countries indicates that no data are available.


Merchandise exports, % of GDP in 1990 prices

4.6

17.2

2.5

10.1

0.2

13.4

0

5

10

15

1870 1900 1930 1960 1990

world USA Japan

Data source: Maddison (2001, Table F-5)


price

quantity

A

Home import demand

Foreign export supply

BC

1

1

1

2

paF

pbH

paH

pbF

pc

qa qb qc

price

quantity

A

Home import demand

Foreign export supply

BC

1

1

1

2

paF

pbH

paH

pbF

pc

qa qb qc


1870 1910 1920 1930 19401890 19001880-10

-5

0

5

10

1870 1910 1920 1930 19401890 19001880-10

-5

0

5

10

Source: based on Obstfeld and Taylor (2003); the units are percentage points.


0.6

0.4

0.2

01860 1880 1900 19601920 1940 1980 2000

Foreign capital stocks; assets / world GDP0.6

0.4

0.2

01860 1880 1900 19601920 1940 1980 2000

Foreign capital stocks; assets / world GDP

Source: based on Obstfeld and Taylor (2003).


Relative annual immigration flows, 1870-1998 (per 1000)

-2

0

2

4

6

1870-1913 1914-1949 1950-1973 1974-1998

Western Europe Western Offshoots

Data source: net migration in the period (Maddison, 2001, Table 2-4) is divided by the

(simple) average population and length of the period, normalized per thousand

inhabitants


production block

country Afirm 1

inputs markets

production block 1

country Afirm 1

inputs

markets

production block 4

country Afirm 1

production block 3

country Cfirm 2

production block 2

country Bfirm 1

inputsinputs

inputs

I. traditional production process

II. globalized fragmented production process

service link

service link

service link

service link

production block

country Afirm 1

inputs markets

production block 1

country Afirm 1

inputs

markets

production block 4

country Afirm 1

production block 3

country Cfirm 2

production block 2

country Bfirm 1

inputsinputs

inputs

I. traditional production process

II. globalized fragmented production process

service link

service link

service link

service link


introduction to globalization. what is globalization in general? hendrick van den berg: a process...

Documents

globalization slide

personal empowerment

technology internet

countries technology

information citizens

technology transfer

globalizations results

cold war world