Globalisation (1)

Globalisation (1)

1. Global markets comprise of industry goods, not consumer markets

2. Gives opportunity to compete more effetively if they can lower cost structures or perhaps improve the quality of their products

   • Technological advancements: Internet makes outsourcing easier and again cost effective

3. problems of globalisation include:

   • Formal & informal barriers to trade
     • barriers to foreign direct investment
       • Transportation costs
         • issues associated with economics/politicial risks

4. Phases of globalisation

   • 1st: 1830-80 Aided by railroads and other transportation which allowed for a rise in manufacturing and trade
     • 2nd: 1900-20s Fulled by electricity & steel, begin to see early MNEs
       • 3rd: 1948-70s GATT & end of WW2 shows a gradual reduction of barriers to trade
         • 4th: 1980-2007 technological advancements: internet shows a rapid liberalisation in emerging markets

5. Institutions were put in place to help manage, regulate & police the global market place:

   • General Agreement on Tariffs and Trade (GAFF)
   • World Trade Organisation (WTO)
     • Responsible for policing the world trading system, facilitating the establishment of additional multinational agreements & making sure nations stick to the rules laid down in trade treaties. In 2009 collectively had 153 nations. It promotes lowering barriers to cross-border trade & investment.
   • The International Monetary Fund (IMF) & World Bank
     • Both created in 1944 by 44 nations. IMF set up to maintain order in the international monetary system. Acts as a last resort lender to economies that are turmoil or where the currency is losing value - Mexico. In more recent times it has helped nations cope with the financial crises. IMF loans come with strings, in return for the loans the IMF requires nations to adopt specific policies aimed at returning to economies of growth and stability. WB was set up to promote economic development, focuses on making low-interest loans to poor nations that want to invest in infrastructure (roads).
   • United Nations (UN)
     • Established in 1945 by 51 countries to preserve peace it now has 191 countries. To join a nation must abide by certain rules: peace & security, develop friendly relations and cooperate in solving international problems. Main focus is geared towards
       • G20: 1999 comprising of finance ministers from the 19 largest economies with representatives from the EU & central bank to help redevelop the economies of nations hit serverly by the recession.

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