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Globalization & Introduction

Globalization & Introduction. Three dimensions of globalization . Economic Globalization increasing cross-border trade in goods, services and financial capital. Cultural Globalization increasing movements of knowledge, culture and people across borders.

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Globalization & Introduction

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  1. Globalization & Introduction

  2. Three dimensions of globalization • Economic Globalization increasing cross-border trade in goods, services and financial capital. • Cultural Globalization increasing movements of knowledge, culture and people across borders. • Political Globalization increasing international governance

  3. Link

  4. Importance of Trade Grows Source: http://data.worldbank.org/data-catalog/world-development-indicators

  5. SOURCE: PRELIMINARY REPORT: 27 JULY 2011, BIS REPORTING BANKS HTTP://WWW.BIS.ORG/STATISTICS/BANKSTATS.HTM Perspectives on Financial Globalization

  6. SOURCE:GLOBALIZATIONFDI STATISTICSHTTP://STATS.OECD.ORG/INDEX.ASPX

  7. SOURCE: BIS QUARTERLY REVIEW: 'JUNE 2011TABLE 12A: INTERNATIONAL DEBT SECURITIES - ALL ISSUERS HTTP://WWW.BIS.ORG/STATISTICS/SECSTATS.HTM

  8. Perspectives on Globalization • Positive: Increases access, competition • Negative: Increases inequality, risk IMF: Link BirdsallLink

  9. Why Now? • Transportation and Communication costs declining. ( Containerization, Link; Fiber optic; New York Times) • Ideology (success of export led growth strategies, collapse of Soviet communism, post-Cold War dominance of Western countries).

  10. Comparative AdvantageExample • England is better at making both cloth and wine than Portugal. It has an absolute advantagein both products. But compared to other products, wine is the product in which Portugal is relatively strongest.

  11. If England makes 1 additional cask of wine, they give up the opportunity to make 3 bolts of cloth. If Portugal makes an additional cask of wine, they need only give up 1 bolt of cloth. This lower opportunity cost of producing wine in Portugal is a comparative advantage. • England has a comparative advantage in producing cloth. To make an additional bolt, they must only give up 1/3 of a cask of wine.

  12. If England trades 48 bolts of cloth to Portugal in exchange for 24 casks of wine, both countries can consume more of all goods. • Concentration on producing goods with comparative advantage and trading with others with different comparative advantage is mutually advantageous.

  13. Declining Tariff Rates

  14. Critiques • Free Trade May Create Winners and Losers • Comparative Advantage: Static Theory, Dynamic Development • Friedrich List/Alexander Hamilton – Infant Industry List

  15. B. Cultural Globalization Globalization Index

  16. Hollywood Movies a Global Business Princeton International Network Archive Link

  17. C. Political GlobalizationMultinational Institutions • We will draw data, research and analysis from global economic institutions. • Key activity of all institutions include policy advice; economic analysis, and technical assistance and training to member gov’ts • These institutions also important elements of global economic architecture.

  18. Banks: Some institutions act as banks, drawing funds from member countries and making loans. • International Monetary Fund (IMF) • World Bank • Bank for International Settlements (BIS) • Regional Development Banks • World Trade Organization (WTO)

  19. Link Key IMF activities The IMF provides : • Short-term loans to countries facing financial or currency crises • Support for G20

  20. Key World Bank Activities • Raises funds on world financial markets and makes low interest loans to national and regional gov’ts for infrastructure projects to promote development. • Receive donor funds and provide grants for improvement in health, education, environment or other social goals. Link

  21. http://treasury.worldbank.org/cmd/pdf/InvestorBriefsGlobalBonds.pdfhttp://treasury.worldbank.org/cmd/pdf/InvestorBriefsGlobalBonds.pdf

  22. http://www.bis.org/stability.htm Key BIS Activities • Act as a bank for central banks, holding foreign reserves and facilitating central bank transactions • Hosting Basel committees on financial stability Linkand disseminating results.

  23. Regional Development Banks • Development Banks fulfill same role as World Bank but with regional focus

  24. Organization for Economic Cooperation and Development provides information sharing on policies. Limited membership sometimes viewed as synonymous with developed country status. http://www.oecd.org

  25. Link to WTO Main Duties of World Trade Organization • Negotiate Trade Agreements • Review Trade Policies • Settle Trade Disputes

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