1. Marvin Zonis, Professor Graduate School of Business University of Chicago zonis@mza-inc.com MZA eCommerce, Globalization, and Deregulation GSB 383

2. 1 MZA  Globalization  Technology  Consolidation of market economies: the spread of market- friendly reforms  The reduction of strategic challenges The Global Drivers

3. 2 MZA The Global Drivers  Demography  The Withering away of the State  Failed States  The Miracle of Economic Growth

4. 3 MZA Globalization Definition of Globalization - I  The “growing economic interdependence of countries worldwide through the increasing volume and variety of crossborder transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology.” -International Monetary Fund

5. 4 MZA Globalization Definition of Globalization - II Globalization also entails the greater movement of people across national borders and the relentless rise of similar standards across the globe. The increasing similarity of standards is driven by the diffusion of technology and the diffusion of American popular culture and by the dictates of industrial and commercial economic organizations. But the central element of globalization is that it is driven by companies in their relentless search for market share and profits. Companies are at the heart of globalization.

6. 5 MZA Globalization – How much? Capital flows to emerging markets $21 billion in 1970$190 billion in 2000 Foreign direct investment flows $44 billion in 1970$865 billion in 1999 International refugees1.4 million in 196122.3 million in 1999 World trade$311 billion in 1950$7.5 trillion in 2000 International NGOs and Non-Profits 985 in 195640,000 in 2000 Sources: UN World Investment Report, Institute for International Finance,UNCTAD, UN High Commission on Refugees, IMF World Economic Outlook, Union of International Assoc.,World Health Org

7. 6 MZA Real Economic Growth % Source: US Dept of Commerce

8. 7 MZA Globalization: How Much? Capital Flows to US

9. 8 MZA Globalization: How Much? Portfolio Flows to US

10. 9 MZA FDI in the US 19981999 2000 I 2000 II 2000 III 2000 IV 2000 Total All countries 181,764 271,169 47,94699,96872,35791,628 311,899 European Union 153,572228,07 9 34,33973,21957,96655,174 220,697 Japan 7,5639,529 -5461,3286,9704,959 12,710 In Millions of dollars; not seasonally adjusted; outflows(-) Source: US Dept of Commerce, Bureau of Economic Analysis

11. 10 MZA USA: Current Account & Saving Rate Source: Deutsche Bank

12. 11 MZA Growth in USA IT Investment Source: Leto Research

13. 12 MZA The Disruptions from Globalization Globalization is everywhere disruptive Globalization disrupts ideologies Globalization disrupts economies Globalization diminishes national sovereignty Globalization disrupts ways of living

14. 13 MZA The Rise of Technology Source: Robert Fogel

15. 14 MZA Exponential Growth: Technology Source: Robert Fogel

16. 15 MZA Technology: The Internet – Years to Obtain 50 Million Users

17. 16 MZA The Digital Economy: What Does It Do?  Kills Geography  Kills Time  Allows new entrants  Shifts power from buyers to sellers  Kills transaction costs  Enables new business processes  Ultimate instrument of democracy

18. 17 MZA The Digital Economy: What Does It Do?

19. 18 MZA The Digital Economy: Kills time

20. 19 MZA The Digital Economy: Allows for New Entrants  2000The New Yorker Collection from cartoonbank.com. All rights reserved

21. 20 MZA The Digital Economy: Shifts power from buyers to sellers Amazon.com apologizes September 27, 2000

22. 21 MZA The Digital Economy: Kills transaction costs

23. 22 MZA The Digital Economy: Enables New Business Processes

24. 23 MZA The Digital Economy: Ultimate instrument of democracy

25. 24 MZA  Internet users per 1000 people (1998): The Digital Economy

26. 25 MZA Internet Users Growth Projected Growth, 1999-2005:

27. 26 MZA The Digital Economy Internet Generated Revenue 1996-2002:

28. 27 MZA Number of Web Sites Number of web sites 1993-1999:

29. 28 MZA Online Languages Percentage of web pages per language:

30. 29 MZA  Registered hosts on the Internet : Source: Matrix information and Directory Services The Digital Economy