Globalization and BGS Relationships Part 5 Chapter Thirteen Globalization and BGS Relationships

Chapter Thirteen Learning Objectives Define Globalization Examine the phenomenon of Globalization, the Pros and Cons Learn how US Corporations adopted to Globalizations competitive threats Familiarize ourselves with major global trade agreements Examine current trends in the world economy Understand what it takes to have a capitalism that works

Globalization: a definition “Globalization is the expansion and intensification of linkages and flows – of people, goods, ideas and cultures – across national borders.” Bosworth and Gordon Brookings Review

Globalization: Pro and Con PRO: Creates enormous riches and wealth and higher standards of living for millions of people. CON: “The essence of globalization is a subordination of human rights, of labor rights, consumer rights, environmental rights, democracy rights, to the imperatives of global trade and investment.” Ralph Nader

U.S. Corporate Response to Competitive Threats Partnerships with suppliers Coordination of functional departments Outsourcing Increasing foreign direct investments Improving productivity Forming combinations with other companies Mergers and acquisitions Alliances Consortiums Expanding regional trade agreements

Major Global Trade Agreements European Union NAFTA MERCOSUR APEC

European Economic and Monetary Union Members AUSTRIA BELGIUM DENMARK* FINLAND FRANCE GERMANY GREECE IRELAND ITALY LUXEMBOURG NETHERLANDS PORTUGAL SPAIN SWEDEN* UNITED KINGDOM* * Not a MONETARY UNION member. GREECE joined the EMU effective January 1, 2001.

North American Free Trade Agreement Members CANADA MEXICO UNITED STATES

ARGENTINA BRAZIL PARAGUAY URUGUAY MERCOSUR Members ARGENTINA BRAZIL PARAGUAY URUGUAY GDP in excess of $1 TRILLION (half of all Latin America)

Asia-Pacific Economic Cooperation Members AUSTRALIA BRUNEI DARUSSALAM CANADA CHILE PEOPLE’S REPUBLIC OF CHINA HONG KONG, CHINA INDONESIA JAPAN KOREA MALAYSIA MEXICO NEW ZEALAND PAPUA NEW GUINEA PERU PHILIPPINES RUSSIA SINGAPORE CHINESE TAPEI THAILAND UNITED STATES VIETNAM

Current Trends in the World Economy Expanding globalization Increasing global competition Expanding global trade agreements Financial instability Spread of capitalism Erosion of nation-state sovereignty Erosion of cultures

Capitalism That Works Must Have Certain Fundamental Structural Arrangements in Place: Trustworthy financial system Bankruptcy courts Antitrust laws A minimum social security net Limited government regulation An efficient tax system An acceptance of the idea of private property A legal system that protects private property An assumption of private enterprise responsibilities to workers and communities