Driving Forces Behind Globalization and International Trade Georgia Council on Economic Education w w w . g c e e . o r g

Georgia Council on Economic Education Globalization The term was popularized by Theodore Levitt in his article, “Globalization of Markets”, published in the Harvard Business Review, 1983, May-June issue. Georgia Council on Economic Education w w w . g c e e . o r g

Georgia Council on Economic Education Globalization Five Factors – Increase in the Volume of Trade Mobility of Labor Changes in What is Traded Changes in Technology Changes in Trade Policies Georgia Council on Economic Education w w w . g c e e . o r g

Globalization: driving forces Dramatic growth in international trade. Between 1960 - 2002, US imports grew from 4.2% to 13.8% of GDP. Exports grew from 4.9% to 9.3% GDP. Since 1950, world trade has increased 20 fold. Between 1997-1999, world trade doubled from $468b. to $827b. Georgia Council on Economic Education w w w . g c e e . o r g

Globalization: driving forces Mobility of Labor In 2001, the US had 20 million immigrants, comprising 13.9% of the labor force—approximately twice as high as in the l970s Georgia Council on Economic Education w w w . g c e e . o r g

Net Migration Flow by Region, 1995-2000 Globalization: driving forces Net Migration Flow by Region, 1995-2000 Region North America Europe Oceania Africa Latin America/Caribbean Asia Source: UN Population Division Average Annual Net flow of migrants 1,394,000 769,000 90,000 -447,000 -494,000 -1,311,000 Georgia Council on Economic Education w w w . g c e e . o r g

Globalization: driving forces 3. Evolution of Trade Changes in what is traded Changes in how trade is conducted Growth of Multi-National Corporations Georgia Council on Economic Education w w w . g c e e . o r g

Fortune Global 500, 2006 Top 10, ranked by revenues Exxon Mobil Wal-Mart Stores Royal Dutch Shell BP General Motors Chevron DaimlerChrysler Toyota Motor Ford Motor ConocoPhillips Georgia Council on Economic Education w w w . g c e e . o r g

Globalization: driving forces 4. Changes in Technology Use of Internet and www Increased sales of PCs—almost 200% between 2000 and 2006 eCommerce—from $130.2 billion in 1999 to $1.640 trillion in 2003 Impacts worker productivity Georgia Council on Economic Education w w w . g c e e . o r g

Driving Forces of Trade Communication Technology

Globalization: driving forces 5. Changes in Trade Policies Freer trade—over 40 years, GATT lowered world-wide tariff rates from about 40% to 5% Open economies Trade agreements NAFTA ASEAN European Union Georgia Council on Economic Education w w w . g c e e . o r g

The Global Top 20— 2006 Rankings 1. Singapore 2. Switzerland 3. United States 4. Ireland 5. Denmark 6. Canada 7. Netherlands 8. Australia 9. Austria Sweden 11. New Zealand 12. United Kingdom 13. Finland 14. Norway 15. Israel 16. Czech Republic 17. Slovenia 18. Germany 19. Malaysia Hungary Source: www.atkearney.com Georgia Council on Economic Education w w w . g c e e . o r g

Blessing? …or Curse?

Some controversial issues Health Pandemics Migration Outsourcing/Off-shoring Cultural Differences Environmental Degradation Trade Deficit Global inequality: growth and poverty Protectionism Georgia Council on Economic Education w w w . g c e e . o r g

What does trade/globalization mean to me?

What it means to me…

Lilburn, Georgia Population 11,307…

International Businesses in Lilburn, Georgia Company Nation Products Binswanger Glass Company Mexico glass and glazing work Bull HN Information Systems, Inc. France computer hardware/software Ecotech Machinery, Inc. China grinding machines Ferguson Enterprises, Inc. United Kingdom plumbing & heating equipment Hailun Distribution pianos Shaw-Almex USA, Inc. Canada rubber vulcanizing T & R Enterprise USA, Inc. Taiwan vinyl and rigid film Thomas Concrete of Georgia, Inc. Sweden ready-mixed concrete

What it means to me…

A Global Transition In the last 20 years we have seen a major transformation of global economies and wealth. Numerous countries around the world have embraced free market principles.

Moscow, Soviet Union 1988

Moscow, Russia 2008

Old China

New China

Beijing, Los Angeles, Moscow 2009

Georgia Council on Economic Education What is Globalization? no commonly accepted definition means different things to different people a complex phenomenon which includes a variety of topics and issues Georgia Council on Economic Education w w w . g c e e . o r g

Globalization defined “a process of interaction and integration among people, companies and governments of different nations, a process driven by international trade and investments and aided by information technology. This process has effects on the environment, on culture, on political systems, on economic developments and prosperity and on human physical well-being in societies around the world.” Globalization101.org Georgia Council on Economic Education w w w . g c e e . o r g

Globalization defined “…the worldwide phenomenon of technological, economic, and cultural change as brought about by expanding facilities for intercommunication and interdependency between traditionally isolated cultures. The term refers to the overall integration, and resulting increase in interdependence, among global actors, be they political, economic, or otherwise.” http://en.wikipedia.org Georgia Council on Economic Education w w w . g c e e . o r g

Globalization defined “Globalization refers to increases in the degree of integration between national economies. Integration encompasses all of the ways national economies are connected in international markets, including trade in goods, services and ideas; international movements of the factors of production; and coordination of public policies.” Focus: Globalization, NCEE, 2006. Georgia Council on Economic Education w w w . g c e e . o r g

Georgia Council on Economic Education What is Globalization? THEN World trade has existed for centuries. NOW “Globalization is farther, faster, cheaper, and deeper.” - Thomas Friedman Georgia Council on Economic Education w w w . g c e e . o r g