1. Globalization Theme: Impact of globalization and related responses and related responses

2. Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected? How does globalization affect the world economy?

3. It brings about a tremendous flow of capital and finance, as well as cross- border production and trade. It brings about advancement in communications and transport technologies. Global institutions serve as platforms for different countries to trade. How does globalization affect the world economy? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected?

4. Transnational economic activities increase. The global markets are closely linked. How does globalization affect the world economy? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected?

5. What is ‘economic globalization’? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected?

6. International Monetary Fund Through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology, the economic interdependence of countries worldwide is growing. What is ‘economic globalization’? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected?

7. In short, economic globalization refers to… the expansion and intensification of economic interrelations across the globe. What is ‘economic globalization’? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected?

8. What are the factors facilitating economic globalization? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected?

9. Economic globalization Transport, information and communications technologies International institutions National governments facilitate What are the factors facilitating economic globalization? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected?

10. Since the advancement of technologies, such as the invention of the Internet, satellites, fiber optic cables, etc., which facilitated spontaneous communications around the world, the costs of cross-border trade have been lowered. What are the factors facilitating economic globalization? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected? Transport, information and communications technologies

11. The General Agreement on Tariffs and Trade (GATT), the World Trade Organization (WTO), the International Monetary Fund (IMF), etc. are working towards the lifting of barriers to trade and investment and offering currency support to various countries. National governments recognize the need for extensive use of market incentives for economic success. What are the factors facilitating economic globalization? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected? International institutions National governments

12. What are the changes to the global economic order? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected?

13. Bretton Woods Conference The Bretton Woods system was the first example of a fully negotiated monetary order intended to govern monetary relations among independent countries. It was regarded as a milestone for international relations and the progress of globalization. What are the changes to the global economic order? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected?

14. The Bretton Woods Agreements The major economic powers of the global North agreed to establish binding rules on international economic activities. They attempted to create a more stable money exchange system. The value of each country’s currency was pegged to the US dollar. The value of the US dollar was pegged to a fixed gold value. What are the changes to the global economic order? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected?

15. The Bretton Woods Agreements IMF facilitated International Bank for Reconstruction and Development GATT Countries in the North even took a step forward to establish the North American Free Trade Agreement (NAFTA). Including: The establishment of international institutions What are the changes to the global economic order? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected?

16. Under globalization, what are the changes in trade and production? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected?

17. Economic globalization ‧ Economic systems of various countries are interlinked. ‧ A number of goods and services have emerged in the global markets. Global competition has transcended national borders. Corporations have to increase their global competitiveness. ‧ Cut costs ： Search for the cheapest labour and raw materials. ‧ Maximize productivity. ‧ Try to capture the largest possible global market share. Relocate different stages of production to different locations around the world. Global commodity chains / global sourcing Under globalization, what are the changes in trade and production? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected?

18. It refers to a mode of production in which different stages of the production of a commodity are carried out in different locations on the globe. Under globalization, what are the changes in trade and production? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected?

19. Draws the needed resources from all over the world, rather than being restricted to a single country or region. Benefits ＞ Costs  Financial gains in corporations  Prevalence of global sourcing The costs saved from labour, raw materials, regulations and taxation The costs of transport between the various sites in the global production chain Benefits Costs Under globalization, what are the changes in trade and production? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected?

20. How can patterns of employment and consumption become globalized? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected?

21. They are often odd, part-time and temporary jobs. The benefits and wages are less than those of permanent jobs. The mode of employment is flexible. To increase global competitiveness, corporations tend to employ flexible labour. ‘Flexible’ labour How can patterns of employment and consumption become globalized? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected?

22. Global trade linked up the global markets, and  the integration of commodity markets has since become increasingly visible. They can be found everywhere in the world! Globalized patterns of consumption How can patterns of employment and consumption become globalized? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected?

23. The popularity of information technology  changed the consumption patterns. Shopping is no longer restricted by time and space. Online shopping has become popular. E-commerce on the Internet has expanded from less than US$3 billion in 1996 to nearly US$6.8 trillion in 2004. How can patterns of employment and consumption become globalized? Exploration Journey 1: Are global markets closely connected? connected? Exploration Journey 1: Are global markets closely connected? connected? Globalized patterns of consumption

24. E-Commerce (EC) refers to the buying and selling of products or related services electronically on the Internet, a corporation’s intranet or a value-added network. It is the practice of engaging in traditional business activities through a network or electronic system. E-Commerce includes e-currency exchange, supply chain management, electronic trading markets, network marketing, online transaction processing, electronic data interchange, inventory management, automatic data collection systems, etc.

25. How do finance and capital flow around the world? 2 Exploration Journey

26. Exploration Journey 2: How do finance and capital flow around the world? around the world? Exploration Journey 2: How do finance and capital flow around the world? around the world? Can a currency be circulated all around the world?

27. Can a currency come into circulation all around the world? The liberalization of financial transactions, and the privatization of state-owned banks and financial institutions, are part of the globalization of the flow of finance and capital. Globalization of the flow of finance and capital is manifested in: 1. Global money 2. Global financial market Exploration Journey 2: How do finance and capital flow around the world? around the world? Exploration Journey 2: How do finance and capital flow around the world? around the world?

28. Facilitates global production, global markets and global travel. US Dollar Japanese Yen British Pound Example: Exploration Journey 2: How do finance and capital flow around the world? around the world? Exploration Journey 2: How do finance and capital flow around the world? around the world? Can a currency come into circulation all around the world?

29. Global credit cards become common. Currencies of different countries can be stored at once in the form of digital money. Capital can be circulated more quickly around the world. Exploration Journey 2: How do finance and capital flow around the world? around the world? Exploration Journey 2: How do finance and capital flow around the world? around the world? Can a currency come into circulation all around the world?

30. ‧ Through electronic communication, securities trading can be done anywhere in the world. This facilitates the emergence of the global financial market. ‧ International financial centres, such as New York, Sydney, Tokyo, Hong Kong and London, are located in different time zones. The global financial market, which is constituted by them, can be under operation 24 hours a day. This facilitates globalization of the flow of finance and capital. Exploration Journey 2: How do finance and capital flow around the world? around the world? Exploration Journey 2: How do finance and capital flow around the world? around the world? Can a currency come into circulation all around the world?

31. Each financial centre is located at a different time zone. Together, they constitute a 24-hour global financial market. Exploration Journey 2: How do finance and capital flow around the world? around the world? Exploration Journey 2: How do finance and capital flow around the world? around the world?

32. Are transnational corporations bridges or barriers to globalization? 3 Exploration Journey

33. Exploration Journey 3: Are transnational corporations bridges or barriers to globalization? bridges or barriers to globalization? Exploration Journey 3: Are transnational corporations bridges or barriers to globalization? bridges or barriers to globalization? Are transnational corporations the cause or the outcome of globalization?

34. Globalization Global rules regulating the flow of goods and investment have been relaxed. Information and transport technologies have become advanced. The profits earned from placing different production lines in different places are higher than the production costs. Transnational corporations became popular. Operation strategies are led by the global market. Look for the cheapest raw materials, labour and factories in the world. Strengthen the connection between the economies of different places. Sell the manufactured products to different places in the world. Strengthen the cultural exchange between different places. Exploration Journey 3: Are transnational corporations bridges or barriers to globalization? bridges or barriers to globalization? Exploration Journey 3: Are transnational corporations bridges or barriers to globalization? bridges or barriers to globalization?

35. Hong Kong also has locally established transnational brands; Giordano is one of the examples. In 1981, Mr. Jimmy Lai Chee-ying founded Giordano. By now, Giordano has become one of the most well-known clothing retailers in the Asia Pacific region. At present, Giordano has more than 1,900 shops over 30 regions in the world, with more than 8,000 staff members employed.

36. How strong are transnational corporations? Exploration Journey 3: Are transnational corporations bridges or barriers to globalization? bridges or barriers to globalization? Exploration Journey 3: Are transnational corporations bridges or barriers to globalization? bridges or barriers to globalization?

37. Giant transnational corporations dominate global trade in terms of goods and services. For example: Banking Insurance Computers How strong are transnational corporations? Exploration Journey 3: Are transnational corporations bridges or barriers to globalization? bridges or barriers to globalization? Exploration Journey 3: Are transnational corporations bridges or barriers to globalization? bridges or barriers to globalization?

38. In 2000, 51 out of the largest 100 economies in the world were operated by companies, not nations. Many global corporations now hold more economic power than individual countries. How strong are transnational corporations? Exploration Journey 3: Are transnational corporations bridges or barriers to globalization? bridges or barriers to globalization? Exploration Journey 3: Are transnational corporations bridges or barriers to globalization? bridges or barriers to globalization?

39. Why do transnational corporations undergo mergers and acquisitions? Exploration Journey 3: Are transnational corporations bridges or barriers to globalization? bridges or barriers to globalization? Exploration Journey 3: Are transnational corporations bridges or barriers to globalization? bridges or barriers to globalization?

40. ‧ Get rid of a competitor and maintain global competitiveness through mergers and acquisitions. ‧ Cross-border acquisition has given many companies a means of quick entry into a target country. E.g., Coco-Cola Company intended to acquire China Huiyuan Juice Group Limited ( 中國匯源果汁有限公司 ) to enter China’s beverage market. E.g., Lenovo Group Limited acquired IBM’s PC Division to maintain its competitiveness in China’s computer market. Why do transnational corporations undergo mergers and acquisitions? Exploration Journey 3: Are transnational corporations bridges or barriers to globalization? bridges or barriers to globalization? Exploration Journey 3: Are transnational corporations bridges or barriers to globalization? bridges or barriers to globalization?

41. ‧ A handful of giant TNCs now dominate many sectors, leading to oligopoly. E.g., In the mid-1990s, the following sectors were dominated by the 5 largest companies: Percentage in global market Consumer durables 70% Air travel 60% Aircraft manufacture 50% Global media 40% Electronic and electrical equipment 50% Why do transnational corporations undergo mergers and acquisitions? Exploration Journey 3: Are transnational corporations bridges or barriers to globalization? bridges or barriers to globalization? Exploration Journey 3: Are transnational corporations bridges or barriers to globalization? bridges or barriers to globalization?

42. Is the role of international economic organizations becoming stronger? 4 Exploration Journey

43. Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger? Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger? Are international economic organizations multifunctional?

44. World Trade Organization International Monetary Fund Organization for Economic Co-operation and Development Three big global economic institutions Global economic institutions Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger? Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger?

45. Background Settling trade disputes Reviewing national trade policies Duties/ Objectives Acting as a forum for trade negotiations Monitoring the enforcement of trade agreements Assisting developing countries in trade policy issues, through technical assistance and training programmes Cooperating with other international organizations By 2008, there were over 150 member states Mainly addressing concerns with cross-border exchange of goods Established in 1995, and based in Geneva World Trade Organization Global economic institutions Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger? Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger?

46. Background Duties / Objectives Established in 1946, and based in Washington D.C. Undertaking comprehensive and detailed surveillance of economic performance of its 185 member states annually, and of the world economy as a whole biannually. Facilitating the expansion and balanced growth of international trade Promoting exchange rate stability Promoting international monetary cooperation Assisting in the establishment of a multilateral system of payments International Monetary Fund Sponsoring over 80 countries to restructure their economies Making its resources available to members experiencing balance of payments difficulties Global economic institutions Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger? Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger?

47. Background Duties / Objectives Established in 1961, and based in Paris Having 30 member states Boosting employment Raising living standards Maintaining financial stability Assisting other countries’ economic development Organization for Economic Co-operation and Development Supporting sustainable economic growth Contributing to growth in world trade Global economic institutions Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger? Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger?

48. ‧ Neighbouring countries form regional economic blocs due to common economic interests. ‧ The aims of the blocs are to strengthen economic cooperation within the region and use preferential policies to encourage the member states to conduct economic activities, such as trade and investment. Global economic institutions Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger? Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger?

49. The European Union The North American Free Trade Area The Asia-Pacific Economic Cooperation The Association of Southeast Asian Nations Major regional economic blocs Global economic institutions Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger? Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger?

50. ‧ Various European countries moved towards unifying their European economies. ‧ After the Second World War, both the Eastern and Western European countries thought that the best way to achieve post- war reconstruction was to help one another by gathering the forces and resources of all countries. ‧ Eastern Europe and Western Europe in turn established the Council for Mutual Economic Assistance, the Organization for European Economic Cooperation and the like. ‧ The European Union (EU) was established in 1993. ‧ They adopt a single currency ──the euro. ‧ They remove barriers of trade among them. ‧ They speak in the international arena in the same tone. ‧ They coordinate their laws and systems and cooperate in technological research and development. ‧ The establishment of the EU has also had a huge impact on the integration of European countries in the political, social and cultural aspects. The European Union (EU) BackgroundSpecial features Global economic institutions Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger? Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger?

51. Special featuresBackground The North American Free Trade Area (NAFTA) ‧ The North American Free Trade Agreement came into effect in January 1994. ‧ The Agreement stipulates that the US, Canada and Mexico shall remove all trade barriers in 15 years. ‧ It is the second largest free trade area in the world. ‧ Goods can flow freely within these countries and enjoy the benefit of zero tariffs. ‧ Meanwhile, the three countries also work together to remove non-tariff barriers, such as quotas and foreign exchange controls. Global economic institutions Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger? Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger?

52. BackgroundSpecial features The Association of Southeast Asian Nations (ASEAN) ‧ In 1967, The Association of Southeast Asian Nations (ASEAN) was established. ‧ Since the mid-19th century, many Southeast Asian countries became colonies of Western countries. ‧ After the Second World War, many Southeast Asian countries started decolonization movements and became independent. ‧ Then, these countries realized that they had to make an effort to promote cooperation between the newly independent countries. ‧ ASEAN was established with only five founding countries. The number of members increased to ten by the end of 2009. ‧ Except for East Timor, all Southeast Asian countries had joined the Association. ‧ ASEAN members cooperate closely on economic, political, social and cultural aspects. Global economic institutions Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger? Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger?

53. BackgroundSpecial features The Asia-Pacific Economic Cooperation (APEC) ‧ It was established in 1989. ‧ It is an informal forum between governments. In the forum, senior officials discuss trade and economic affairs. ‧ The economic leaders of the member economies hold a conference every year to exchange ideas on economic affairs. ‧ APEC also holds a ministerial meeting every year to evaluate the organization’s work in the past year and to decide the way forward. Global economic institutions Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger? Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger?

54. What are the limitations faced by international economic organizations? Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger? Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger?

55. Double standards Limited enforcement Poor coordination between institutions Understaffing Underfunding A lack of legitimacy Common problems What are the limitations faced by international economic organizations? Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger? Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger?

56. They do not attend to the benefits and needs of all countries. The number of members of the regional trading blocs affects the representation of the blocs. Global economic institutions Regional economic blocs What are the limitations faced by international economic organizations? Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger? Exploration Journey 4: Is the role of international economic organizations becoming stronger? organizations becoming stronger?

57. -The end-