1. Globalization and the Economy

2. What is Globalization?  The shift toward a more integrated and interdependent world economy  Two components:  The globalization of markets  The globalization of production  The shift toward a more integrated and interdependent world economy  Two components:  The globalization of markets  The globalization of production

3. Globalization of Production  Vizio flat panel TV is  designed in a small office in California  assembled in Mexico  From  panels made in South Korea  electronic components made in China  microprocessors made in the U.S.  Vizio flat panel TV is  designed in a small office in California  assembled in Mexico  From  panels made in South Korea  electronic components made in China  microprocessors made in the U.S.

4. Not just manufacturing…  Globalization of production has historically been about manufacturing  Increasingly companies are using modern communications to outsource service activities to low-cost nations  Globalization of production has historically been about manufacturing  Increasingly companies are using modern communications to outsource service activities to low-cost nations

5. Globalization of markets  In the past, each country had its own companies in many industries and its own products

6. Today everyone knows…  Nintendo  Starbucks  Coca-Cola  Ikea  McDonald’s  Samsung  Nintendo  Starbucks  Coca-Cola  Ikea  McDonald’s  Samsung

7. But the most global markets are for standard goods  Aluminum  Wheat  Microprocessors  Aircraft  For many consumer end-products, huge differences still exist among national markets  Entertainment, food, clothing  Aluminum  Wheat  Microprocessors  Aircraft  For many consumer end-products, huge differences still exist among national markets  Entertainment, food, clothing

8. Drivers of Globalization  Two factors underlie globalization  “Decline in barriers to the free flow of goods, services, and capital” that has occurred since the end of World War II  Technological change  Two factors underlie globalization  “Decline in barriers to the free flow of goods, services, and capital” that has occurred since the end of World War II  Technological change

9. Declining Trade and Investment Barriers  During the 1920s and ‘30s, many of nations erected formidable barriers to international trade and foreign direct investment international trade foreign direct investment  Advanced industrial nations of the West committed themselves after World War II to removing barriers to the free flow of goods, services, and capital between nations.  During the 1920s and ‘30s, many of nations erected formidable barriers to international trade and foreign direct investment international trade foreign direct investment  Advanced industrial nations of the West committed themselves after World War II to removing barriers to the free flow of goods, services, and capital between nations.

10. Average Tariff Rates on Manufactured Products 1913195019902002 France21 %18 %5.9 %4.0 % Germany20 %26 %5.9 %4.0 % Italy18 %25 %5.9 %4.0 % Japan30 %--5.3 %3.8 % Holland5 %1 %5.9 %4.0 % Sweden20 %9 %4.4 %4.0 % UK--4%5.9 %4.0 % US44 %14 %4.8 %4.0 %

11. Affects of Lowering Trade Barriers

12. The Role of Technology  Lowering of trade barriers made globalization possible;  Technology has made it a transforming movement  Lowering of trade barriers made globalization possible;  Technology has made it a transforming movement

13. Internet Usage Growth

14. Globalization is acceleration of trends of the last 10,000 years  People lived for 250,000 years in hunter-gatherer bands  Rise of agriculture 10,000 years ago led to rise of empires and nation-states  Science and ‘enlightenment’ after 1680 produced global trade and empires  Free trade and tech after 1980 produced globalization  People lived for 250,000 years in hunter-gatherer bands  Rise of agriculture 10,000 years ago led to rise of empires and nation-states  Science and ‘enlightenment’ after 1680 produced global trade and empires  Free trade and tech after 1980 produced globalization

15. The Emergence of Global Institutions Notable global institutions include  the World Trade Organization (WTO) which is responsible for policing the world trading system and ensuring that nations adhere to the rules established in WTO treaties  In 2008, 151 nations accounting for 97% of world trade were members of the WTO  the International Monetary Fund (IMF) which maintains order in the international monetary system Notable global institutions include  the World Trade Organization (WTO) which is responsible for policing the world trading system and ensuring that nations adhere to the rules established in WTO treaties  In 2008, 151 nations accounting for 97% of world trade were members of the WTO  the International Monetary Fund (IMF) which maintains order in the international monetary system

16. The Changing Roles of Countries in the Global Economy In the 1960s:  The U.S. dominated the world economy and the world trade picture  U.S. multinationals dominated the international business scene  About half the world-- the centrally planned economies of the communist world-- was off limits to Western international business Today, much of this has changed. In the 1960s:  The U.S. dominated the world economy and the world trade picture  U.S. multinationals dominated the international business scene  About half the world-- the centrally planned economies of the communist world-- was off limits to Western international business Today, much of this has changed.

17. The Changing World Output and World Trade Picture  In the early 1960s, the U.S. was the world's dominant industrial power accounting for about 40.3% of world manufacturing output  By 2007, the U.S. accounted for only 20.7%  Other developed nations experienced a similar decline  In the early 1960s, the U.S. was the world's dominant industrial power accounting for about 40.3% of world manufacturing output  By 2007, the U.S. accounted for only 20.7%  Other developed nations experienced a similar decline

18. The Changing Nature of the Multinational Enterprise  Since the 1960s,  there has been a rise in non-U.S. multinationals  there has been a rise in mini-multinationals  Since the 1960s,  there has been a rise in non-U.S. multinationals  there has been a rise in mini-multinationals

19. The Globalization Debate  Pro  Lower prices for goods and services  Economic growth  Increase in consumer income  Creates jobs (for many)  Countries specialize in production of goods and services that are produced most efficiently  Pro  Lower prices for goods and services  Economic growth  Increase in consumer income  Creates jobs (for many)  Countries specialize in production of goods and services that are produced most efficiently  Con  Destroys manufacturing jobs in wealthy nations  Wage rates of unskilled in advanced countries decline  Companies move to countries with fewer labor and environment regulations  Loss of sovereignty  Homogenized cultures  Con  Destroys manufacturing jobs in wealthy nations  Wage rates of unskilled in advanced countries decline  Companies move to countries with fewer labor and environment regulations  Loss of sovereignty  Homogenized cultures

20. Managing an international business is different  Countries are different  International transactions involve converting money into different currencies  Range of problems in an international business is wider and problems are more complex  International business must cope with different, conflicting government rules and systems  Different strategic approaches required  Countries are different  International transactions involve converting money into different currencies  Range of problems in an international business is wider and problems are more complex  International business must cope with different, conflicting government rules and systems  Different strategic approaches required

22. Key terms  An international business – any business with international sales, sourcing, or investment  A multinational business – any business with productive activities in 2 or more countries  A global business – a business that takes a global approach to production and sourcing (Coca-Cola, Intel)  An international business – any business with international sales, sourcing, or investment  A multinational business – any business with productive activities in 2 or more countries  A global business – a business that takes a global approach to production and sourcing (Coca-Cola, Intel)

23. The Emergence of Global Institutions  the World Bank which promotes economic development  the United Nations (UN) which maintains international peace and security, develops friendly relations among nations, cooperates in solving international problems and promotes respect for human rights, and is a center for harmonizing the actions of nations  the World Bank which promotes economic development  the United Nations (UN) which maintains international peace and security, develops friendly relations among nations, cooperates in solving international problems and promotes respect for human rights, and is a center for harmonizing the actions of nations

24. Globalization and the Family  What is your definition of a family?

25. A Working Definition of Family .. family as a collection of people, bound together in a committed relationship, for the purpose of maximizing their joint benefit in their interaction with each other and the outside world. What constitutes the joint benefit of the family is determined by the family members through joint decision-making or “bargaining” within the context of social norms.

26. Global Economy and the Family  Globalization of the economy tends to encourage individualism and mobility, in direct opposition to the collectivity and stability necessary for successful family relationships.

27. Globalization and the Family  Globalization is one of the key factors in the disruption of the family.  In the United States, Europe, and Japan, marriage rates are declining, birth and fertility rates are falling, real wages are flat or declining, and hours worked outside the home are rising.  Globalization is one of the key factors in the disruption of the family.  In the United States, Europe, and Japan, marriage rates are declining, birth and fertility rates are falling, real wages are flat or declining, and hours worked outside the home are rising.

28.  What are the Costs and Benefits Associated with Families?

29. Underinvestment in Families  the pressing day-to-day needs of survival  government policies promoting market participation over home participation,  workplace training and career-building that occurs during prime relationship-forming and childbearing years,  workplace practices that needlessly disadvantage people in relationships or parents with children,  failure of governments to treat children as a public good.  the pressing day-to-day needs of survival  government policies promoting market participation over home participation,  workplace training and career-building that occurs during prime relationship-forming and childbearing years,  workplace practices that needlessly disadvantage people in relationships or parents with children,  failure of governments to treat children as a public good.

30. How Do We Solve the Problem of Underinvestment in Families?

31.  Gotham’s study focuses on how global forces interconnect with local actions to facilitate the growth of urban tourism.

32. Localization  “localization” implies that local actors and organizations can harness the ‘local’ to produce unique products, establish locally specific social ties and networks, and build and enhance place distinctiveness by using different themes, symbols and motifs.

33.  While Mardi Gras is a local celebration, it is also a marketing slogan to stimulate consumer demand for corporate products  Bacardi rum, Southern Comfort, Coors beer, Kool cigarettes and other companies  While Mardi Gras is a local celebration, it is also a marketing slogan to stimulate consumer demand for corporate products  Bacardi rum, Southern Comfort, Coors beer, Kool cigarettes and other companies

34.  Local businesses and organizations are attempting to export Mardi Gras products, as well as float building styles and techniques to other regions of the world, thus encouraging the ‘globalization of the local’. Localization is evident in efforts by local groups to use tourism to enhance place distinctiveness, maintain old Mardi Gras traditions and create new traditions.

35.  Ritzer suggests that ‘one of the best examples’ of the ‘globalization of nothing’ is in the realm of tourism which involves the global production of non-places (Disneyland), non-things (mass- manufactured souvenirs) and non-people (clerks at souvenir shops). According to Ritzer, tourism is about the production of ‘nothing’ which refers to a ‘social form that is generally centrally conceived, controlled, and comparatively devoid of distinctive content

36.  A handful of factories in China produce most of the Mardi Gras beads imported to the United States.  bead industry sells US $500 million of beads each year worldwide  A handful of factories in China produce most of the Mardi Gras beads imported to the United States.  bead industry sells US $500 million of beads each year worldwide

37.  Mardi Gras beads illustrate the nexus of the global and the local.  Beads produced in China are transported to New Orleans where disrobement and gifts of beads are components of a ceremonial exchange where ‘doing deviance’ becomes a tourist site of entertainment  Mardi Gras beads illustrate the nexus of the global and the local.  Beads produced in China are transported to New Orleans where disrobement and gifts of beads are components of a ceremonial exchange where ‘doing deviance’ becomes a tourist site of entertainment

38. Mardi Gras Parade Float

39.  In recent years, nonlocal businesses have begun organizing special Carnival travel packages for employees, customers and business prospects that culminate with riding in a parade. The idea is that Mardi Gras can be a site for corporate entertaining that can foment or strengthen business relationships, establish networks and cultivate profit opportunities