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WHAT IS GLOBALIZATION?
Globalization is the process by which ideas, knowledge, information,
goods, and services spread around the world. In business, the term is
used in an economic context to describe integrated economies marked
by free trade, the free flow of capital among countries, and easy access
to foreign resources, including labor markets, to maximize returns and
benefit for the common good.
 3 COMPONENTS OF ECONOMIC
GLOBALIZATION
-Academic literature commonly subdivides
globalization into three major areas

Cultural/Soci
Economic Political
al
Globalization Globalization
Globalization
ECONOMIC GLOBALIZATION
-It refers to the widespread international movements of goods,
capital, services technology, and information.

-Economic Globalization primarily comprises

the globalization of:

1. Production -Economic Globalization is one most

2. Finance often mentioned in the media.
3. Markets
4. Technology -It is associated with massive
5. Organizational amounts of financially traded daily
6, Regimes on the different stock markets
7 institutions around the label "NEW ECONOMY".
8.Corporations
9. Labour
ECONOMIC GLOBALIZATION
- In order to monitor the economy, 3 economic institutions were created.

2. The International Bank for

1. The International Monetary Reconstruction and Development
Fund (IMF) --- would oversee (IBRD) later named WORLD BANK
the international monetary (WB) ---would provide loans for
system; European reconstruction but later
expanded its activities to the
developing world.
3. The General Agreement on
Tariffs and Trade (renamed, of the
WORLD TRADE ORGANIZATION in
1992)--- would oversee multilateral
trade agreements.
CULTURAL GLOBALIZATION
Refers to the transmission of ideas, meanings, and values across
national borders.

1. Migration is an important aspect of cultural globalization.

• This process has been going on for several centuries, with languages, religious
beliefs, and values being spread by military conquest, missionary work, and trade.

2. Food is the most obvious example of cultural globalization.

• Food consumption is an important aspect of culture and most societies around the world
have diets that are unique to them. however, the cultural globalization of food has been
promoted by fast-food giants such as McDonald's, Coca-Cola, and Starbucks.

3. Sport is another fairly obvious example of cultural globalization.

• All the international sporting events - most notablv the World Cup and The Olympics
which pins millions together in shared, truly global, leisure experience.
CULTURAL GLOBALIZATION
1. Converging Global Consumption Patterns 2. Homogeneity

Today you can go to pretty much any major city in the Comes into society in several ways - ethnically(Japanese),
world and share in a similar 'consumption experience'. religiously(many Arabs), culturally(Indians),
politically(communism).
•More and more in Asia and South America are coming to •The study has shown that the most prominent type of
enjoy a high-consumption lifestyle. homogeneity is ethnicity, where everybody shares
•Central to this is the growth of similar styles of shopping similar physiological characteristics and cultural
malls, and leisure parks which provide a homogenous behavior.
cultural experience in different regions across the world.

3. Financial Homogeneity 4. The Global Village/Global Consciousness

It exists in many countries. It was prevalent in many Individuals and families are now more directly
communist countries- this type of homogenous society is plugged into the news from the outside world - some
in decline now a day. of the most gripping events of the past decade have
unfolded in real-time in front of a global audience.
• North Korea is a great example of financial homogeneity, at
an extreme level, another good example is Scandinavian
countries, where the government makes sure that every
citizen of their country enjoys high-level living standards.
CULTURAL GLOBALIZATION
-DETRADITIONALISATION- In his classic 1999 text, Runaway World, Anthony Giddens argues that
one consequence of globalization is detraditionalization-where
people question their traditional beliefs about religion, marriage, gender roles, and
so on.

-GLOBAL RISK CONSCIOUSNESS- Ulrich Beck (1992) argues that a fundamental feature of
globalization is the development of a global risk consciousness, which emerges due to shared
global problems which threaten people in multiple countries.

Examples:
•Threat or terrorism
•International nuclear war
• The threat of global pandemics
•The rise or organized crimes funded primarily through international drug trafficking
• The threat of planetary melt-down due to global warming.
 POLITICAL GLOBALIZATION
The globalization of political refers to the absence of the absolute
Examples of Political Globalization:

sovereignty of a state's political borders over a certain area as well as 1. European Union- The European Union is a trade and
increased interaction between the systems of government and treaty bloc comprising 27 nation-states on the
increased external intervention and interaction on the basis of continent of Europe. It is the successor of several other
democracy, non-governmental organizations, human rights, and freedoms. political agreements established after World War 2 to
help integrate the European continent after the war.
Advantages Of Political Globalization: Disadvantages Of Political Globalization:
2. NATO - The North American Treaty Organization is
1. Establishment of International Norms When 1. Loss of Power at the Nation-State Level - When another multi-national political treaty established after
nation-states sign treaties with international nation-states make multinational agreements, they World War 2. NATO's primary goal is to contain Russian
bodies, it's an agreement to operate within a set often make concessions in aggression by creating a military pact. If one NATO
of norms and order to reach a middle ground that's satisfactory to nation is attacked, then the rest will (supposedly) come
standards that all signatories will adhere to. all parties. They also sign off on certain norms and to their defense. This deters potential Russian
standards that restrict their abilities to unilaterally aggression.
2. Ease of Movement - take action.
Often, political agreements between nations 3. Belt and Road Initiative - The Belt and Road Initiative is
lead to the relaxing of the movement of labor 2. Levels of Bureaucracy a trade initiative established by China designed to
across boundaries. This Multinational political agreements can add extra spread China's sphere of influence across Asia and the
can lead to immigration and emigration layers of bureaucracy to the everyday Middle East.
opportunities for millions of people. activities of businesses and citizens. For example,
many global political agreements put 4. War Games - Many allied nations engage in yearly war
3. Ease of Trade - in place standards that you need to 'tick off before games in a bid to strengthen military ties and protect
One of the key goals of political sending a product to market. their interests.
globalization is to create better trade routes
around the world (in effect, to support and 3. Decreased Political Accountability One of the 5. NAFTA - NAFTA was a flashpoint of anti-globalization
promote economic globalization). biggest critiques of bodies like the sentiment in the 1990s because it was seen to decrease
WTO, the EU, and United Nations is that they are full labor standards and would lead to the exodus of blue-
of unelected bureaucrats. collar jobs from the United States.
 LOBAL ECONO
E G MY
TH
WHAT IS THE GLOBAL
ECONOMY?
-The global economy refers to the interconnected worldwide economic activities that take place between multiple countries. These
economic activities can have either a positive or negative impact on the countries involved.
The global economv comprises several characteristics, such as:
• Globalization: Globalisation describes a process by which national and regional economies, societies and cultures have become integrated through
the global network or trade, communication, immigration, and transportation. These developments led to the advent of the alba economv. Due to the
global economy and globalization, domestic economies have become conesive, leading to an
improvement in their performances

•International trade: International trade is considered to be an Impact or globalization. It refers to the exchange or goods and services between
different countries , and it has
also specialze in products
Which they have a comparative
advantage. This is an economic theory that refers to an
economy’s abilty to produce goods and services at a lower opportunity cost than its trade partners.

International finance: Money can be transterred at a faster rate between countries compared to
goods, services, and people: making International finance one or the primary features of a global
economy. International Finance consists of topics like Currency exchange rates and monetary policy.

•Global investment: This refers to an investment strategy that is not constrained by geographical
boundaries. Global investment mainly takes place via foreion direct investment (FDI)
 WHY IS THE GLOBAL
ECONOMY IMPORTANT?
We can understand the importance of the global economy by looking at it in relation to emerging
markets:

Economic importance at a micro and macro level:

The increase in the world's population has led to emerging markets growing Long-term world economic outlook:
economically, making them one of the primary engines of world economic growth. According to financial and economic projections
The growth and resilience shown by emerging markets are a good sign for
the world economy. Before delving into the next point, you need to understand
based on demographic trends and capital productivity
the concept of microeconomics. It refers to the study of the behavior of models, the GDP in emerging market economies in
households, individuals, and firms with respect to the allocation of resources 2019 is likely to keep increasing
and decision-making. In simpler terms, this branch of economics studies how at a positive rate. According to an emerging markets
people make decisions, what factors affect their decisions, and how these economic forecast for 2019 conducted by Focus
decisions affect the price, demand, and supply of goods in the market.
Economics, the economy is set to increase by 7.5% in
Therefore, from the perspective of microeconomics, some of the largest firms
with high market value and a few of the richest individuals in the world hail from India, 6.6% in the Philippines, 6.3% in China, 5.3% in
these emerging markets, which has helped in the higher distribution of income Indonesia, 5.1% in Egypt, 4.9% in Malaysia, 3.8% in Peru
in these countries. However, many of these emerging countries are still plagued and 3.7% in Morocco.
by poverty, and work still needs to be done
to work towards eradicating it.
WHO CONTROLS THE GLOBAL ECONOMY?
Although governments do hold power over countries' economies, it is the big banks and large
corporations that control and essentially fund these governments. This means that the global
economy is dominated by large financial institutions.

Benefits of Global Economy

Factors affecting the global economy
According to the latest economic news, here are some of
the key factors that influence and affect how well the

Benefits Costs global economy works:

-Economies of scale/lower prices -Environmental costs • Natural resources;

•Infrastructure;
-Increased global investments -Tax competition and avoidance
•Population;
-Free movement of labour -Brain drain from some countries •Labour;
•Human capital;
-May reduced Global inequality -Less cultural diversity
•Technology;
• Law.
 KET INTEGRAT
AR ION
M
MARKET INTEGRATION
Market integration occurs when prices among different locations or related
goods follow similar patterns over a long period of time. Groups of goods
often move proportionally to each other and when this relation is very clear
among different markets it is said that the markets are integrated.

What is the impact of market integration For example, if the demand for
baby dolls within a given
on the global economy? geographical market
were to suddenly be reduced by
50%, there is a good chance that
Economic integration can reduce the costs of trade,
the demand for baby doll
improve the availability of goods and services, and increase
clothing would also decrease in
consumer purchasing power in member nations.
proportion within that same
Employment opportunities tend to improve because trade
geographical market.
liberalization leads to market expansion, technology
sharing, and cross-border investment.
 REASONS FOR MARKET INTEGRATION
To remove transaction costs
Foster competition
Provide better signals for optimal generation and consumption decisions.

Improve security of supply

• Theoretically one can integrate two markets without interconnection.

The advantages include increasing market share, reducing competition, and creating
economies of scale. Disadvantages include regulatory scrutiny, less flexibility, and the
potential to destroy value rather than create it.
ROLE OF INTERNATIONAL
FINANCIAL INSTITUTION IN
THE CREATION OF GLOBAL
AND MEMBERSHIP
COMPOSITION OF IFI
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GOVERNANCE