Introduction to Global Business

The Rise of Globalization

Module 1 Part 1
 After studying this chapter, you should be able to:

1. Explain the characteristics of globalization and describe

how it functions.
2. Identify how major international institutions facilitate
globalization.
3. Evaluate the need for strong and transparent institutions
that can adapt to global competition.
4. Describe the key policy measures that make
globalization sustainable.
 After studying this chapter, you should be able to:

5. Describe the role of information technology in bridging

the global digital divide.
6. Describe the validity of the anti-globalization argument.
7. Explain the case made to temporarily support those
people negatively affected by globalization.
 Introduction

Insights on
Globalization

video interview:
Prof. Terrence Hopmnan,
“Globalization” – Brown
University

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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Globalization

© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Globalization
encompasses the socio-economic reform
process of eliminating trade, investment,
cultural, information technology, and
political barriers across countries, which
could lead to increased economic growth
and geo-political integration and
interdependence among nations of the
world (Gaspar, Kolari, Hise, Bierman,
Smiith & Arreola-Risa, 2019)

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 Consider a real-world situation

Italy

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 (Source: The Manila Times)

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 Emerging Economies
• Emerging economies
– Are implementing more open
trade and free-market
policies to “compete with
everyone from everywhere
for everything”
– Are becoming the world’s
center of economic gravity
through innovation,
research, and development
• BRIC economies
EXHIBIT 1.2 STRATEGIC COMPETITORS 2020
 Decoupling and the Move to a Multipolar World
Economic Order
• Decoupling • Multipolar world
– A global shift in which industrialized – A world economy in which the
country-dependent developing engines of growth are comprised of
economies grow based on their own both industrialized (e.g., the United
underlying economic strengths States) and emerging market
rather than those of highly- economies (e.g., BRIC countries)
developed countries
EXHIBIT 1.3 A MULTIPOLAR WORLD ECONOMIC ORDER
 Key International Institutions That
Facilitate Globalization

When governments of the free world recognized the importance of

international cooperation and coordination, which has led to the emergence of
three major international organizations:
 Key International Institutions That
Facilitate Globalization

Began operations
on March 1, 1947
December 1945 Washington D.C.

As of September
18, 2014, 188
countries were
members

o IMF continues to:

▪ Provide a forum for cooperation on international monetary problems
▪ Facilitate sustainable growth of international trade
▪ Promote exchange rate stability
▪ Lend countries foreign exchange when needed
 The World Bank
• World Bank’s initial role was to aid the
reconstruction of Europe after World War II.

• Current focus areas:

1. Global integration through trade
liberalization
2. Analysis and national trading policy advice
3. Agreements supporting international
standards in financial systems
4. Information and knowledge transfer to
1944 Bretton Woods Conference
developing countries to support Washington DC
sustainable development
5. Eradicating communicable diseases
 TABLE 1.1 THE WORLD BANK GROUP’S DEVELOPMENTAL
INSTITUTIONS

International Bank for Supports reconstruction and restructuring of

Reconstruction and
Development (IBRD)
International Development
Association (IDA)
International Finance
Corporation (IFC)
Multilateral Investment
Guarantee Agency (MIGA)
International Center for the
Settlement of Investment
Disputes (ICSID)
member countries using funds raised in
international capital markets
Provides long-term low-interest social sector and
infrastructure loans to the poorest members
using foreign aid funds provided by the rich
nation members
Provides loans and takes equity position in
private companies of developing countries and
works toward developing capital markets in
those economies
Provides political risk coverage for private
investments made in developing countries
Works on issues related to foreign investment
disputes
 The World Bank

Updates:

WB approved worth US$500 million

loan to help the Philippines mitigate
the impact of COVID-19 pandemic
on poor and vulnerable households,
and to provide financial relief to
small and medium enterprises.

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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
 Key International Institutions That
Facilitate Globalization

The WTO began Liberalized trade by

trading in 1948 lowering and/or
under the General removing trade barriers
Agreement on Tariffs such as tariffs, quotas,
and Trade (GATT). and subsidies
 The World Trade Organization
• WTO promotes global trade by:
1. Administering trade agreements
2. Acting as a forum for trade negotiations
3. Settling trade disputes (US and China)
4. Reviewing national trade policies
5. Providing developing countries with technical assistance and
training programs
6. Cooperating with the IMF and the World Bank
Multilateral Trading System Principles Fostered
by WTO Agreements
Trade without discrimination

Increasingly freer trade

WTO Predictability of trading

Agreements relationships

Promotion of fair competition

Encouragement of economic
reforms in developing countries
 End of Module 1 (IBT)

Thank you!

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© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.