Globalisation

Much beyond trade

Goods Economic

Services Social

Ideas Culture

Technology Political

Information People
Business in Afghanistan, Iraq etc ?

Currency

The Lebanese pound recorded the highest loss

of value against the U.S. currency,
depreciating by 89.89 percent. Following close
behind is the Argentine peso, which lost
nearly 78 percent of its value
 David Ricardo's theory
David Ricardo's theory, known as the theory of
comparative advantage, is a fundamental concept in
international trade. This economic principle,
developed in the early 19th century, explains why
countries engage in trade and how they can benefit
from specialization and exchange

Advantages of David Ricardo’s Theory

1. Labor Theory of Value
2. Comparative Advantage
3. Specialization
4. Opportunity Cost
5. Limitations and Assumptions
David Ricardo
heckscher - ohlin theory
The Heckscher-Ohlin Theory, also known as the Factor Proportions
Theory, is an economic theory of international trade that extends
the ideas of comparative advantage. Developed by economists Eli
Heckscher and Bertil Ohlin in the early 20th century, the theory
focuses on the role of factor endowments, specifically the
abundance or scarcity of factors of production, in shaping patterns
of trade between countries.

Key concepts Assumption

1. Factors of Production The theory relies on several assumptions, including perfect

2. Factor Intensity competition, constant returns to scale, and the assumption that
3. Factor Endowments factors of production are not internationally mobile
4. Factor Price Equalization
Role and importance of Multinational Corporations in international business
Multinational corporations (MNCs) play a crucial role in international business, shaping the global
economic landscape in various ways. Their activities extend beyond national borders, and their
impact is felt in multiple aspects of the global economy. Here are some key roles and importance of
MNCs in international business
Market Expansion
MNCs contribute to market expansion by operating in multiple countries. They access new markets,
increase their customer base, and diversify their sources of revenue.
Economic Growth and Development
MNCs can stimulate economic growth in host countries by investing in infrastructure, creating job
opportunities, and contributing to the overall development of local economies
Employment Opportunities

MNCs generate employment opportunities in host countries, contributing to skill development and
increasing standards of living for local communities
 Defenders of MNCs
Economic Growth and Job Creation:
Argument: MNCs contribute to economic growth by investing in new markets, creating jobs, and fostering
entrepreneurship. Their presence stimulates economic activities and can be a driving force for development.

Technology Transfer and Innovation:

Argument: MNCs bring advanced technologies, managerial expertise, and innovation to host countries. They
contribute to the transfer of knowledge and skills, enhancing local capabilities.

Access to Capital and Resources:

Argument: MNCs provide access to capital, allowing host countries to finance projects and infrastructure. They also
bring in resources such as foreign direct investment (FDI) and access to global markets

Critics of MNCs
Environmental Degradation:
Critique: MNCs are accused of contributing to environmental degradation by prioritizing profit over sustainable
practices. This includes issues such as pollution, deforestation, and resource depletion.

Cultural Homogenization:
Critique: Critics express concerns about the cultural impact of MNCs, arguing that the spread of globalized media and
consumer culture can lead to the erosion of local traditions and values.
Cultural Impact of Globalization:

Cultural Homogenization:
Transformation: Globalization has led to the spread of Western culture, lifestyles, and
consumerism, potentially resulting in cultural homogenization. This can affect traditional
practices and local cultural identities.

Cultural Hybridization:
Adaptation: In response to globalization, cultures often undergo hybridization, blending
traditional elements with new influences. This can lead to the emergence of unique cultural
expressions that reflect a combination of global and local influences.

Communication and Media Influence:

Exchange: The rise of global media, including television, movies, and the internet, has facilitated
cultural exchange. It allows individuals to access diverse perspectives, shaping cultural attitudes
and values.
Changing Gender Roles

Women's Empowerment
Opportunities: Globalization has contributed to increased educational and economic
opportunities for women. Women are more likely to participate in the workforce, pursue higher
education, and challenge traditional gender norms

Access to Information
Awareness: Increased access to information through globalization has led to greater awareness
of gender issues. Women and men are more informed about gender equality, leading to
advocacy for women's rights.

Corporate Inclusion
Workplace: MNCs operating globally often promote diversity and inclusion in the workplace. This
includes efforts to address gender disparities and promote equal opportunities for career
advancement.
Unit 3 - Globalization & Change in World Order
Globalization has played a significant role in shaping the world order, influencing political,
economic, and social structures on a global scale. The term "world order" refers to the
distribution of power, governance structures, and relationships among states and non-state
actors. The impact of globalization on the world order is complex and multifaceted,
contributing to both transformative and challenging dynamics. Here are some key ways in
which globalization has influenced the change in the world order
Exchange Rate
Exchange rates refer to the value of one currency in terms of another. They play a crucial role in
international trade and finance, influencing the flow of goods, services, and capital between countries. The
determination of exchange rates can follow different systems, including fixed, flexible, and managed
exchange rates.

Fixed Exchange Rate

A fixed exchange rate is a system in which the value of a currency is directly tied to the value of another currency, or
a basket of currencies, or even to a commodity like gold. The central bank of a country intervenes in the foreign
exchange market to maintain the fixed rate

Flexible (Floating) Exchange Rate:

A flexible or floating exchange rate is determined by market forces of supply and demand in the foreign exchange
market. The value of a currency fluctuates freely based on economic conditions and market perceptions.

Managed Exchange Rate

A managed exchange rate system is a hybrid approach where the currency's value is primarily determined by
market forces, but central banks may intervene occasionally to influence the exchange rate
 Protectionism: Free Trade Agreement (FTA)

Protectionism is an economic policy aimed at shielding A free trade agreement is a pact between two or more
domestic industries from foreign competition by countries to facilitate trade by reducing or eliminating
imposing barriers to trade. These barriers can include barriers, such as tariffs and quotas, that impede the flow
tariffs, quotas, subsidies, and other restrictive measures. of goods and services across borders.

Tariffs: Taxes imposed on imported goods to make them Tariff Reduction or Elimination: FTAs often involve a
more expensive and less competitive compared to phased reduction or elimination of tariffs on goods
domestically produced goods. traded between member countries.

Import Restrictions: Various non-tariff barriers, such as Investment Protection: Provisions to protect and
licensing requirements and quality standards, designed promote foreign direct investment (FDI) between
to limit foreign competition. member countries.

Objectives: Protecting domestic industries from foreign Objectives: Promoting economic growth, fostering
competition, preserving jobs, promoting national international cooperation, encouraging specialization
security, and maintaining trade balance. based on comparative advantage, and creating a more
efficient allocation of resources.
 Globalization & Wars
Positive Aspects Negative Aspects
Economic Interdependence:
Theory: The idea of economic interdependence suggests
that countries with strong economic ties are less likely to
go to war with each other. Shared economic interests
provide incentives for peaceful cooperation
International Institutions:
Role: Globalization has led to the creation and
strengthening of international institutions and
organizations (e.g., United Nations, World Trade
Organization) that aim to resolve conflicts peacefully and
promote cooperation
Diplomacy and Communication:
Facilitation: Globalization has improved communication
and diplomatic channels, allowing nations to engage in
dialogue more easily and potentially resolve disputes
through negotiation rather than armed conflict.
Resource Competition:
Conflict over Resources: Globalization has intensified
competition for scarce resources, leading to potential
conflicts over access to energy, water, minerals, and
other essential commodities.
Economic Inequality:
Root of Conflict: Globalization has been criticized for
exacerbating economic inequalities within and between
countries. These inequalities can be a source of social
unrest and, in extreme cases, contribute to conflicts.
Terrorism:
Transnational Threats: Globalization has facilitated the
movement of people, ideas, and funds across borders,
making it easier for terrorist organizations to operate
globally and exploit grievances for their causes.