DRIVERS OF GLOBALISATION

ESTABLISHMENT OF WORLD TRADE

ORGANISATION
• Government of the member countries of general
agreement on trade and tariff(GATT) concluded the
uruguay round negotiations on the 15th december, 1994.
The ministers expressed their political support to the
outcome of the meting by signing the final act in
marrakesh, morocco on the 15th april 1994. According to
the marrakesh declaration , the results of uruguay round
would, “strengthen the world economy and lead to more
trade, investment, employment and income growth
throughout the world,”the WTO was established with
effect from 1st jan 1995 in order to
 Cont….
• Facilitate the implementation, administration and
operation and further the objectives of this
agreement and on multinational trade
agreements and shall also provide the framework
for implementation, admistration and operation
of plurilateral trade agreements.
• The value of exports increased by 245% and
import increased by 1014% after the
establishment of WTO i.e..,during 1995 and 2006.
 REGIONAL INTEGRATION
• The regional integration of the countries of the same
region or areas increase the size of market, aggregate
demand for products and services, quantity of
production, employment and ultimately the economic
region of the region. Further. The people of the region
get a variety of products at comparitively lower prices.
This factor, in turn enhances the purchasing power and
living standards of people. The significant regional
integrations include european uninon, NAFTA, ASEAN,
SAARC, EFTA, APEC, MERCOSUR, ANDEAN.
 DECLINING TQRADE BARRIERS
• Another significant driver of globalisation in the
declining trade barriers. International trade
occurs when the goods flow across the
countries. Governments used to impose trade
barriers like quotas and tariffs in order to
protect domestic business from the compitition
of international business. Advanced countries
after world war 2 agreed to reduce the tariffs in
order to encourage free flow of goods.
 Contd….
• The member countries of the general
agreement on trade and tariffs (GATT) in
various rounds of negotiations agreed to
reduce the tariffs rates. The uruguay round of
negotiations contributed to further reduction
in trade barriers and extension of GATT to
cover manufactured goods and services.
DECLINING INVESTMENT BARRIERS
• Global business firms invest capital in order to
establish manufacturing and other facilities in foreign
countries. Foreign government impose barriers on
foreign investment in order to protect domestic
industry. But various countries have been removing
these barriers on foreign direct investment in order
to encourage the growth of the global business.
 Growth in foreign direct investment
• The investment made by the company in new
manufacturing and or marketing facilities in a
foreign country is referred to as “Foreign Direct
Investment (FDI). There are a number of reasons
for the growth of FDI in recent years. These
reasons include: increase in sales and profits, enter
into rapidly growing market, reduce costs,
consolidate trade blocs, protect domestic markets,
acquire technological and managerial know-how.
 STRIDES IN TECHNOLOGY
• Technological change is amazing and phenomenal
after 1980s.in fact, it is like a revolution in case of
telecommunication, information technology and
transportation technology. Companies spread latest
technology throughout the globe and technology
itself makes the global company possible and fastens
the process of globalisation. In addition, the latest
devolopments in informationtechnology have
enabled the global company to develop into a virtual
global company.
 Contd…..
• Microprocessors and Telecommunication
• The internet and world wide web
• On-line globalisation
• Transportation technology
 GROWTH OF MNC’S
• A multinational corporation/company is an
organisation doing business in more than one
country. Transactional company produces,
markets, invests and operates across the
world. Mnc’s and TNCs have been growing and
spreading their operations due to market,
financial and other superiorities and the
expansion of international markets.