GLOBALIZATION

WHAT IS GLOBALIZATION?

+GLOBALIZATION IS THE INTERCONNECTIVENESS

OF THE WORLD.
FACILITATORS OF GLOBALIZATION
+ World Trade Organization (WTO)
+ World Bank
+ International Monetary Fund (IMF)
+ Transnational Organizations
 THE WTO
+The World Trade Organization was formed in
1995 and it replaced the General Agreement of
Tariffs and Trade (GATT) which was established
after World War II.
+Its function is to remove all barriers of any kind
within the world.
OBJECTIVES OF WTO
 To promote multilateral trade
 To promote free trade by abolishing tariff (taxes) and non-tariff (policies) barriers.
 To enhance competitiveness amongst all trading partners to benefit consumers.
 To increase the level of production and productivity so as to increase the level of employment in the
world.
 To expand and utilize world resources.
 To take special steps for the development of the poorest nations.
FUNCTIONS OF WTO
+ Implements and monitors WTO trade agreements between
countries.
+ Cooperating with the IMF and World Bank.
+ Settling trade related disputes among member nations with the
help of its Dispute Settlement.
+ Provides technical assistance to different countries to make sure
that they follow the rules of the World Trade Organization
+ Facilitate free trade.
STRUCTURE OF WTO

+This organization contains 160

members who all account for 95% of
world trade
ECONOMIC PARTNERSHIP AGREEMENT
(EPA)
+ EPA facilitates free trade and it is a preferred trade agreement between countries.
+ Members of CARICOM signed an EPA with the European Union in 2008.

+ BENEFITS OF EPA:
• Opens up the market beyond WTO especially in service sectors such as
entertainment industries.
• Free flow of goods
• Exemption from high taxes and quota limits would be higher.
WORLD BANK
+ The World Bank was established after WWII and it provides financial and
technical assistance to developing countries around the world. It has 187
member countries and its headquarters are in Washington DC.
+ This bank provides capital for projects to push development.
+ The main aim of the world bank is to help countries to reduce poverty.
+ BENEFITS OF THE WORLD BANK:
 Low interest
 Poverty alleviation
 Financial and technical services
INTERNATIONAL MONETARY FUND (IMF)
+ The IMF is based solely on austerity and are the same for all
developing countries including:
 Keeping interest rates high to balance currency
 Devalue the currency to boost exports
 Reducing government spending in non-productive sectors
(health and education)
 Privatization of state owned enterprises.
TRANSNATIONAL ORGANIZATIONS
+ These are big multilateral corporations or mega businesses that operate
across the globe with headquarters on every continent.
+ The main headquarters are usually in developed countries such as UK,
Germany, France, Japan.
+ Examples of these companies:
 Facebook
 Apple
 Microsoft
 Business Process Outsourcing (BPO) sector
IMPACT AND RESPONSE TO GLOBALISATION

+ Industry and commerce

+ There has been the expansion of free trade or trade liberalization whereby tariffs
and other barriers to trade have been removed. However, developed countries may
still subsidise their industries and institute tariffs but flood the markets of
developing countries with their goods.
+ Capital can be moved quickly to anywhere in the world facilitating FDI in many
countries.
+ Distributive sector (supermarkets, department stores) ~ These exhibit a wide range
of goods from all parts of the world, increasing choice for the consumer. He benefits
by choosing cheaper products that may not be locally produced. However, these
goods have to be paid for with foreign exchange
+ These exhibit a wide range of goods from all parts of the world, increasing choice for the
consumer. He benefits by choosing cheaper products that may not be locally produced.
However, these goods have to be paid for with foreign exchange.
+ Labour — Globalization both creates and destroys jobs. Jobs found in industries which are
not globally competitive are lost while those which contribute greatly towards thecountry’s
exports are maintained and formed continuously. Ideally, globalisation should also facilitate
the free movement of labour between countries. Therefore, persons qualified in a specific
area may move to those countries specialising in those activities.
+ Technology — Countries which have removed trade barriers — but were less efficient in
production than competitors — have sought to automate many processes in production
and industry e.g. agriculture. This would increase output and reduce costs, thereby making
these countries more competitive.