Landscape and Challenges of

International Business -
INTE60006A.
Dr. Gilbert K. Adarkwah, PhD., LLM., MSc., MA., BA
 Session 2.
Globalization and its
implications
• Last week…
Globalization

The integration of goods, services, and culture among the nations of the world.

The Stages of Globalization (From Thomas Friedman in The World is Flat)

1. Globalization 1.0 (from 1492 to 1800) country

2. Globalization 2.0 (from 1800 to 2000) company

3. Globalization 3.0 (from 2000 to the present) individual

Globalization 1.0

• Occurred from 1492 until about 1800.

• Globalization was centered around countries.

• It was about how much horsepower, wind power, and

steam power a country had and how creatively it was
deployed.

• The world shrank from size “large” to size “medium.”

Christopher Columbus
Globalization 2.0 (first half)

• Occurred from about 1800 until 2000.

• Interrupted only by the two World Wars.

• The dynamic force driving change was

multinational companies.

• The world shrank from size “medium” to size

“small.”
Globalization 3.0

• Today
• The convergence of the personal computer, fiber-
optic Internet connections, and software has
created a “flat-world platform.”
• This platform allows small groups and individuals
to go global.
• The world has shrunk from size “small” to size
“tiny.”
Globalization: antecedents and outcomes
What are the antecedents of globalization? What are the outcomes of globalization?

1. Increased investments in technology Democratisation of almost everything

The internet Intellectual work, intellectual capital
broadband connectivity
can be delivered from anywhere
Connectedness
undersea cables
outsourcing
2. Democratisation of technology Economic inter-dependency
Economy of scale and company in critical
markets drove down prices for computers and
other hardwares

Freebies  - e-mail search etc

Key aspects of Globalization

1. Economic

2. Technological

3. Cultural

4. Political

5. Military

THESE ASPECTS ARE ALL

INTERCONNECTED!
1. Economic globalization

Today:
Economies Are Increasingly Linked Together
[NAFTA (MX, CA, US), The EU, AcFTA, WTO (World Trade Organization)

• Only global international organization dealing with investor-government

disputes
Transportation costs
Average US airfaire
Transatlantic phone system
Transportation and communication costs
Another technology: the Internet revolution
Source: https://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/disp-diff/mobil2.aspx?lang=eng
Source: https://www.cbc.ca/news/business/eli-lilly-files-500m-nafta-suit-against-canada-over-drug-patents-1.1829854
• Today… we go deeper!
The game plan: Lecture, group work and presentations
Session # Name Student activities

1 Introduction Read assigned readings

2 Globalization: Measures, Challenges and
Trends
3 Globalization: Nations in the Global
Environment
International Trade: Institutions and
Regulations
5 International Trade: Regional Economic
Integration
6 Financial Integration and Global
Governance
7 Midterm Exam
Read assigned readings
Start forming groups
Read assigned readings
Start forming groups
Decide topics of blog entries by team (3
members per team). Join a team with the
same topic interest.
Start of work for the first team blog entry
+ Presentation of narration
Quick presentation of co-creation work
Exam
The game plan: Lecture, group work and presentations
Session # Name Student activities

8 Foreign Direct Investments and
Multinational Corporations
9 Competition in a Globalized Word and
Global Technological Innovation
10 Political Frictions: Corruption, War, and
Terrorism
11 Emerging Markets: Base of the Pyramid,
Institutional Voids, and Market-based
Solutions to Poverty Alleviation
12 Grand Challenges: Solving the World's
Problems (and Adapting to the Response)
13 Research Project (own work)
14 Final exam
Work progress for the first team blog entry. +
Presentation
Publication of first entry (optional)
Start of work for the second team blog entry
+ presentation
Work progress for the second team blog
entry + presentation
Work progress for the second team blog
entry + presentation
finalize blog entry
Publish second blog entry
Exam
• What is globalization, really, and how do we go
about measuring it?
• What is the impact of globalization on multinational
firms?
• Is globalization a positive/negative force on the
economy? On societies? On the world in general?
 What is the impact
of globalization on
multinational firms?

Is globalization a
What is globalization,
positive/negative force on
really, and how do we
the economy? On
go about measuring it?
societies? On the world in
general?
The readings…
 Social
constructivis
m?
• Research question: Can we separate the
discussions about globalization and its
implications from the way we measure it?
Agenda

1 Globalization : What is it?

2 Measuring globalization

3 Trends

4 Challenges

5 Next week
1. Globalization:
What is it?
New Developments (also new issues) in
Governance

Trade governance Institutions


Bilateral and Multilateral 
Institutional innovations:
Trade Agreements 
World Trade Organization

International Monetary Fund

World Bank

United Nations
There are over 305 regional trade agreements in the
world
There are over 305 regional trade agreements in the world
New institutions
Some new risks
• Will economic activities rebound in 2023?
• What risks with that bring?
• A salient feature of the rebound of economic activity in 2021
wasbeen the rise of international shipping costs.

• For instance, the average global market price of shipping a 40-foot

container increased eightfold from an average of $1,331 in the week
of Feb. 28, 2020, to a peak of $11,109 in the week of Sept. 10,
2021.
 Freight Index and US shipping costs

Data here: https://fbx.freightos.com/

Reasons and consequences (2023)

Why are shipping costs declining?

 Reasons and consequences (2021)
Partially in response to the COVID-19 economic
environment:

Unprecedented levels of fiscal stimulus,

a sharp reallocation of demand from services
into durable goods, leading to the resurgence
of inflation across developed economies.

Given that durable goods are particularly likely
to be traded internationally, these
developments have led to the increased
demand for international shipping services
and, thus, to the rise of international shipping
costs.
There is also a sense that the international
shipping industry is facing unprecedented
disruptions that extend beyond the COVID-19
economic developments:

For instance, health and containment policies
introduced to combat COVID-19 have limited
the availability of workers to process cargo in
ports as well as their work arrangements,
leading to a slowdown of container processing.

The unexpected nature of these disruptions
may be leading countries and firms to rethink
their reliance on international trade for a wide
variety of critical goods by reorganizing their
structure of production.
Foreign trade (Tariff) Barriers Worldwide
Free Trade Agreements
Firms' vs host governments in international
dispute settlements
 # Country No. cases # Country No. cases # Country No. cases
1 Argentina 62 44 Dominican Republic 7 87 Lesotho 2
2 Venezuela, RB 54 45 Indonesia 7 88 Tajikistan 2
3 Spain 53 46 Lithuania 7 89 Ethiopia 2
4 Czech Republic 41 47 Kuwait 7 90 Belgium 2
5 Egypt, Arab Rep. 40 48 North Macedonia 7 91 Cameroon 2
6 Mexico 35 49 Philippines 6 92 Nigeria 2
7 Poland 32 50 Montenegro 6 93 Australia 2
8 Canada 31 51 China 6 94 Nicaragua 2
9 Ukraine 26 52 Morocco 6 95 Bahrain 2
10 Russian Federation 26 53 Sri Lanka 5 96 Ghana 2
11 India 26 54 Cyprus 5 97 Cuba 1

ICSID CASES as of 2022 12

13
14
Peru
Ecuador
United States
25
25
20
55
56
57
Uruguay
Chile
Greece
5
5
5
98
99
100
France
Rwanda
Sierra Leone
1
1
1
15 Romania 20 58 Estonia 5 101 Trinidad and Tobago 1
16 Libya 19 59 United Arab Emirates5 102 Iran, Islamic Rep. 1
17 Croatia 19 60 Azerbaijan 5 103 Uganda 1
18 Kazakhstan 19 61 Lebanon 5 104 Cabo Verde 1
19 Bolivia 17 62 Mongolia 5 105 Kenya 1
20 Colombia 17 63 Germany 4 106 South Africa 1
21 Kyrgyz Republic 17 64 Bosnia and Herzegovina
4 107 Qatar 1
22 Georgia 16 65 Oman 4 108 Myanmar 1
23 Hungary 16 66 Armenia 4 109 Tunisia 1
24 Turkey 15 67 Burundi 4 110 Nepal 1
25 Panama 15 68 Madagascar 4 111 Austria 1
26 Turkmenistan 14 69 Lao PDR 4 112 Sudan 1
27 Slovak Republic 13 70 Iraq 4 113 Equatorial Guinea 1
28 Italy 13 71 Senegal 4 114 Switzerland 1
29 Moldova 12 72 Congo, Dem. Rep. 4 115 United Kingdom 1
30 Serbia 12 73 Belarus 3 116 Syrian Arab Republic1
31 Costa Rica 11 74 Gabon 3 117 Barbados 1
32 Pakistan 10 75 El Salvador 3 118 Bangladesh 1
33 Albania 10 76 Mozambique 3 119 Guyana 1
34 Algeria 10 77 Slovenia 3 120 Grenada 1
35 Bulgaria 10 78 Zimbabwe 3 121 Benin 1
36 Saudi Arabia 9 79 Malaysia 3 122 Denmark 1
37 Jordan 9 80 Yemen, Rep. 3 123 Papua New Guinea 1
38 Latvia 9 81 Mauritius 3 124 Norway 1
39 Tanzania 8 82 Belize 3
40 Vietnam 8 83 Paraguay 3
41 Uzbekistan 8 84 Thailand 2
Data here: https://investmentpolicy.unctad.org/investment-dispute-settlement 42 Korea, Rep. 8 85 Gambia, The 2
43 Guatemala 7 86 Honduras 2
2. Measuring
Globalization
•
How should we measure globalization?
•
Why should we care?
•
Based on what we know, who are the
“winners”? Who are the “losers”?
Measuring Globalization: The A.T. Kearney/Foreign Policy Globalization Index

Dimensions
1. Economic integration
1. Trade
2. FDI
2. Personal Contact
1. Telephone calls
2. Travel
3. remittances
3. Technological connectivity
1. Internet usage
2. Internet host
3. Secure servers
4. Political engagement
1. IOs
2. UN peacekeeping
3. Treaties
4. Government transfers
•
http://foreignpolicy.com/2009/11/20/measuring-globalization/
KOF Globalisation Index

The KOF Globalisation Index measures

1. The economic
2. Social, and
3. Political
dimensions of globalisation.
Globalisation in these fields has been on
the rise since the 1970s, receiving a
particular boost after the end of the Cold
War.
KOF Globalisation Index 1970 vs 2019

KOF Globalisation Index – KOF Swiss Economic Institute | ETH Zurich

KOF Globalisation Inde: Canada

KOF Globalisation Index – KOF Swiss Economic Institute | ETH Zurich

KOF Globalisation Inde: Canada

KOF Globalisation Index – KOF Swiss Economic Institute | ETH Zurich

 2022 KOF Globalisation Index
Rankings for the year 2020

Globalisation
Rank Country
Index, overall

1 Switzerland 91
2 Netherlands 90
3 Belgium 90
4 Sweden 89
5 United Kingdom 89
6 Germany 88

Who’s in the
7 Austria 88
8 Denmark 88
9 Finland 87
10 France 87

game? 11
12
13
Ireland
Luxembourg
Spain
86
85
85
14 Czech Republic 85
15 Portugal 85
16 Norway 85
17 Hungary 84
18 Canada 84
19 Greece 83
20 Singapore 83
Who’s out of the game?
The WEF’s Travel and Tourism Competitiveness Report
and the Passport Index
 Association between COVID-19 fatality rate (CFR) and the KOF Globalization
Index
Is it ok to use the usual macroeconomic
indicators to talk about globalization?
•
New indicators: •
Real-time data / nowcasting
https://ec.europa.eu/environ •
Machine Learning
ment/beyond_gdp/index_en
.html techniques and in particular
neural networks
•
More granular data: macro /
meso (industrial and
•
https://shiny.rstudio.com/
clusters) / micro levels gallery/superzip-
example.html
•
Microeconomic foundations
of macroeconomics
Social Progress Index 

Global Index 2022: Results | Social Progress Imperative

Social Progress Indicator
Social Progress Index
 FACEBOOK Social connectedness index

https://africapolis.org/sci/?fbclid=IwAR12Yg6a9pzEQkIC4dYmUTUZngSFShKCyHA1a5pFbffSBG2Ht1vvsaord1g
3. Trends
Global trends
•
Intangible versus tangible goods:
•
Modify the way we track data on globalization
•
Modify the way states compete
•
Modify the way firms compete
•
Innovation creating new pressures on value chains
•
Populism and nationalism
•
Shifting power
Service exports (current US$)
Trade in services (% of GDP)
Global Technological Innovation
• The information revolution

• The new business models of the new information

revolution: The platform economy
4. Challenges
Challenges – at subject level
• Climate change
• Economic
• Political
• Cultural
• Religious
• Social
Challenges – at the methods level
In need of going Beyond GDP or GDP+
•
see the Stiglitz-Sen-Fitoussi report (2008) if you
are interested in this conversation
•
See the developments at www.unctad.org
• Research question: Can we separate the
discussions about globalization and its
implications from the way we measure it?
5. Next week
The future of Nation States in globalization

To prepare our discussion, here are some questions to think about:

• What makes a nation competitive?
• What are the impacts on trade then?
• What international governance?

Readings
• Porter, M.E. (1990). « The Competitive Advantage of Nations. (cover story) », Harvard Business Review, vol.68, no.2,
73-93p. [Click here] (id = michael, pwd = porter)
• Griffiths A., Zammuto R. F. (2005) “Institutional Governance Systems and Variations in National Competitive
Advantage: An Integrative Framework”, Academy of Management, Vol. 30, No. 4, pp 823-842 [Click here] (id =
michael, pwd = porter)