GLOBALISATION TRADE AND DEVELOPMENT

By Mohammad Ayaz Khan (E)15

GLOBALISATION

Definition: The movement towards the expansion of economic and social ties between countries through the spread of corporate institutions and the capitalist philosophy that leads to the shrinking of the world in economic terms. Economists define it as the free movement of goods, services, labor and capital across borders. World Bank defines globalization as "Freedom and ability of individuals and firms to initiate voluntary economic transactions with residents of other countries" (Milanovic, B 2002).

BELONGINGS OF GLOBALIZATION TRADE AND DEVELOPMENT

GLOBALISATION

Globalisation could involve all these things!

THE BRIGHT SIDE OF GLOBALIZATION

DEVELOPMENT AND INTEGRATION OF ECONOMIES

The increasing reliance of economies on each other The opportunities to be able to buy and sell in any country in the world The opportunities for labour and capital to locate anywhere in the world The growth of global markets in finance

Stock Markets are now accessible from anywhere in the world!

DEVELOPMENT OF ECONOMIES

Made possible by:

Technology Communication Internet

networks

access Growth of economic cooperation trading blocs (EU, NAFTA,SAFTA etc.) Collapse of communism Movement to free trade

TRADE ?

Benefits of Trade:

Increased choice Greater potential for growth Increase international economies of scale Greater employment opportunities
Trade has led to massive increases in wealth for many countries.

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THE GLOBAL FREE-TRADE

The argument for free trade rests on the of intuition:

Comparative

advantage. A country enjoys a comparative advantage in the production of a good if the production of that good has a lower opportunity cost than it would have if produced in another country.

CORPORATE EXPANSION

No matter where you go in the world, certain businesses will always have a presence.

Multi-national or trans-national corporations (MNCs or TNCs) businesses with a headquarters in one country but with business operations in a number of others.

CORPORATE EXPANSION

Characteristics:

Expanding revenue Lowering costs Sourcing raw materials Controlling key supplies Control of processing Global economies of scale

Controlling supplies may be one reason for global expansion.

THE DARK SIDE FO GLOBALIZATION

TRADE ?

Disadvantages of trade:

Increase in gap between the rich and the poor Dominance of global trade by the rich, northern hemisphere countries Lack of opportunities for the poor to be able to have access to markets Exploitation of workers and growers

How far does trade help children?

CORPORATE DOMINATION

Key Issues: Damage to the environment? Exploitation of labour? Monopoly power Economic degradation Non-renewable resources Damage to cultures
Shell and Nikes activities have come under severe criticism in some quarters.

ANTI GLOBALIZATION MOVEMENTS

The establishment of the WTO in 1995 and subsequent protests led to a large-scale antiglobalization movement that is primarily concerned with the negative impact of globalization in developing countries. Their concerns range from environmental issues to issues like democracy, national sovereignty and the exploitation of workers

Naomi Klein argues in her book No Logo, anti-globalism can denote either a single social movement or an umbrella term that encompasses a number of separate social movements such as nationalists and socialists. In either case, participants stand in opposition to the unregulated political power of large, multi-national corporations, as the corporations exercise power through leveraging trade agreements which in some instances create unemployment, and damage the democratic rights of citizen

OTHER ISSUES:

There are plenty of people who believe that globalisation is a negative development, protests at the G8 summits, pollution, poverty and concern over GM crops are just some of the issues.

Accountability of Global businesses? Increased gap between rich and poor fuels potential terrorist reaction Ethical responsibility of business? Efforts to remove trade barriers Exploitation of child labor Environmental degradation Destruction of indigenous cultures Destruction of small farmers Genetically engineered foods

Thank you