Globalization Era
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Ch2GlobalizationandWorldwideInfrastructureDevelopment.pptxGlobalization and Worldwide Infrastructure Development
Chapter 2
Key Points
World economic progress has been greatly facilitated by public and private infrastructure development. The United Nations, via agencies such as the ICAO, IMO, IMF, WTO and the World Bank, has laid many of the foundations for world trade through its effects on transportation, currency exchanges, and developing country infrastructures.
Private sector contributions to world infrastructures include more efficient transportation, global media and communications, and worldwide distribution services.
Economic and political integration has occurred as countries have joined together in trade blocs to access each other’s markets and products.
The advent of market forces capitalism worldwide has prompted national governments to private state-owned industries and deregulate others to make them more efficient and responsive to the marketplace.
This Chapter…
The beginning of this chapter describes How the UN contributes to world infrastructure development. The description of many of the agencies helping developed as well as developing countries are explained.
It also explains financial infrastructures and their role in establishing foreign exchange rate values and gives a historical perspective.
Although very interesting content, in our shorten semester/course, you may skip this reading and begin on page 58. Next slide –
Free Trade – Protectionism Debate
Free Trade – Protectionism Debate
Pro-free trade arguments include:
Free trade promotes global competition, which benefits consumers through increased varieties of products and lower prices.
The economic interdependencies of trade and global commerce make countries less likely to go to war.
The uneven distribution of global resources, particularly in commodities, makes trade inevitable.
Trade helps emerging economies develop through technology transfers.
World trade encouraging efficient use of global resources.
Global competition forces companies to become more efficient and innovative.
Trade as a source of global education has made countries and peoples increasingly aware of world events and problems.
Exporting creates jobs.
Free trade has very much become associated with world development.
Countries specialize and export those goods in which they have comparative advantages, and they import products that they produce less effectively than other nations.
Competition forces countries to focus on industries in which they are competitive.
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Free Trade Debate - Continued
Protectionist/anti-free trade arguments tend to be country or industry focused and include:
Job loss- global competition through imports causes unemployment in national economies.
Low developing-country wage rates represent unfair competition. Industrialized countries argue that emergent-nation wage rates are too low.
Infant industry argument. Start-up industries often need time to build up experience and scale economies before being exposed to international competition.
Strategic industry arguments. There are some industries that governments label “strategic” and that are sheltered from international competition.
Uneven playing fields – Some countries are alleged to practice “managed trade policies,” whereby governments effectively shield domestic producers.
Managed trade accounts. Countries often restrict trade to a level where export earnings in convertible currencies cover import bills.
Free trade and economic restructuring.
Cultural protectionism.
Developing countries have actively lobbied against low-wage arguments at the WTO, claiming that their cheap labor is a legitimate competitive advantage.
Free trade has significant repercussions as resources are moved out of uncompetitive sectors into industries with secure long-term prospects.
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Internet Effects on Global Commerce
Global e-commerce generated close to $4 trillion in 2004, with business-to-business dominating business-to-consumer purchases by a 2 to 1 margin.
Worldwide websites are expected to be a major facilitators of global trade.
Current product lines and brochures can be promoted.
Sales orders and inquires can be received 24 hours a day.
Communications are less affected by time differences.
Satellite technology has made global communications a reality. Recent advances have greatly expanded the variety, availability, and potential uses for satellite technology, whose costs have decreased with mass-market usage.
Global media developments proliferated over the 19902 and into the new millennium. Global television has become a reality.
Types of Trade Blocs
Free trade areas are first established to abolish internal tariffs among member nations while maintaining their own external tariffs against nonmembers.
Customs unions not only eliminate internal tariffs among member states but also instigate common externa tariffs.
Common markets have no internal tariffs, a common external tariff, and free movements of labor and capital among member countries.
Full economic integration brings member nations closer to single-market status as non-tariff barriers such as national product standards, labeling and product testing requirements are harmonized.
Political integration is the final stage and involves member states sacrificing national economic and political sovereignty to integrate fiscal, monetary policies and institute a common currency to replace national currencies.
Formation of Economic/Political Blocs
The remaining chapter is details the various Economic and Political blocs that have been formed over the years.
Although very interesting – read this section only if you have time.
