Globalization Era
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Ch3GlobalizationEffectsonCountryInstitutionsPeopleand.pptxGlobalization Effects on Country Institutions, People and Business
Chapter 3
Key Points for the Chapter
Economic development comprises positive economic growth and entails changes in a country’s political, economic, and cultural institutions, as well as in individual values, attitudes, and behaviors.
Economic development requires resources from public and private sectors, both internal and external.
Technology transfers by international corporations comprise manufacturing technologies, management organizations, and marketing know-how.
Intro: The Economic Development Process
Economic development is the progress countries make in living standards as they experience positive economic growth and the changes occurring in societal and cultural institutions and values as nations move toward more advanced stages of industrialization.
Economic progress demonstrates human progress, and more pragmatically, it keeps politicians in power, companies busy, and consumers (and voters) optimistic about the future.
Technology Transfers
International trade, investments, and global media have opened world markets up to a variety of modernizing influences.
In general terms, technology transfers occur as corporations enter new markets with products, technologies, lifestyles, and business methods developed in their home and other international markets.
Technology transfers first affect urban segments of developing countries where there are developed infrastructures and pocket of economically significant customers.
As media become commercialization and distribution channels are built into rural areas, greater proportions of developing-country populations come into contact with modernization influences.
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Positive Effects
Positive effects occur as societies are exposed to broad varieties of products that make lives easier.
Convenience products such as packaged foods, and consumer durables such as refrigerators, radios, televisions, and stoves have positive effects on consumer lifestyles.
New technologies in manufacturing and distribution make products cheaper and more widely available. They provide employment opportunities for local populations.
Not All Have Positive Effects…
Not all technology transfers have positive effects.
In the short term, modern products are only accessible to the affluent elites.
Commercial advertising also stimulates demand among poor consumers, causing frustration.
Increased competition in local marketplaces causes dislocations as indigenous companies find themselves unable to compete against international competitors, and local workers are disadvantaged because of their lack of education and workplace skills.
How People Change in Industrialized Societies
Many societies have been exposed to new technologies, and modernizing influences, but NOT all have been able to sustain their development efforts.
One key to sustaining development is the emulation cycle:
The process begins with individuals recognizing the limitations of traditional societies where birthright and seniority determine social positions.
As workers find jobs, they take on an industrial work ethic and their wages allow new consumption habits to form.
As time passes, their commitment to the industrial society increases.
Migration to towns, young workers join industrializing society
1. Industrializing society uses
6. Work hard to emulate of consumption patterns of social superiors
“Demonstration Effect” Exposure to new products, media, lifestyles
2. Work becomes “means to the end” work ethic cultivated
5. Commitment to industrial society increases
Wages allow new consumption patterns to form and
Materialistic behavior takes hold
Sustaining Economic Growth: The Emulation Cycle “Rat Race”
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Developmental Effects on Industry Behaviors
National trade policies affect company abilities to import vital machinery, equipment, components, and raw material supplies. This can be problematic in developing markets as governments restrict imports to conserve foreign exchange or to manage their trade balances.
Local labor costs and availability affect industry development and cost structures.
Demand factors affect industry growth rates and patterns.
Obstacles to Economic Development
Industrialization Process Impediments:
Population migration problems
Worker frustration
Worker adjustment problems
Geographic Impediments:
Resources impediments
Geographic locations
Ethnic and Linguistic Composition
Institutional Resistance to Change
