Exam 1: Globalization

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Trade Trade has grown slightly faster than GDP and world trade has shrunk. The developments that will benefit global trade are: 1. Digital innovation and drive to sustainability: Digital innovation will continue to increase business opportunities as environmentally friendly products and business models are modified for different markets without being limited to a specific location. The high interconnectivity of economies will help bring about rapid change and the transmission of ideas globally. The global supply chain will need to adapt to respond to greater demands for sustainability. 2. Reverse innovation and mass customization: It is a phenomenon in which companies first develop products and services for emerging rather than developed economies. This demonstrates a shift from traditional mass production toward mass customization of products for specific markets. Companies will look to "glocalize" or determine the ultimate balance between globalization and localization. As intelligent systems are constructed that track information and consumer demand, companies will be able to better understand customer expectations and their influence. 3. Growth of micro multinationals: SMEs will be able to compete against larger firms by taking advantage of the digital revolution and high network interconnectivity. Digital platforms will create an even playing field, allowing SMEs to overcome cost advantages that prohibited them from participating in international trade. New technology such as 3D printing will allow smaller companies to deliver products globally like large MNCs. 4. Falling cost and rising speed of trade: Improvements in logistics will help expand trade. Advancements in transport technology and improved infrastructure will decrease shipping costs and lead to increased trade capacity, ultimately opening new trade routes. "5. Ongoing trade liberalization: It will expand free trade and harmonize standards and regulations to reduce trade barriers. A more stable political and financial environment will make trade favorable for MNCs. New rules and trade and investment terms should allow countries to return to a multilateral system. Foreign Direct Investment FDI has outpaced trade and GDP. FDI growth rates have not fully recovered to pre-financial crisis levels. FDI flows to developed countries has fallen to the lowest level in a decade. Inflows to the United States have fallen, flows to Europe have fallen, while Asia has received the bulk of inflows. Services account for the majority of investment, accounting for 63% of global FDI stock, doubling manufacturing shares. Increasing global flows has resulted in inward FDI flows to the U.S. They were driven by the improved performance of the US economy as well as cross-border M&As centered on reducing companies' tax obligations. People Increased global connectivity allows for the free movement of people more frequently and the ability to migrate for temporary and permanent jobs. Communities are continuing to adjust to the growing complexity and diversity within their populations. As the global population ages, countries will look to attract migrants to solve the labor shortage issues. Economies that are unable to fill this void and experience stagnant or negative population growth will struggle. Furthermore, the global workforce has become more diverse from a gender and ethnic perspective. Country of origin no longer determines a worker's geographical scope. Information The Internet helps convey distant information that connects everything around us. This enormous influence of overflowing data and information has led to "information claustrophobia." Convergence of information has also resulted in the development of "smart" machines and telecommunication technology that help us learn, improve, and understand task-specific contexts."

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A) Unification of the world into a single community
B) Impacts various economic dimensions of societies
C) Creates a community with limited social relations and confines social consciousness
D) Impacts political and sociocultural dimensions of societies

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A) Technological advancements
B) Decline of trade barriers
C) Expansion of free trade agreements (FTAs)
D) None of the above

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A) A capital investment made by a domestic party within the local economy
B) Both trade and GDP outpace it
C) Net inflows increased due to economic fragility and greater political risk
D) Majority of global FDI has been focused in service industries

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A) Free flow of trade and investment through fundamentalism and deregulation
B) Inevitability of capital flow across borders requiring promotion of fair trade
C) Believes globalism can and will benefit everyone
D) Assumes the free market dictates strategies and policies

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Market Globalism Market globalism is an ideology based on the assumption that globalization is driven by the free market and that it will benefit everyone. It advocates for free flows of trade and investment through deregulation and breeds increased competition through market fundamentalism. Justice Globalism Justice globalism represents a philosophy that attempts to utilize various strategies and policies to make globalization more equitable. It claims that widening global disparity should be recognized and corrected through redistribution of wealth and power. Fair trade, not free trade, should be promoted and to achieve this goal of equitable distribution, adequate control of capital flow across borders is inevitable. Additionally, environmental protection, improvement of human rights, and labor unions deserve greater attention. (Answers to the second question may vary.)

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The traditional mindset around outsourcing is changing as many MNCs are looking to return to partnerships and superior quality back on home soil. Some firms are looking to Latin America; the continent has thriving IT industries in Chile, Mexico, and Brazil and is starting to become a major global player. U.S. firms are also interested in establishing partnerships with Latin American countries due to cultural similarities, time-zone compatibility, and a tech-savvy demographic. Outsourcing is no longer about having providers abroad to be more cost effective but instead is about having providers that can support certain IT functions or services. Companies that are able to integrate national economies into international economies will reap tremendous benefits.

A) Scarcity of experienced leaders
B) Inconsistent educational standards
C) Greater exposure to risk
D) All of the above

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A) Higher labor costs
B) Constrained management time
C) Increased speed and delivery of outsourced activities
D) All of the above

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A) Integration and interdependence of various markets
B) Product standardization
C) Convergence of consumers' tastes and preferences
D) All of the above

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A) Technological stagnation
B) Shift from emerging markets to developed economies
C) Aging population
D) Decrease in flow of trade, capital, people, and information

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A) Protectionism
B) Standardization of goods and services
C) Cultural differences
D) National security

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