30 Kasım 2012 Cuma

Globalization

Globalization describes an ongoing process by which regional economies, societies and cultures have become integrated through a globe-spanning network of communication and exchange. The term is sometimes used to refer specifically to economic globalization: the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration and the spread of technology.[1]

As discussed above, globalization has a lot of dimensions; from economic to political, from social to cultural and from technological to ecological. In economic terms, globalization mainly refers to the growing interdependence of countries in an increasingly integrated world economy, growth of trade, increasing foreign direct investment (FDI), increasing importance of private actors in the contemporary global economy, especially in the financial sector. In political terms, it is perceived as the diminishing importance of political borders, the expansion of democracy, freedom of speech and the rule of law. In societal and cultural terms, globalization brought to the fore the increasing awareness of human rights, gender sensitivities and women empowerment. In technological terms, globalization includes the decreasing costs in communication and transportation, mainly the widespread use of internet. However, despite all these dimensions, we will mainly concentrate on economic aspects of globalization.[2]

Economic globalization is a historical process, the result of human innovation and technological progress. It refers to the increasing integration of economies around the world, particularly through the movement of goods, services and capital across borders. The term sometimes also refers to the movement of people and knowledge across international borders.

The term “globalization” began to be used more commonly in the 1980s, reflecting technological advances that made it easier and quicker to complete international transactions. It refers to an extension beyond national borders of the same market forces that have operated for centuries at all levels of human economic activity.[3] This term was not commonly used before but this does not mean that there was no indicator of globalization before 1980s. It was accepted that the globalization has evolved under three stages:[4]
  • Half a millennium ago, the people understood that they were living in a world which has limits and which is spherical. This has begun with the discovery of the new continent America.
  • In the 19th century, the Great Britain has started the rule most of the world by adapting the free trade between its colonies all over the world. This might be the first trial of the global economy. The communication, transaportation have been improved.
  • After the World War II; UN and NATO were established and they have tried to protect the world from big wars. It helps the world to become more global. In order to give one cue about globalization before 1980s, the international trade has been folded ten times between 1950 and 1975[5] which shows that the borders were meaningless for international trade. The world economy has become much more integrated in recent years because of the combined affects of market incentives or international organizations such as the World Trade Organization (WTO). There are also an increasing number of regional trade agreements, covering such areas as the Asia-Pacific region, North America, as well as Europe.[6] 
 In addition to this, other sources claim that the globalization has occured in other three different stages:[7]
  • In the first stage the war between people was the first touch of different types of people.
  • In the second stage, the intellectual and political aspect of the globalization was in place.
  • In the third stage, the people tend to be more aesthetic or spiritual which leads to creativitiy. 
There are some indicators that illustrate how goods, capital and people have become more globalized. These are shown as follows:[8]
  • The value of trade (goods and services) as a percentage of world’s GDP increased from 42.1% in 1980 to 62.1% in 2007.
  • Foreign direct investments (which we will discuss in detail in the later chapters) have increased from 6.5% of world GDP in 1980 to 31.8% in 2006.
  • The stock of international claims (primarily bank loans), as a percentage of world GDP, increased from roughly 10% in 1980 to 48% in 2006.
  • The number of minutes spent on cross-border telephone calls, on a per-capita basis, increased from 7.3 in 1991 to 28.8 in 2006.
  • The number of foreign workers has increased from 78 million people (2.4% of the world population) in 1965 to 191 million people (3.0% of the world population) in 2005.
The globalization shows itself in the lifes of the people. For example the internet users were only 0.4% of the world population in 1995 but in 2008 it has reached to 23.3%. This percentage has been increasing since 1995 and it is expected to be more in the coming years. This is not because of the technology is followed by the young people but also by the businessmen and the tradesmen. They have started to use internet in order to do overseas business.
  
As the countries become more globalized, they think the world as a borderless earth and they try to acquire their requirements from anywhere they can find. Therefore; technology, work force, capital etc. can be easily replaced with another alternative that can be found in another place in the world.
  
As technology goes in, work is outsourced and the number of people doing paid work is reduced. More technology goes in and the same work that was previously outsourced is insourced but with much less paid work required. This cycle is repeated over and over in quicker loops as technology gets faster, smaller, more integrated and more human-like. The globalizing labor force promotes top-down behavior. From the macro economics view, value chains drive cheap labor and automation. The net result is profit for companies and readily available goods for the individual. The increasing displacement is driving a bottom-up phenomenon. From the micro-economic view people are ill equipped to adapt to the increasing rate-of-change.[9]

To open globalization subject more, we can also say that it is a type of management challenge which is a process that includes building world wide teams, customizing products and services special to the national preferences, communicating with a multinational workforce and developing career strategies with a global view.[10] This shows that global companies should be managing their oversea operations by recruiting new staffs who are from that culture but also convenient for the principles and culture of the companies. They should represent the company in all environments with their utmost capability but shouldn’t show them as if they are underestimating their local people. If this can not be achieved, the result will be a big loss for the company. According to this, we have understood that globalization is also creating losers as well as winners. The companies should “think globally” which might be the keyword for trade in this century and also should act as locals as HSBC is saying in its advertisements (world’s local bank).

The other aspect of globalization is to offer the standardized products or services to the local buyers. This is because the people expect the same quality of services from the same companies. If one consumer buys one shirt from Marks and Spencer in UK while he was having a vacation, he expects the same quality in his motherland. Therefore, global marketing of standardized products to global consumers is a concept that has been increasing in the last years. The argument for global standardization was initiated by Theodore Levitt in 1983 as follows: [11]
  • Customers needs and interests becoming increasingly homogeneous worldwide.
  • People around the world willing to sacrifice preferences for such things as product features, functions and design for lower prices at high quality.
  • Substantial economies of scale in production and marketing can be achieved through supplying global markets.
Although globalization has vital and important effects in the lifes of the people, there are also anti-globalization parties which claim that globalization has increased the poverty and it has caused several attacks to the stability of the economies. The globalization processes which are lived in social, cultural, economic, political and technological spheres bring about new structures which change the societal structures in an irreversible manner. These structural changes shake the existing sensitive equilibria of the previous order and cause radical changes in the survival strategies of the world’s societies. Naturally, the societies which are affected by these processes develop various resistance mechanisms in order to resist these changes; to change the direction of the ongoing processes for their benefit or at least to have the least harm during these transition processes. Actually, the Anti/Alternative Globalization Movements (AGMs) are a resistance to these changes as well as a mechanism for affecting the changes, which the world’s societies exhibit against the unavoidable globalization processes with the aim of operating these changes for the benefit of the societies.[12]


[1] Jagdish N. Bhagwati, In Defense of Globalization, US, Oxford University Press US, 2004, p.3.
[2] Zeynep Sütalan, “Globalization and The Political Economy of Reform in Jordan (1989-2001)”, Master Thesis, ODTÜ SBE, 2006, p.8-9.
[3] IMF, “Globalization: A Brief Overview”,  IMF Issues Brief, Issue: 02/08, May 2008, p.2.
[4] Daniel Cohen, Globalization and Its Enemies, US, MIT Press, 2007, p.4-6
[5] Malcolm Waters, Globalization, US, Routledge, 2001, p.60.
[6] Müslüm Aydoğmuş, “Geopolitics Versus Globalization: United States’ Foreign Policy After September 11, 2001”, Master Thesis, ODTÜ SBE, 2007, p.8.
[7] Jacques Audinet, The Human Face of Globalization: From Multicultural to Mestizaje, US, Rowman & Littlefield, 2004, p.130.
[8] IMF, p.3.
[10] Apud TANG, Roger Y. W. Intrafirm Trade and Global Transfer Pricing Regulations. London, Quorum Books, 1997, p. 5
[11] Burak Kartal and Canan Ay, “Globalizasyonun Çokuluslu Isletmelerin Pazarlama ve Yönetimine Etkisi”, Yonetim ve Ekonomi, Vol: 11, No: 2, 2004, p. 15.
[12] Müjgan Ergül Yılmaz, “The Anti/Alternative-Globalization Movement: A Case Study on Turkey”, Master Thesis, ODTÜ SBE, 2007, p.1.

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