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Globalization and
International Linkages
1
International Management
2
Globalization and Internationalization
Globalization
Process of social, political, economic, cultural, and
technological integration among countries around
the world.
Hastened by
Offshoring
Outsourcing
3
Globalization: Pros and Cons
Benefits of Globalization
Wealth
Jobs
Technology
Lower prices
Criticisms of Globalization
off-shoring of business and service jobs to lower-
wage countries
growing trade deficits
slow wage growth
environmental and social impacts
4
Global and Regional Integration
Global Agreements
World Trade Organization (WTO)
General Agreement on Tariffs and Trade (GATT)
Regional Agreements
North American Free Trade Agreement (NAFTA)
U.S.-Central American Free Trade Agreement
(CAFTA)
European Union (EU)
Association of Southeast Asian Nations (ASEAN)
Free Trade Agreement of the Americas (FTAA)
5
International Economic Power
in the Global Economy
Shifting landscape due to
Economic integration
6
The Worlds Largest Economies 2005 and 2020
(Projected)
Measured by GDP at Market Exchange Rates
7
Global Economic Systems
Market Economy
Command Economy
Mixed Economy
9
Economic Performance
by Major World Region
Established Economies
Emerging Economies
10
Economic Performance
Established Economies
North America
One of the four largest trading blocs in the world
Free-market-based economy is attractive to private
firms
United States
Foreign MNCs find U.S. a lucrative expansion market
Foreign firms welcomed as investors in U.S. market
U.S. firms hold market dominance in many European
markets; gaining market share in Asia
11
Economic Performance
Established Economies
Canada
U.S.s largest trading partner
Most of the largest foreign-owned Canadian
companies are totally or heavily U.S.-owned
Legal and business environment in Canada is similar
to that in U.S.
Mexico
Strongest Latin American economy
Very strong maquiladora industry
Trade with both Europe and Asia has increased
Now competitive with Asia for the U.S. market
12
Economic Performance
Established Economies
European Union
Ultimate objective
Foreign MNCs trying to gain foothold in EU
Acquisitions, alliances, cooperative R&D efforts
13
Economic Performance
Established Economies
Japan
Huge economic success in 1970s and 1980s
Keiretsu
Decade long recession in 1990s
Remains a formidable competitor in the Pacific Rim,
North America, and Europe
14
Economic Performance
Emerging Economies
Central and Eastern Europe
Russia
Czech Republic, Hungary, Poland
15
Economic Performance
Emerging Economies
China
Real economic growth of 12 percent in 2007, 9
percent in 2008, and 11.5 percent in 2009
Attractive to investors despite political risk
16
Economic Performance
Emerging Economies
South Korea
Chaebols
Hong Kong
Part of Peoples Republic of China
Uncertainty about the role the Chinese government
17
Economic Performance
Emerging Economies
Singapore
Success story
Leader and financial center for ASEAN region
Taiwan
Progressed from labor-intensive economy to one
dominated by technologically sophisticated
industries
18
Economic Performance
Emerging Economies
Thailand, Malaysia, Indonesia
Large population base
Inexpensive labor
Considerable natural resources
Attractive to outside investors
19
Economic Performance
Emerging Economies
India
Large population
Recent trend of locating software and high value-
added services to this country boosting middle- and
upper-class market for goods and services
20
Economic Performance
Developing Economies on the Verge
South America
Hampered by foreign debt and severe inflation
But, intercountry trade is increasing
Brazil
Economy is now flourishing and attracting
investment from MNCs
21
Economic Performance
Developing Economies on the Verge
Middle East and Central Asia
Large oil reserves
Highly unstable geopolitical and religious forces
Plagued by continuing economic problems
22