GLOBALIZATION

Presented By:
Daraius Variava
Seminar In Economic Policy

Date: 14
th
June 2014
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What is globalization?
Globalization is the acceleration and intensification of
interaction and integration among the people, companies,
and governments of different nations.
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This process has speeded up dramatically in the last two decades as

Technological advances make it easier for people to travel
Communication
Conduct Business internationally.

Two major recent driving forces are advances in telecommunications infrastructure
and the rise of the internet.


In general, as economies become more connected to other economies, they have not
only increased opportunity but also increased competition


History of globalization
The term globalization appeared in 60s

100,000 years ago the process of globalization started with
migration. The principal agents of globalization were soldiers (and
sailors), traders, preachers and adventurers

Alexander the great, Marco Polo, Ibn Batuta, Ganghis khan etc

Then there were the religious preachers Christian missionaries,
Muslim Sahabas, Buddhist monks used to preach religion globally

Because of these global preaching both these religions are
considered to be global religions with millions of followers
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History (Contd) Ancient Routes
Ancient routes like the silk route/ silk road, the GT road etc
have played an important role in linking the world
together.

Ancient routes like silk route were used to transport silk,
spices, tea
and precious stones and
jewellery

Spices found their way
from Asia to Europe, while
luxuries entered the Asian market.







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History The Slave trade
the increase in trade the demand
for labours such as miners and
farmers increased.

The need for miners and labours
resulted in Slave Trade

slaves were taken to the
developed world via vessels and
were tortured to death for not
obeying orders. Theses Africans
were not considered humans
because of there colour which
resulted in a racial genocide. The
whites even changed their name
so that their cultural heritage is
destroyed.


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History Opium War
In early 19
th
century the decreasing supply of silver led the British to replace it
with Indian opium for trading with china.

the Chinese got hooked

Chinese rulers placed regulations on imports and arrested British traders

Imperial Chinese opposition to the drug trade led to the Opium War- the first war
of globalization

Opium War 1839-42

Chinese got defeated

Ceded Hong Kong to Britain
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History - Role of East India
Company

East India Company became the first
Multinational and helped colonize the British
empire. The world economy integrated

The British are considered to be the first to
make foreign direct investments (FDI). These
FDIs were in the form of colonial investments.


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History - Industrial Revolution

The process of globalization got boost with
the introduction of steam engines, steam
ships and aircrafts reducing distances and
travel cost.

The globalization process got further boost
from Telegraphs, telephones, radios and
television which helped wire the world.

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The pro-globalization lobby argues that globalization brings
about much increased opportunities and competition for
almost everyone.

The anti-globalization group argues that certain groups of
people who are deprived in terms of resources are not
currently capable of functioning within the increased
competitive pressure that will be brought about by allowing
their economies to be more connected to the rest of the
world.

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Institutions that Govern
Globalization
Are
Three main institutions govern globalization: IMF, World
Bank and WTO

World Bank devoted to eradicate poverty

IMF to maintaining global stability

The World Trade Organization

is a entity (which currently has 144 members) that was set up to
formulate a set of rules to govern global trade and capital flows through
the process of member consensus, and to supervise their member
countries to ensure that the rules are being followed.


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Important anti-globalization organizations
include environmental groups
like Friends of the Earth and Greenpeace;
international aid organizations like Oxfam;
third world government organizations like the
G77; business organizations and trade unions
whose competitiveness is threatened by
globalization
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Important anti-globalization
organizations
Types of Globalization
1. Economic Globalization

2. Political Globalization

3. Cultural Globalization
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Economic Globalization
No national economy is an island now. To varying degrees, national
economies influence one another. One country which is capital-
rich invests in another country which is poor. One who has better
technologies sells these to others who lack such technologies.

requires that capitalism be accepted globally. This would require
significant restructuring and changes to the existing laws and practices in
many countries

Thus, globalization is predominantly an economic process involving
the transfer of economic resources form one country to another.
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Economic Globalization
MNCs from the developed world have started to
setup production in the developing countries because
of cheap labour & resources to gain competitive
advantage in the international market.

There are currently over 88,000 multinationals

while the developing countries benefit from the transfer
of technology and management skills.

Mergers and acquisitions are taking place to increase
the competitiveness.


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Economic Globalization is achieved through progressive changes in
laws and policies governing how countries exchange goods.

GATT and WTO have ensured that countries reduce their tariff and
non-tariff barriers so that the goods can flow freely between
countries.

Economic integrations refers to FTAs like NAFTA & EU are considered
to be the future of how trade will take place.
Abolishing of custom tariffs

Economic globalization
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Pakistans Trade Profile (WTO)
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Pakistans Trade Profile (WTO)
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Pakistans Trade Profile (WTO)

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Political Globalization
Since long, efforts have been on to bring the whole world under
one government. Governance for the matters like; global warming,
de-regulation of trade and nuclear proliferation

Political globalization take place above the state through political
integration schemes such as the European Union

And through organizations UN such as the International Monetary
Fund, the World Bank and the World Trade Organization have been
the efforts in that direction. It is believed that the world under one
government will be safer and freer from conflicts.

The member-states remain sovereign, but they have to fulfill
obligations and commitments, to be part of concerned
international organizations and groupings.

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Political Globalization
Current integrations
European Union (27 countries)
African Union (54)
to rid the continent of the remaining traces of colonization;
promote unity and solidarity among African States;
to intensify cooperation for development
to safeguard the sovereignty and territorial integrity of Member
States and
to promote international cooperation within the framework of the
United Nations.
future confederation's goals include the creation of a free trade
area, a customs union, a single market, a central bank, and a
common currency thereby establishing economic and monetary
union. The current plan is to establish an African Economic
Community with a single currency by 2023

Union of South American Nations (12)

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Globalization and Imperialism

the domination of a powerful country over a less
powerful country
also lead to invasions, occupations
Imperialism has existed for centuries now,

previously it was the britishers colonizing the globe.

now its US the sole super power dominating others with
either political force or the military force

The U.S.
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Since
independence
1776
At war
Close to 100
wars since
1776
Since 2001
Been
involved in
atleast 3
wars
Afghanistan,
Iraq & busy
bombarding
Pakistan
Plus it is
Threatening
Iran, North
Korea,
Pakistan and
Syria for
invasion

Playing a world police role
Drone attacks in Pakistan
Afghanistan and Iraq invasion etc
Globalization and
Imperialism

Pakistan and Political Globalization
US influences the political and economic
decision making in Pakistan (for example)

Forcing Pakistan to sign Tajikistan Afghanistan
Pakistan gas pipeline (2010)
instead of Iran Pakistan gas pipeline which was less costly
and less time consuming
the project offers a way to further isolate Iran

Forced Pakistan to hand over Gwadar to Singapore
Port Authority built by Chinese Engineers

didnt want China to get access to hot waters.

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Cultural Globalization
Arts, beliefs, institutions, and all other
products of human work and thought.
Culture; although intangible can be imported
or exported.

Homogenization of world culture
most dominant cultures are becoming larger and
more dominant at the expense of many others.

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Cultural Globalization
Expansion of trade in cultural products
Results in exposure of foreign culture in
society
Change in local culture ,values,
traditions
people's exposure to foreign culture can
undermine their own cultural identity
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Movies, Music,
Books etc.
Cultural Globalization
Culture exported/transmitted through
Literature and publications (Popular books have international markets
Harry Potter has readers almost all over the world)

Entertainment (English movies are seen almost in all countries.
Western pop music has become popular in developing countries.)

Social Interaction

Food (fast food culture McDonald's, Starbucks etc etc)

Education (our education promotes consumerism, capitalism,
materialism with little focus on ethics and religion. Our books are
written by foreign authors and gurus and these gurus are quoted in
every literature and research work because they are considered
infallibles or superior to our national experts or gurus.)



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Cultural Globalization
Language
English has become the global language

Many governments around the world have attempted
to protect their native cultures by imposing bans on
what they declare to be foreign cultural intrusions.

in Canada's French speaking province of Quebec,
provincial regulations stipulate that any sign containing
English posted by a business must also post the same text
in French in letters at least twice the size of the English
text.


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Globalization Vs Asian values
Asian values call for respect for authority
Family culture
Belief that community is more important than individual
While Globalization promotes individualism, capitalism,
materialism, political freedom and democracy

Western Values and Islam
The War of Terror (propaganda and stereotyping against
Muslims)
Ban on Naqab (France)
Ban on minaret (Switzerland they viewed them as an intrusion
to their culture and a symbol of victory for Muslims)


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Advantages
Increased free trade between nations

Increased liquidity of capital allowing investors in developed
nations to invest in developing nations

Corporations have greater flexibility to operate across borders

Increased flow of communications allows vital information to
be shared between individuals and corporations greater ease
and speed of transportation for goods and people

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Advantages

Greater interdependence of nation-states

Reduction of likelihood of war between developed nations

Transfer of technology from Developed world to the
Developing world




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Disadvantages
LOSS OF HIGHER PAYING JOBS (Unemployment): For developed
economies, globalization means a loss of higher paying jobs as
companies seek the cheapest skilled labor at the lowest cost.

CHEAP LABOUR MAY NOT HAVE SAME SKILL The new workers in
new counties may not have the same skill levels as the workers
they replaced. In that case, product quality suffers.

FOREIGN LABOUR MAY BE EXPLOITED BY PAYING LESS A real
threat exists that workers in less developed countries might be
exploited by foreign companies. These companies are attempting
to make the maximum profit and probably wont pay or treat
workers as well as they do in their home country.



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Media is controlled by a handful corporations,
mostly western affecting the culture of the
home country.

Spread of materialistic and capitalistic lifestyles

Western countries have pushed poorer
countries to eliminate trade barriers while
keeping barriers to their economy.

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SEVERE IMPACT ON ECONOMY: The impact of globalization on
Pakistan s economy has been severe. The economy has been
affected since 1988 by following policies of liberalization ,a key
component of globalization.

Radical Change Trade and industrial sectors have been
undergoing radical change in compliance with structural
adjustment programmes of IMF and World bank and than in
compliance with GATT and WTO.

Structural adjustment agreements of IMF and World Bank
have implemented result in increase in foreign debt, currency
devaluation, inflation, privatization etc.
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Globalization for Pakistan
No Significant Expansion in Trade: Pakistans expansion in trade
has not been as spectacular as that of some of the other
countries.

Pakistans share in the world merchandize exports has fallen from 0.15 to
0.13
Liberalization policies in the 90s did not have positive impact on PK
economy decline in the GDP growth rate, from 6.1% in the 1980s to
4.5% in the 1990s
INTEREST IN REAL ESTATE PROJECTS There has been a growing interest
from overseas investors in real estate projects in Pakistan . While this
could provide some benefit in terms of employment opportunities and
increased demand for construction material, investment of this nature
does not involve any transfer of technology.



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Globalization for Pakistan
LTERACY RATE In Pakistan the literacy rate is 54.9% (as per UNICEFs
report dated Dec 27
th
2013). According UNESCO, out of 221
countries who allocate more in their budgets for education Pakistan
is on 180th position.

INSUFFICIENT HEALTH FACILITIES General health opportunities are
barely adequate for a common citizen expensive private clinics are
increasing.

POVERTY HAS INCREASED ,World Bank has also failed Sustainable
employment opportunities have decreased and people under
poverty line have increased immensely. The number of poor in the
country has risen from 60 to 77 million since 2007 because of food
inflation (Food Crisis in Pakistan: Real or Artificial, October 16, 2008)



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Globalization for Pakistan
Recommendations
COLLABORATION & COORDINATION There is a need for a
coordinated and collaborative effort among the South Asian
countries to expand trade in the region.

SHIFT FROM AGRI TO INDUSTRIAL PRODUCTS Pakistan needs
to diversify its export base and shift from primary agricultural
products to more value added and industrial products.

ATTRACT FDIS Similarly, direct foreign investment is crucial for
resource mobilization. It is therefore, strongly recommended
that the government of Pakistan must attract foreign direct
investment by giving them various incentives.





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NEED TO UPGRADE HUMAN DEVELOPMENT (health, education,
employment)The most compelling factor for Pakistan to derive
benefits from globalization is to upgrade its human
development. Unfortunately this has been an area of neglect by
successive governments over a long period of its history.

In fact, this underdevelopment of human capital is the single
most daunting challenge facing Pakistan at present.
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Conclusion
Although Globalization has a power to do enormous good and the potential to enrich
everyone in the world, particularly the poor.

POOR HAVE NOT BENEFITED But unfortunately the poor has not benefited with the
process of globalization. There is an enormous cost associated with the continuing
global instability.

Western countries have pushed poorer countries to eliminate trade barriers


EFFECTIVE ALLOCATION & UTILIZATION RESOURCES The developing countries can
benefit form globalization if effective allocation and utilization of resources are ensured

Using resources effectively countries like Pakistan must focus on its competitive
advantage

However the economic benefit must not come at the expense of culture and
sovereignty of nation


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The search for magic formula to turn poverty in to prosperity failed

1.4 billion people in developing countries live on $1.25 a day or less.
(
IFAD
Rural Poverty Report 2011
)

Rural areas account for three out of every four people living on less than $1.25
a day.

(Human Development Report, 2007/2008)


22,000 children die each day due to conditions of poverty.

(UNICEF State of
the World's Children, 2010)


Globalization can be a positive force but only if these institutions
dramatically alter the way they operate
requires vigilance,
transparent mechanisms
and the rule of law

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Sources
WTO

Pakistan Trade Profile

http://www.unicef.org/infobycountry/pakistan_pakistan_statistics.html
http://unctad.org/en/PublicationsLibrary/wesp2014pr_en.pdf
http://www.wto.org/english/res_e/statis_e/its2013_e/its13_world_trade_dev_e.pdf
http://en.wikipedia.org/wiki/Political_union#Mixed_unions
http://en.wikipedia.org/wiki/African_Union#Economy
http://en.wikipedia.org/wiki/European_Union#Governance
http://en.wikipedia.org/wiki/2011_military_intervention_in_Libya
http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/columns/06-Mar-
2012/politics-of-iran-pakistan-gas-pipeline
http://en.wikipedia.org/wiki/Iran%E2%80%93Pakistan_gas_pipeline
http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/12-Sep-
2012/pew-supports-handing-over-gwadar-port-to-china
http://pakobserver.net/detailnews.asp?id=172588

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THANK YOU
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