Econ401 Global economy main point (first class)(Global第一堂课-第一章的重点在此

Econ401 Global economy main point (first class)

guide leturer:Dr.Clive Padfield(Canada)

Ch.1 globalization



Globalization refers to the shift toward a more integrated and interdependent world econ.It consists of 2 points-market and production.



The globalization of markets refers to the merging of historically distinct and separate national markets into one huge global marketplace.



By offering a standardized product worldwide,that help to create a global market.

The most global markets currently are not markets for consumer products,for markets –infustrial goods and materials.



The globalization of production refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production(such as labor,energy,capital)



Companies hope to lower coststructure and improve the quality of their product,thereby allowing them to compete more effectively.



Drivers of globalization

(i) declining trade and investment barriers

occur foreign direct investment(FDI),GATT,WTO etc….

allows firms to base production at the optimal location for that activity,serving the world market from that location.

Facilitated the globalization of production

FDI is playing an increasing role in the global economy as firms ranging in size.



(ii) technological change

strinking distance,advances in communication,information,transportation technology.

Ex:internet

Technological have changed human lifestyle and increased cross-border trade already.

Ex:E-marketing



But globlization critized and concerned by somebody because of these reasons:



(i) when companies relocate they don’t care about the environment.(Ex:2009,Malaysia poisoning factory case)

(ii) Global firm for large more powerful than government(soverignty)(Ex:Microsoft??)

(iii) Producing an homogenized culture(culture “attacked”,Ex:Ivory coast-Pepsi cola case ,from drawback of advertising ,published by Malaysia consumer association,1996)

(iv) Economical scale when firm produce in large volume the per unit decreases(Ex:They argue that free trade will result in countries specializing in the production of those goods and services that can produce most efficiently,while importing goods that they can’t produce as efficiently)(maybe cause to home currency depreciate)

(v) Widen world economical inequality(Ex:USA and Ghana)

(vi) Dumping,turn around cost,unfair for workers，especially most of third world countries



4 reasons why managing an international business is different from managing a domestic business.

(i)countries are different

(ii)the range of problems confronted by a manager in an international business is wider and the problems themselves more complex than those confronted by a manager in a domestic business

(iii)managers in an international business must find ways to work within the limits imposed by governments intervention in the international trade and investment system

(iv)international transactions involve converting money into different currencies