Globalization Globalization and its effects and its effects on developing on developing

worldworld

OutlineOutline• What we understand by globalization• Introducing globalization, and its characteristics. • Importance of Globalization• Social Consequences of Market Globalization

• Globalization and economic development in Eastern Europe

• Globalization and economic development in Africa.

GLOBALIZATION!GLOBALIZATION!

What is Globalization?What is Globalization?• A Turkish national, receives a Master's degree in

France, will work for an American registered company, which is based in China and started by an Italian....

• This is called GLOBALIZATION!

Phases of Phases of Globalization!Globalization!

Has simply Has simply accelerated accelerated and gained and gained

complex complex characteristics characteristics

in recent in recent decades.decades.

Globalization is not a new

phenomenon; early

civilizations in the

Mediterranean, Meddle

East, Asia, Africa, and

Europe have all contributed

to the growth of cross-

border trade over time.

Importance of Importance of GLOBALIZATION!GLOBALIZATION!

Law of Competitive Advantage...(Because of Trade Liberalization)

OpennessOpenness==

(Ex+Im)/ GDP(Ex+Im)/ GDP

• Netherlands 99%• Canada 70%• Germany 56%• South Korea 53%• Norway 49%• France 43%• UK 39%• US 22%• Japan 18%

Economics at the World

Bank have found that

economic growth rates are

closely related to the

openness to trade,

education, and

communication

infrastructure.

Source: IMF

Social Consequences Social Consequences of Market of Market

Globalization!Globalization!• Loss of National Sovereignty  • Off shoring and the flight of jobs• Effect on the Poor• Effect on the Natural Environment• Effect on the National Culture

Eastern EuropeEastern Europe

Obstacles encountered Obstacles encountered by EE countries. by EE countries. 

• Lack of standardized business accounting knowledge   

• Lack of practical applications on education• Coping with the competition from Asia• Too much government interference• Prevailing role of government in contracting• Cultural and language barriers

Market access-Market access-the most the most important important

factor factor considering considering

FDIFDIGlobalization come to

Eastern Europe mainly

through FDI.

The factors helping in

reaching the markets of

Eastern European

countries, may well be tax

advantages offered to

foreigner investors.

Corruption in Privatization.

Savings in Labor and Savings in Labor and Material costsMaterial costs

CEE advantages vs CEE advantages vs China in many China in many

industriesindustries