Macro economics – Globalization

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Globalization & Discontent Globalization & Discontent Globalization & Discontent Prepared By: ManoharM. M. Iyer VAS2010XMBA15P005 Globalization & Discontent

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Macro economics – Globalization

Transcript of Macro economics – Globalization

Page 1: Macro economics – Globalization

Globalization & DiscontentGlobalization & Discontent

Globalization & Discontent

Prepared By: Manohar M. M. Iyer

VAS2010XMBA15P005

Globalization & Discontent

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Introduction

• Globalization

– Extending or reaching to other parts of the world

– to tap Resources & Market available thereto tap Resources & Market available there

– and fulfill the socio-economic Need or Greed

– of the home country or region or company.

Prepared By: Manohar M. M. Iyer

VAS2010XMBA15P005

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Content or discontent?

• Does the globalization activities

– strictly adhere to ethical principles?– strictly adhere to ethical principles?

– Provide welfare to all the stake holders involved?

Prepared By: Manohar M. M. Iyer

VAS2010XMBA15P005

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Is it Positive?

• Outsourcing lowers the production costs.

• Developing countries get employment.

• Access to the latest technology are shared.

• Quality of goods are world class.• Quality of goods are world class.

• Improvement in human rights as any

violations draws the attention of world media.

Prepared By: Manohar M. M. Iyer

VAS2010XMBA15P005

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Isn’t it Negative?

• Increased competition forces local companies

to lower prices.

• Developed countries loses employment.

• Investments made on technology loses value • Investments made on technology loses value

far quickly as it becomes obsolete very fast.

• To provide world class products, companies

need to invest in APing of each other.

• Job security is an issue as cheap labor

dominates decisions.

Prepared By: Manohar M. M. Iyer

VAS2010XMBA15P005

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Unfortunate Facts

• Nike has been accused of using child labor in

the production of its soccer balls in Pakistan

where a typical person survives barely on $5

per day.

• Since 1960s United States began losing • Since 1960s United States began losing

automotive manufacturing jobs to Japan.

• Since fuel prices are driven by global markets,

the cost of living in one part of the world is

affected by price changes in another part of

worldPrepared By: Manohar M. M. Iyer

VAS2010XMBA15P005

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Facts from History

• We can even say vital events of world history like:

– European sailors discovering new lands

– exploring resources there

– Trading goods between the nations

– Settling in the discovered land– Settling in the discovered land

– Conquering the Land

– Favoring needs of people in home land

– Violating rights of people in the foreign land

– resulting wars of independence, rebellions and world wars

were some negative effects caused by globalization

though this word was not coined at that time.Prepared By: Manohar M. M. Iyer

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Recent Facts

• US president Obama who came to Mumbai yesterday

(06/11/2010) along with 200 CEOs from US. He was more

like a salesman than a statesman. Per him:

– “no reason why India cannot be our top trading partner”

– “Boeing is going to sell dozens of planes to India”– “Boeing is going to sell dozens of planes to India”

– “GE is going to sell hundreds of electric engines”

– “The deals are worth USD 10 billion and will create more

than 50,000 jobs in the US”

– “India is a market of the future where US was willing to step

up investments”

– “Ease of export rules, ending the technology denial regime

against Indian entities such as DRDO and ISRO”Prepared By: Manohar M. M. Iyer

VAS2010XMBA15P005

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Ironies

• US president Obama has come to India to create more

than 50,000 jobs in the US using the purchasing

power of India i.e. transfer of Indian money to US.

• On 22/10/2010 US pledged to provide $2.29 billion to

Pakistan as a long term military aid i.e. transfer of US Pakistan as a long term military aid i.e. transfer of US

money to Pakistan

• There are evidences to prove that Pakistan is using US

aid to enhance defence against India and to prove

that it is spreading terrorism in India

Prepared By: Manohar M. M. Iyer

VAS2010XMBA15P005

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Has Globalization actually brought Discontent?

Case Study follows………

Prepared By: Manohar M. M. Iyer

VAS2010XMBA15P005

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Victim of GlobalizationDecline of once World’s super Power:Decline of once World’s super Power:

US

Prepared By: Manohar M. M. Iyer

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Some reasons

• Insecurity: Competition with foreign workers,

resulting in decrease in wages and general standard

of living.

• Fiscal crisis of the state: Less dependency on one

nation, resulting in a shrinking tax base - Govt. nation, resulting in a shrinking tax base - Govt.

expenses to outrace revenues.

• Double standards: TNC’s got basically everything

they wanted: the collapse of communism, free trade

agreements, deregulation, lower taxes, the

weakening of trade unions and the pushing down of

wage rates and deregulation.

Prepared By: Manohar M. M. Iyer

VAS2010XMBA15P005

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Insecurity: Examples

• General Motors

– has laid off 70,000 workers since 1993

– General Motors now ranks as the wealthiest U.S. corporation, with

$168 billion in revenues in 1995 alone

– Equal to the annual wages of more than 19 million Americans earning

the minimum wage.

• The Times pointed out :

– "between 1991 and 1995, nearly 2.5 million Americans had lost their

jobs because of corporate restructuring“

– “the top pay for corporate executives has soared to nearly 200 times

that of the average worker.”

– “stock prices keep rising on Wall Street while Main Street is littered

with the bodies of workers ”

• Between 1983 and 1993 banks in the U.S. replaced 179,000 human tellers

with automated teller machines Prepared By: Manohar M. M. Iyer

VAS2010XMBA15P005

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Fiscal crisis

• Unemployment hits the income tax revenue of the Govt. At the

same time the demand for unemployment insurance and food

stamps increases.

• Federal govt. debt stood at $4.9 trillion in early 1996.

• The interest US paid to the owners of that debt is $232 billion in a

single year.single year.

• The corporate share of the tax load was cut.

• In the early 1950s, corporations paid 76 cents in taxes for every one

dollar paid by families and individuals

• By 1992 corporations were paying just 21 cents for every one dollar

in taxes paid by families and individuals

• Tax load was pushed onto the workers. However some of it was

financed through deficit spending: issuing government bonds to

borrow from the capital markets.Prepared By: Manohar M. M. Iyer

VAS2010XMBA15P005

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Casino Economy

• Shift from productive investment to

speculative investment.

• Annual value of Global merchandise trade is

about $4 trillion.

• The global derivatives market equals this

dollar volume of transactions in just two days!

• This has weakened the power of many

government to control national economies

and protect people's jobs.

Prepared By: Manohar M. M. Iyer

VAS2010XMBA15P005

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US: A third world country?

• The gap between high- and low-income families has widened

steadily since about 1980, hitting a new high every year since

1985.

• In 1992, average weekly earnings in the private, non-

agricultural part of the U.S. economy were 19 percent below

their peak in the early 1970s.their peak in the early 1970s.

• Nearly one-fourth of the U.S. workforce now earns less in real

terms than the 1968 minimum wage it has a significant

portion of the population living in poverty

• Yet corporate profits and the salaries of top management

have soared. The average pay of Chief Executive Officers at

the 362 largest companies in the U.S. jumped 30 percent

during 1995 to an average of $3,746,392Prepared By: Manohar M. M. Iyer

VAS2010XMBA15P005

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Prepared By: Manohar M. M. Iyer

VAS2010XMBA15P005

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Thus we can see that

Globalization has generated

lots of Discontent among all lots of Discontent among all

stakeholders involved due to

transformation of need into

Greed

Prepared By: Manohar M. M. Iyer

VAS2010XMBA15P005

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Globalization & DiscontentGlobalization & Discontent

I thank one and all who have provided me the knowledge &

support to prepare this Presentation.

Please feel free to forward your valuable feedback, comments,

queries and suggestions related to this presentation at

[email protected].

Thank you,

Warm regards,

Manohar M. M. Iyer

Prepared By: Manohar M. M. Iyer

VAS2010XMBA15P005