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- Disadvantages: -Advantages:
Destroyed Value
Reduced Flexibility Can reduce investment risk
Increases customer base of the
2. Vertical Integration company
- Occurs when a firms performs more -Disadvantages:
than one activity in the sequence of the
marketing process. Management costs increases due to
size of the group.
Taxation of group structure reduces the
taxation benefits.
Degree of Integration
1. Ownership Integration
- Decision and assets are assured by
another firm.
2. Contract Integration
- Agreement on both firms on certain
decisions while having separate identity.
Global
System
-Disadvantages:
- A regularly interacting group or
It can bring more difficulties interdependent group of items forming a
Requires huge amount of unified whole.
money
Creates barriers to market entry
The Modern World System
Decrease in flexibility
• Followed the crisis of the feudal
system in Europe and helps explain
the rise of Western Europe to world
supremacy between 1450 to 1670
• World economic system emerged
• Now a global economy with a global
political system (the modern 3. International Finance Corporation
interstate system)
(IFC): provide loans for private sectors
• Structured politically as interstate
system – a system of competing in developing countries.
and allying states 4. Multilateral Investment Guarantee
• A single global economy composed Agency (MIGA): to promote foreign
of international trade and capital direct investment in developing
flows, transnational corporations countries.
that produce products on several 5. International Centre for Settlement of
continents, as well as all the Investments Disputes (ICSID): forum
economic transactions that for investors in most of international
occur within countries and at local
investments.
levels.
• Rise and fall of hegemonic powers
6. International Monetary Fund (IMF):
ensure the stability of international
monetary system.
Elements of State
1. People
2. Territory
3. Sovereignty
4. Government
Global Economy
- Refers to the increasing integration of
economies around the world particularly
the movement of goods, services, and
capital across borders.
World Bank Group Macroeconomics
1. International Bank Reconstruction & - The study of the behavior and decisions
Development (IBRD) : offer loans to of entire economies.
middles class countries and improve
their economy.
2. International Development
Association (IDA): provide loans and
grant programs that boost economic
growth.
Globalization Indicator of Development
- A modern term used to describe the 1. Per Capita GDP
changes in societies and the world 2. Energy Consumption
economy that result from dramatically 3. Labor Force
increased international trade and 4. Literacy
cultural exchange. 5. Infant Morality
6. Life Expectancy
The Phenomenon can Thus Several 7. Consumer Goods
Interconnected Dimension Issues in Development
1. Rapid population growth
A. The Globalization of Trade of Goods 2. Resource distribution
and Services 3. Lack of Physical Capital
B. The Globalization of Finance and 4. Lack of Human Capital
Capital Market Health/Nutrition
C. The Globalization of Technology and Education/Training
Communication “Brain Drain”
D. The Globalization of Industry 5. Political Factors
Shifting from Colonial
Why do Nations Trade? Dependency
- They are diff. from each other. Government Corruption
- To achieve economies of scale in Political Instability (civil wars,
production. social unrest, lack of
Drivers of Globalization government infrastructures)
- The declined in barriers to the free flow 6. Debt
of goods services and capital that has World Bank
since the end of the WW2. - Vital source of financial and technical
- The technological chance, particularly assistance to developing countries
the dramatic development in recent - Made up of 186 member countries
years in communication, information - Provide low interest loans
processing and transpo technologies. - Est. 1944 in Washington, D.C
- 3 Pillars of World Bank:
The Globalization Market Results
- Merging of historically distinct and
Reform
separate national markets into one huge
Resources
global market place.
International Monetary Fund
- Started in 1944 in Bretton Woods
Trade Barriers
Conference
- Preventing a foreign product from freely
- Foster global monetary cooperation, etc.
entering into a nation’s territory.
- Creates structural adjustment programs
in less developing countries.
Types of Trade barriers
World Trade Org.
1. Import Quota
- Dealing with rules of trade bet. nations
2. Voluntary Export Restraint
- Est. Jan 1, 1995 Geneva, Switzerland
3. Tariff
- 153 countries
4. Informal Barriers
- Functions:
5. Government Licensing Restrictions
6. Government Health and Safety Administering WTO Trade
Requirements agreements
Forum for trade Negotiations
Protectionism Handling trade disputes
- The use of trade barriers to protect Monitoring national trade
industries from foreign competition. policies
Technical assistance and
International Agreements training for developing countries
1. World Trade Org. (1995) Cooperation with other
- Dealing with global rules of trade international org
between nations.
- Ensures trade flows as smoothly, WORLD OF REGIONS: GLOBAL DIVIDES –
predictability, and freely as possible. THE NORTH AND SOUTH
2. European Union (1951/1999)
- Regional Economic agreement among Global North
27 countries across the European - Include the U.S.A, Canada, Europe,,
continent. developed parts of Asia, as well as
3. NAFTA (1994) Australia and New Zealand.
- Removed most barriers to trade and - Defined as the richer, more developed
investment among the U.S.A, Canada, region.
and Mexico. - 95% of the North has enough food and
- All the non-tariff were eliminated. shelter
Global South
Development - Is made up of Africa, Latin America, and
- A nation improves the economic, developing Asia including the Middle
political, and social wellbeing of its East.
people. - South largely corresponds with the 3rd
World.
GLOBAL INTERSTATE SYSTEM Security Council Chamber, located in
the United Nations building in New York
What is GLOBALIZATION? City.
- An ongoing process of integration
between different nations to encourage 3. United Nations Economic and Social
the flow of goods, services, capital and Council (ECOSOC)
labor. - ECOSOC brings people and issues
together to promote collective action for
Global Interstate System a sustainable world
- Refers to a controlled access for
national relations. It is the study of - At the centre of the UN development
interconnected of social, politics, system, we conduct cutting-edge
economics, and low on a global level. analysis, agree on global norms and
advocate for progress.
The Union of International Associations (UIA)
- A research institute and documentation - Central body for coordinating the
centre, based in Brussels, was founded economic and social work of the United
over 100 years ago, in 1907 by Henri La Nations and the UN System.
Fontaine and Paul Ollet, a founding
father of what is now called Information 4. The Trusteeship Council
Science. - The system was created at the end of the
- Non-profit, apolitical, independent, and World War II to promote the
non-governmental in nature, the UIA advancement of the inhabitants of those
has been a pioneer in the research, dependent Territories and their
monitoring, and provisions of info. On progressive development towards self-
International Org., International governance or independence.
associations, and their global challenges
since 1907. - Council is comprised of the permanent
- The UIA has consultative status with members of the Security Council—
ECOSOC and associate status with China, France, the Russian Federation,
UNESCO. the United Kingdom and the United
States.
UNESCO
- Intergovernmental org. tasked to
promote international co-operation and - 11 trust territories
create and maintain international order. Western Samoa
- Objectives include maintain international Tanganyika
peace and security, promoting human Rwanda-Urundi
rights, fostering social and economic Cameroons under British administration
development, protecting the Cameroons under French administration
environment, and providing Togoland under British administration
humanitarian aid in cases of famine, Togoland under French administration
natural disaster, and armed conflict. New Guinea
- The UN is the largest, most familiar, Nauru
most internationally represented and Strategic Trust Territory/ Trust Territory
most powerful intergovernmental org. in of the Pacific Islands
the world. Italian Somaliland