We live in a world of intensifying global relationships, one in which international business has become the key determinant of economic development and prosperity. This course, Global Business Environment, Part I, introduces students to a fundamental understanding of the socioeconomic political, cultural, and linguistic environment in which international businesses operate. This course utilizes an inquiry-based approach to understanding country level relationships in the Global Business Environment. It surveys the global business environment by asking and answering key questions about society, the global economy, cultures, institutions and languages. The questions we will ask are: 1. What is Globalization?, 2. Is Globalization New?, 3. How do Political and Social Institutions impact National Economic Development?, 4. What is the role of Culture?, 5. What are the Gains from Trade?6. Free Trade, Free-r Trade or Managed Trade?, 7. What are Foreign Currencies and how are Exchange Rates Determined?, 8. What does the Current Global Business Environment look like? This inquiry-based approach creates reflective opportunities for students to better understand the environment in which businesses operate. Lectures are delivered in an engaging manner, which encourages reflection and inquiry.
Module 2, Part 6
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From the course by University of New Mexico
International Business I
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From the lesson
Week 2
Is Globalization New?
Meet the Instructors
Doug E Thomas, Ph.D.Professor
International Management, Anderson School of Management
Welcome back to global business environment.
This is module two, the sixth and
final part of that module in which we're asking the question, is globalization new?
Last time, we talked about how the inflection point of
about 1980 was really the beginning of today's boom in globalization.
We said that political leaders around the world increasingly embraced more openness.
The IMF and the World Bank were involved in that.
This was not a perfect period, we're not advocating and
saying that it was the right way or not.
But we are saying that is was the beginning of today's,
major, globalized world in which we live.
In addition to the political changes and the policies that were embraced,
we also have said that the 1980s were the beginning of a major computing revolution
and transportation costs rapidly decreased as the price of fuel stabilized.
And so, there were other factors besides political factors that,
that led to the 1980s, the early 1980s being the period of
rapid growth in globalization that we're cur, currently still a part of.
Another thing that happened in the 1980s and 90s was the formalization of
the agreements that were wrapped up in the GATT, the general agreement on trade and
tariffs, tariffs and trade, which came out of World War II.
Those agreements were formalized into an organization called the world trade
organization, in which many countries in the world, including China, for example,
formed part and agreed to, certain changes in their policies, ways of, conflict dis,
dispute resolution when disagreements occurred over, trade and trade rules.
And so, the WTO has also played an important role in today's boom.
We looked at this graph last time and linked trade and prosperity since 1980.
We also can look at this graph and learn something else.
It's very important to understand today's current boom in globalization.
When we, when we talked about the 1950s, 60s and 70s, the increase in exports and
imports and trade that we saw across the world,
really was was focused in the developed or industrialized countries of the world.
Most of the trade that occurred in the 1960s and
70s was between the wealthier countries of the world.
Now that might not be what's commonly thought, but
that was what was the case at that period of time.
What we've seen since the 1980s with this major boom in globalization,
is the increased involvement of the developing or
emerging economies in this globalized world.
Those countries have changed their policies in many places towards
their openness in borders, in tariffs, in
in cultural norms related to interacting with the rest of the world.
So you can see that yes it's true that the developed economies represented
by these yellow line since the 1980s have greatly im, in, increased their exports.
But what's also notable is this major increase on the part of
exports from developing economies.
This is you know, countries that have previous experience lower levels of
growth that have lower levels of gross domestic product, or GDP per capita, and
therefore have not experienced some of the benefits from trade.
We can look at another graph, to see some of the specific countries and
their role in this current boom.
For example if we look at the brown line, we see that China since 1988,
the late 1980s, has experienced just exponential growth
in their percentage or share of world trade.
The, the Chinese economy went from being completely closed off from the rest of
the world for the most part, or
most of the rest of the world in the 1970s to embracing very open trade policies.
And their economy has grown at the same time.
We often talk of brick nations, which are some of the major
developing countries including Brazil, China, and India, and Russia.
There are others that we might include as well.
So you see that China has been one of these major brick nations that
have contributed to this,
to this boom in globalization on the part of developing economies.
It's important to note that the blue line represents what we
might call the developed economies of the world.
And their share, if you look at this right axis of total world trade has decreased
quite a bit as the developing economies have increased in their in their trade.
So, in 1988, the late 1980s the developing, or,
excuse me, the developed countries which we call sometimes OECD,
that's an organization of developed countries.
It in, it decreased from about 72% by 10% to about 62 by the mid-2000s.
And so, that's being replaced by all this trade
from the rapidly growing developing economies.
So what we're seeing in today's world is a major interaction on the part of more and
more countries, even the growing or emerging or developing economies,
which has great, great promise for continued world peace,
hopefully for economic growth as countries continue to interact.
Globalization is not new, it's not a new phenomenon.
It has occurred throughout history, but we are currently experiencing a major boom.
And one of the most important aspects of that current
boom is the role the developing economies are playing and will continue to play.
This concludes module two.
We've answered the question is globalization new,
as part of our course on global business environment.
Thank you.
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