Business Administration

ADMS 1000
Chapter 6 Globalization
What is Globalization?
  * Globalization- is a process involving the integration of world economies, facilitated by bodies such as NAFTA,   EU, APEC, ASEAN etc.
  * It is a process of involving the integration of world markets, products like Gap or Nike
  * The free movement of good/services capital and labor is critical to globalization
  * Increased cross border transactions and economic independence
Multinational/Corporation (Benefits/Threats)
  *
International Trade
  * The purchase sale or exchange of goods or services across countries
  * Mercantilism (1500-1800): encourages trade surpluses where exports of goods or services exceeds imports
  * Trade Protectionism: protects domestic economies through import restrictions.
  * Tariffs – tax placed on goods entering a country
  * Quotas – limits the amount of imports
  * Subsidies to domestic industries/firms to encourage exports
  * What is the problem with mercantilism and trade protectionism?
  * Trade retaliation
  * Increased costs to consumers
  * Limits competitiveness of domestic firms
  * See handout on Tariffs
  * Impact on exporting country:
  * Lower production, job losses, economic decline…
  * Impact on importing country:
  * Less competition for domestic firms, rising sales, prices, employment, spending, government revenues…
  * Increased costs to consumers, less spending on other industries, economic decline, costs of imposing + collecting tariffs, possible costs of retaliation and trade wars…
Trade Agreements and International Bodies
  * GATT (1948) – 100 countries agreed to reduce tariff levels.
  * WTO (1995) – took over from GATT, to manage world trade agreements.
  * IMF – provides short term aid to developing countries.
  * World Bank – seeks to provide long-term loans for development.
  * Regional Economic Integration - Trading Blocs
  * 1. Free Trade Area – removing subsidies & quotas... [continues]

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