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HISTORY OF GLOBALISATION

Leonid Grinin and Andrey Korotayev contribute to the history of globalization an analysis of the nature of global processes and causes of increasing integration. They propose a history of globalization that draws on a special methodology and a world-system approach based on the development of spatial links over seven periods of time starting with the Agrarian Revolution (four before and three after the great geographic discoveries). The time periods range from Introduction: Globalization as a Link between the Past and the Future | xxi

Before the 4th millennium BCE to the 21st century. The types of spatial links described range from local and regional links to global and planetary links through continental and intercontinental ones. Evidence is presented for each period. This includes for instance the existence of large-scale trade in metals as early as 4th millennium BCE, and the social impact of intercontinental trade in the late 1st millennium BCE. The evidence also includes a density and diversity of transcontinental links suﬃcient to transmit disease (bubonic plague) from the Far East to the Atlantic in two decades (1330s-1340s), and the comparability of some aspects of global integration prior to the great geographic discoveries with more recent periods. The authors note that globalization began at least as early as 4th thousand BCE. The proposed system of spatial links addresses shortcomings in previous systems that tended to underestimate the scale of spatial links in the pre-industrial era.

Randall Collins contributed to globalisation with a geopolitical analysis of key globalization events in the past, present, and future. As historical sociologists in the tradition of Weber have documented, the state’s existence has depended on its military power, which varies in degree of monopolization, of legitimacy, and of extent of territory controlled. Geopolitical principles (comparative resource advantage, positional or marchland advantage, logistical overextension) have determined both the Chinese dynastic cycles, and the balance of power in European history. In 1980 the author was successful in using these geopolitical principles to predict the strains which brought about the collapse of the Soviet empire, which was itself a continuation of the older Russian empire. The same geopolitical principles continue to apply to recent wars in Afghanistan, Iraq, and Pakistan. Guerrilla wars diﬀer from conventional wars by relying especially on geopolitical principles of promoting enemy overextension. Geopolitics encompasses both war and diplomacy, the means by which coalitions among states are organized. The rule of international law depends on a dominant coalition upheld by favourable geopolitical conditions; and on the extension of bureaucracy via state penetration, but now on a world-wide scale. Randall Collins answers two key questions regarding historical globalization processes: “Is the world of the early 21st century moving towards a new era of international rule of law to support universal human rights?” and “Where does the opposition to universal human rights come from?” His answers to both of these questions demonstrate that international rule of law is not an alternative to geopolitics, but is successful only under speciﬁc geopolitical conditions.

WHAT IS GLOBALISATION?

Globalisation is the free movement of goods services and people across the word in a seamless and integrated manner. It can also be defined as the process by which businesses or organisations develop internal influences or start operating on an international scale. It is the broad process of global integration, inter-connectedness, and interdependence of international business, economic activities, societies and cultures. The term is closely related to economic globalization: the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, through the spread of technology.

DRIVERS OF GLOBALISATION

The major drivers of globalization are communication, transportation, and trade. Managers must be conscious that markets, supplies, investors, locations, partners, and competitors can be anywhere in the world. Successful businesses will take advantage of opportunities wherever they are and will be prepared for downfalls. Successful managers, in this environment, need to understand the similarities and differences across national boundaries, in order to utilize the opportunities and deal with the potential downfalls. These drivers of globalisation are:

Technology advancement in telecommunication and transportation: global telecommunications are helping to establish global brands that are killing off local brands in certain product categories. This has been done easily through the use of data transfer and affordability of information exchange.

Removal of government rues and controls; relaxation of trade barriers: this is done through agreements and negotiations by WTO and multinational companies. This has encouraged free flow of capital, trade and market, production and information.

Increasing number of multinational companies: large scale multinational companies which operate supply chain in different countries punch globalisation.

Improved political relationships and nurture international cooperation:

The Cold War between the former Soviet Union and the USA drew to a close at the end of 1980s. Stable global political environment facilitated international cooperation. Agreements and organisations were introduced to promote international trades and investments (e.g. WTO)

Global competition: Companies expand their business overseas for new customers and markets. Manufacturers around the world put production in the most economical locations/countries. Competitors do the same and try better position themselves

DIMENSIONS OF GLOBALISATION

Globalisation of products: this is the process of individual firms to disperse parts of the production process to different countries around the globe in order to take advantage of different costs in production. Companies in the world today mostly outsource their manufacturing processes to china in order to take advantage of the cheap labour available in the country. This would decrease the cost at which goods are produced, and as such the cost of those goods would be cheaper than that of those made from countries with high cost of labour.

Market globalisation: moving away from the economic system where national markets are distinct entities to one which national markets merge together with no boundaries in trade, distance and culture.

Economic globalization: Economic globalization is the integration with the world economy through removal of trade barriers, privatization and liberalization. Worldwide transactions of product, service and finance is the special trait of economic globalization.

Development of transportation and communication enhances the economic globalization, and world trade organization, multinational companies and international monetary fund are playing vital role in boost up of the economic globalization. Cultural globalization Cultural globalization is worldwide assimilation of cultural value and norms through communication, tourism and television network. Cooperation, peace, coexistence, cultural exchange are its important aspects.

Political globalization; Political globalization is integration of world community in ideas, norms and values. It provides the forum for idea exchange on, human rights, child labour etc.

ADVANTAGES OF GLOBALISATION

1. Free trade between countries increased.

2. Goods and people are transported more easily and much faster.

3. As the liquidity of capital increases, developed countries can invest in developing ones.

4. The flexibility of corporations to operate across boarders increases.

5. The communication between individuals and corporations in the world increases. Increased flow of communications (e.g. through the Internet, Extranet, Intranet, and teleconferencing) allows vital information to be shared between individuals and corporations around the world.

6. Global mass media, e.g. CNN, BBC, Reuters, etc., connects/ties people around the world. Through the technological advancement in telecommunications, especially with the advent of the Internet, people around the world can reach instant news easily.

7. Increases in environmental protection in developed nations. For example, with effect from 1 June 2006, developed countries (e.g. the USA, members of EU, Japan) required suppliers (mainly from developing countries) to compile with the “Restrictions on Hazardous Substances (RoHS)”for electronic and electrical goods, parts, and components

8. Employment opportunities-This is considered the major benefit of globalization. Companies are setting up shop in new countries creating opportunities for employment. What is more, people are able to migrate easily further creating opportunities for better jobs.

9. Education-With educational institutions spread across the globe, it has become easier to move from home countries for better education opportunities. This has led to integration of cultures and people from different educational backgrounds.

10. Thanks to international trade, trade has become more competitive leading to production of high quality products. Products now have to be enhanced so they can capture the attention of consumers. Consumers today can make compromises when it comes to price but not quality.

11Price of commodities has also become cheaper especially because of the fierce competition noted in the market. There are different products for consumers to choose from making it a necessity for producers to price them competitively.

12. Socially, people have become more tolerant and open towards one another. These increases mean that the economies around the world are more closely integrated.

DISADVANTAGES OF GLOBALISATION

1. Increased flow of skilled and non-skilled jobs from developed to developing nations as corporations seek out the cheapest labour. For example, as a consequence of factory relocation, many workers in Hong Kong have lost their jobs to those in China or Vietnam.

2. Economic disruption in one nation affects all nations. For example, the sub-prime mortgage crisis happened in the USA in 2007 disrupted the economy of many countries in Europe and Asia due to the globally interlinked financial markets.

3. Poor countries with weaker political and economic power are subjected to possible exploitation by developed countries. Globalization has rendered some poor countries (e.g. some African and Muslim countries) to be dominated by developed countries both politically and economically.

4. Greater risk of diseases spread between nations (e.g. SARS epidemic and Avian Flu).

5. International bodies like the World Trade Organisation (WTO) limit national freedom. The WTO oversees a number of agreements to which member nations have signed up, e.g. on trade in goods, services, intellectual property, dispute settlement, and trade policy. A country that does not abide by the findings of the panel can be subject to countermeasures. Companies are not allowed to make complaints to the WTO− they must persuade a government to do so.

6. Decrease in environmental integrity as polluting corporations take advantage of weak regulatory rules in developing countries. Environmental laws in developed countries are stringent but regulatory rules in developing countries are weak. As a result, polluting corporations send their industrial/chemical waste to developing countries for disposal.

7. Increase in the chances of civil war within developing countries and open war between developing countries as they vie for resources

INTERNATIONAL BUSINESS

According to International Business Journal, International business is a commercial enterprise that perform socioeconomic activity beyond the bounds of its location, has branches in two or more foreign countries and makes use of economic, cultural, political, legal and other differences between countries. It encompasses all commercial activities that take place to promote the transfer of goods, resources, people, ideas and technologies across national boundaries. International business occurs in many different formats. They may include

1. The movements of goods from one country to the other (exporting, importing, trade)

2. Contractual agreements that allow foreign firms to use products, services and processes from other nations (licensing, franchising)

3. The formation and operations of sales, manufacturing, research and development.

Nature of International Business

1. Accurate Information

2. Information not only accurate but should be timely

3. The size of the international business should be large

4. Market segmentation based on geographic segmentation

5. International markets have more potential than domestic markets

WHAT IS THE DIFFERENCE BETWEEN GLOBALIZATION AND INTERNATIONAL BUSINESS?

Although these terms are sometimes used interchangeably, there are a lot of differences between international business and globalization. These differences may include the following:

1. International business often has a lot of trade barriers which may hinder the free flow of goods and services to other countries. But with globalization, there are virtually no barriers in trade which leads to the free flow of goods from one country to the other.

2. International businesses mostly deals with the export of goods and services from one country to the other and has no major investments in the countries they export to. But global businesses have investments all over the world including the major countries they operate in.

3. Globalization believes in Liberalization (It stands for the freedom of the entrepreneurs to establish any industry or trade or business venture, within their own countries or abroad) whiles international business does not offer that chance to its participating members.

4. Globalization keeps the state away from ownership of means of production and distribution and letting the free flow of industrial, trade and economic activity across borders. This has made it possible for countries to take their production process abroad in order to take advantage of the cheap labor. Whereas with international business, the factors of production are often own or produced from the home state and other countries have no effect on its production process. The state sometimes control the distribution of these products which inhibits the free flow of goods across bothers.

5. Globalization has also increased collaborations among some countries. Since several countries participate in the production and distribution process, more goods are produced and this has led to the production of quality goods with reasonable pricing policies. But with international business, there is less collaboration and as such, these countries often produce goods which do not match international standards and are sometimes abnormally price due to the high cost of production and taxes imposed on such goods during export.

6. Globalization refers to a broader and integrated process of transformation of the world into a global village characterized by free world trade, freedom of access to world markets and increased social, economic, and cultural linkages and relations among the people of the world. Whereas internationalism stands for increasing scope and intensity of cooperation among nations, globalization refers to a free and integrated world system.

CONCLUSION

Although international business and globalization are closely related, there are a few notable differences between them in terms of trade barriers, integrated methods of production and economic implications to mention a few. We believe that with the differences stated above, there has been some amount clarification to the various processes of globalization and international business.

REFERENCES

1. History of globalization: International Business

VI -Semester BBA

Bangalore University. Page 10

2. Definition and dimensions of globalization

BAFS learning and teaching

Topic C01.

3. International business and nature of international business

VI -Semester BBA

Bangalore University

4. Disadvantage of international business and globalization

www.studoc.com

www.differencebetween.com