Study Guide - Chapter 1 – Globalisation

Brief chapter summary and most important points

Please note that these summaries are not intended to, and in no way can, replace the textbook. You
need to read the textbook for a full understanding of the issues, however the summaries can help you to
start thinking about the topics covered in the class and provide some guidance as to the most important
points.

 Globalisation is defined as ‘the shift towards a more integrated and interdependent world
economy’, that is a shift away from a world where most economic activity happened only
within national borders and there was limited contact between economies.
 Evidence of globalization can be seen in the vast increases in both trade and foreign
investment over the past fifty years, concurrent with this has been the increasing
importance of ‘supra-national’ bodies such as the WTO, World Bank and IMF who
coordinate economic activities on a global basis
 The two factors leading to globalization are 1. Falling trade and investment barriers, 2.
Technological advancement (in both communications and transportation)
 As the world has globalized the share of world production has become more evenly
spread throughout the world and multinationals from developing economies have
become more common. We have also seen the emergence of ‘mini-multinationals.

The second half of the chapter focuses on the benefits and drawbacks of globalization: we will hold a
‘globalisation debate’ in next week’s class discussing these pros and cons. Please refer to the materials
outlined below to give you insight into the conflicting opinions on this issue.

Basically, the arguments for globalization include:

 Allows for country specialization and thus the most efficient use of the world’s resources
 Has lifted maybe billions of people out of poverty and hunger
 Allows consumers to enjoy a greater range of higher quality and cheaper goods

And the arguments against globalization include:

 Has been harmful to the environment

 Takes advantage of low cost labour in developing countries and hurts higher cost labour in
developed countries
 Harms sovereignty of individual countries and creates unelected elites to control activity
 Has led to hugely unequal pay structures
 Creates unrealistic living expectations in developing countries
 Harmful to workers rights
 Has led to an ‘americanisation’ of culture and tastes

There is no single answer to whether globalization is good or bad, to an extent all of the points above,
both for and against, have truth to them.
Resources supplied and required and suggested reading

View the PowerPoint files of Chapter 1 available on Moodle

Read Chapter 1 from the assigned textbook

Watch the following videos available on youtube:

‘Globalisation is good’ by Johan Norberg

[Link]

Complete the short multiple choice quiz on the contents of chapter 1 that has been placed on Moodle
and have a go at the longer ‘self-assessment questions’ contained at the end of this outline. (note –
neither of these self-assessments are marked or contribute to your final grade).

In your groups: complete the following tasks

Collect the names and contact details of all your other group members.

Set up a google docs or Microsoft word shared document that you can all collaborate on and
share information as the project progresses – name the file – ‘BUS2108 2022-23 Sem 2 Sec 1
Shared workspace – Group X’ (with X being your group number). Please also add me to the list
of people who can share the document (whitla@[Link]) so that I can see who is doing what
in your team, and maybe even contribute or comment.

Now, try to find out how the product you have been assigned is made. Look for videos that
show the process (you can post links to this on your shared workplace). Take a look at the types
of workers involved (high, medium or low-skilled?), how much technology is involved? What are
the main components and materials of the product you have been assigned? Which of these
costs the firm most to acquire? Which countries supply most of those materials/ components?
Do either of the countries you have been assigned already have companies that make the
product you have been assigned or have firms that make the materials/components?

Take a look at the following suggested articles also available on Moodle

‘The case for optimism’ The Economist February 18th 2023

Those arguing that 'peak globalisation' has already been reached may be wrong. Global trade
has barely declined and long term trends in demography, technology and politics may mean that
more globalization is coming.

‘The Global Fortune 500’ Fortune August 2023

 The largest 500 companies in the world, ranked by sales, Walmart is still the largest but there
are more and more Chinese companies entering the list every year. The same list from 2017 is
also included for comparison purposes.

‘Reinventing globalisation’ The Economist June 18th 2022

How globalisation is changing, from a just in time philosophy to a just in case one. Increased
conflicts, Covid, protectionism all make political concerns more important in developing global
strategies as opposed to purely economic factors.

‘Goodbye globalisation’ The Economist May 16th 2020

How Covid-19 may have been the final nail in the coffin for globalisation. Countries increasingly
turning inwards and protectionist, changing how firms organise and operate their international
activities.

‘Canaries in the coalmine’ The Economist June 16th 2018

How falling levels of FDI are an indicator that globalisation is in danger of slipping in to reverse.
The political and economic trends that are causing this.

‘Rise of the micro-multinational Chinese and Overseas’ 11th March 2017, The Economist

How small Chinese firms are able to go multinational from the start thanks to technology and
trade.

‘The consensus crumbles’ The Economist 2nd July 2016

How the consensus about the benefits of free trade and globalisation has been broken since the
economic crisis. How some economists predicted this and what they see as need to be done to
put globalisation back on track.

‘Rich Man, Poor Man’ 20 January 2007, The Economist

How globalisation creates both winners and losers from the process of trade integration. Some
people lose their jobs with little opportunity to find another or must accept much lower wages.
On the other hand CEO's running huge global operations find their salaries steadily increasing as
the size of their firms grow.
 Self-Assessment Questions

Please note that these self-assessment questions are totally voluntary and for your own personal use
only. Please do NOT submit answers to these questions, additionally there is no ‘model answer’ for
these questions. Please note that although completing these questions may help you in your
preparation for the final exam, the inclusion of any question below does not imply that similar questions
either will or will not be on the final exam paper.

1. What does the term ‘International Business’ mean? What is the difference between
International Business and Globalisation?

2. What are the major forces pushing globalisation? Why was globalization difficult to achieve in
the absence of these forces?

3. Recent meetings of world trade bodies have seen a number of protests against globalisation,
who is protesting and why?

4. To what extent do you agree or disagree with these protestors?