Globalization
There are only two families in the world, my old grandmother used to say, The Haves and the Have-Nots.
Cervantes, Miguel de (1547 - 1616)
Spanish novelist. Don Quixote , Pt. II, Ch. 20, 1615

Make the world your sales territory

World I



National economies were self-contained entities
Barriers to crossborder trade and investment
National differences in government regulations, culture, etc.
World II

Barriers to crossborder trade and investment are tumbling



Perceived distance is shrinking
National economies are merging
Material culture is becoming similar


The volume of goods, services, and investment crossing national borders has expanded faster than world output

1.
Declining trade and investment barriers
Protectionism (1920s – 1930s)
WWII
GATT
From 1991 to 2000 of the 1121 changes worldwide in the laws governing FI, 95% created more favorable environment
Average tariff rates on manufactured products as %value
Country 1913 1950 1990 2000
France 21% 18% 5.9% 3.9%
Germany
Italy
Japan
Holland word trade >> world output
Sweden
Firms are finding their home markets under attack from foreign companies.
Britain
United
States
20
18
30
5
20
-
44
26
25
-
11
9
23
14
5.9
5.9
5.3
5.9
4.4
5.9
4.8
3.9
3.9
3.9
3.9
3.9
3.9
3.9

2.
The role of technological change
– Microprocessors and telecommunications
– Internet
– Transportation technology
Source: National Science Board, Science and
Engineering Indicators - 2000

The Changing Demographic of the Global Economy

World output and world trade
Country
United States
Japan
Germany
Canada
China
South Korea
Share of World
Output
1963
40.3%
5.5
9.7
2000
27.0%
14.2
7.3
3.0
NA
NA
2.0
3.2
1.4
Share of World
Export
2000
12.3%
7.54
8.7
4.4
3.92
2.7

The Changing Demographics of the Global Economy
2. The changing FDI picture

The Changing Demographics of the Global Economy
Country 1973 1990 1997 2000
3. The changing nature of the MNE
Since 1960s,
-
The rise of non-US MNEs
-
The rise of mini-multinationals
USA
Japan
48.5% 31.5% 32.4% 26%
3.5
12 15.7
17
UK 18.8
16.8
6.6
8
Germany 8.1
8.9
12.7
12

Is Globalization threatening your economy?
Indonesia
Venezuela
Russia
Mexico
Brazil korea
Israel
Canada
USA
Finland
0 it is
2 4 6 8 10
Is not

Attitudes Toward Globalization
Venezuela
Russia
India
Mexico
China
Japan
Canada
USA
Netherlands
0 negative
2 4 6 8 postitive