Chapter 1

Introduction to Globalization

What is Globalization?
Globalization is a term used to describe the changes in societies and the world economy that are
the result of dramatically increased trade and cultural exchange. In specifically economic contexts, it
refers almost exclusively to the effects of trade, particularly trade liberalization or "free trade".
It is a common belief that globalization plays a role just at international levels of trade and
commerce, but the fact is that it has played an important role in making our lives much more
comfortable too. The phones, apparels, gadgets or accessories that we use in our day-to-day life are be
available to us through globalization. Knowingly or unknowingly, we are all under the impact of
globalization, and more importantly it has helped in bringing international peace and justice to mankind.

“Globalization” can mean:

 The formation of a global village - closer contact between different parts of the world, with
increasing possibilities of personal exchange, mutual understanding and friendship between
"world citizens",
 Economic globalization - "free trade" and increasing relations among members of an industry in
different parts of the world (globalization of an industry), with a corresponding erosion of
National Sovereignty in the economic sphere.

Signs of globalization
 Increase in international trade at a faster rate than the growth in the world economy
 Increase in international flow of capital including foreign direct investment
 Greater transborder data flow, using such technologies such as the Internet, communication
satellites and telephones
 Greater international cultural exchange, for example through the export of Hollywood and
Bollywood movies.
 Some argue that even terrorism has undergone globalization. Terrorists now have attacked
places all over the world.
 Spreading of multiculturalism and better individual access to cultural diversity, with on the other
hand, some reduction in diversity through assimilation, hybridization, Westernization,
Americanization or Sinosization of cultures.
 Erosion of national sovereignty and national borders through international agreements leading
to organizations like the WTO and OPEC
 Greater international travel and tourism
 Greater immigration, including illegal immigration
 Development of global telecommunications infrastructure
 Development of a global financial systems
 Increase in the share of the world economy controlled by multinational corporations
 Increased role of international organizations such as WTO, WIPO, IMF that deal with
international transactions
 Increase in the number of standards applied globally; e.g. copyright laws
Anti- globalization
 Many anti-globalism activists see globalization as the promotion of a Corporatist agenda, which
is intent on constricting the freedoms of individuals in the name of profit. They also claim that
increasing autonomy and strength of corporate entities increasingly shape the political policy of
nation-states.
 Globalization imposes credit based economics, resulting in unsustainable growth of debt and
debt crises.

Pro-globalization (globalism)
 Supporters of free trade point out those economic theories such as comparative advantage
suggests that free trade leads to a more efficient allocation of resources, with all those involved
in the trade benefitting. In general, they claim that this leads to lower prices, more employment
and better allocation of resources.

EXCERCISES
 Watch the History Channel’s video entitled 9/11 Timeline: The Attacks on the World Trade
Center in New York City | History (https://www.youtube.com/watch?v=GmedslmeiUc).

 Answer the following questions:

1. What are the impacts of 9/11 World Trade Bombing in the world?
2. How did globalization affect the 9/11 Attack?
3. What characteristic do globalization and terrorism share in commons?
 Questions to think about:
1. What is globalization?
2. What are the driving forces behind globalization?
3. In what ways does globalization affect the world?

Globalization in the Philippines

o The country is taking part in the process of globalization ever since the country signed
agreements with World Trade Organization in 1995.
o Now, globalization is very effective in the Philippines, it has allowed major changes in the nation
like more labor, and more Filipino and foreign companies has emerged in the nation in order to
help the country’s developing economy.

Globalization can make the Philippines into a better nation if the Philippine leaders to make their
economy more advance through global trading and allowing more foreign investors to the help
boost the economy. And by accomplishing those goals, the Philippines should be able to reduce the
poverty level as well as increase labor force for job opportunities for those that are in need for a
living. However, since the poverty level is still increasing, most Filipinos has managed to find work
 overseas and they have managed to seek better living than in the Philippines. The most effective
factor in the Philippines is education. The society’s mentality is to be educated and it’s with
education that people in the nation see their opportunity for a better life in the future.

Advantages
Peaceful Relations
o Most of the countries have resorted to trade relations with each other in order to boost
their economy, leaving behind any bitter past experiences if any.
Employment
o Considered as one of the most crucial advantages, globalization has led to the
generation of numerous employment opportunities. Companies are moving towards the
developing countries to acquire labor force.
Education
o A very critical advantage that has aided the population is the spread of education. With
numerous educational institutions around the globe, one can move out from the home
country for better opportunities elsewhere.
Product Quality
o The product quality has been enhanced so as to retain the customers. Today the
customers may compromise with the price range but not with the quality of the
product. Low or poor quality can adversely affect consumer satisfaction.
Cheaper Prices
o Globalization has brought in fierce competition in the markets.
Communication
o Every single information is easily accessible from almost every corner of the world.
Circulation of information is no longer a tedious task, and can happen in seconds. The
Internet has significantly affected the global economy, thereby providing direct access
to information and products.
Transportation
o Considered as the wheel of every business organization, connectivity to various parts of
the world is no more a serious problem. Today with various modes of transportation
available, one can conveniently deliver the products to a customer located at any part of
the world.
GDP Increase
o Gross Domestic Product, commonly known as GDP, is the money value of the final goods
and services produced within the domestic territory of the country during an accounting
year.
Free Trade
o Free trade is a policy in which a country does not levy taxes, duties, subsidies or quota
on the import/export of goods or services from other countries. There are countries
which have resolved to free trade in specific regions. This allows consumers to buy
goods and services, comparatively at a lower cost.
 Travel and Tourism
o Globalization has promoted tourism to great heights. International trade among
different countries also helps in increasing the number of tourists that visit different
places around the world.

External Borrowing
o With the help of globalization, there is opportunity for corporate, national, and sub-
national borrowers to have better access to external finance, with facilities such as
external commercial borrowing and syndicated loans.

Disadvantages
Health Issues
o Globalization has given rise to more health risks and presents new threats and
challenges for epidemics.
o the dawn of HIV/AIDS. Having its origin in the wilderness of Africa, the virus has spread
like wildfire throughout the globe in no time.
o Food items are also transported to various countries, and this is a matter of concern,
especially in case of perishable items.
Loss of Culture
o With large number of people moving into and out of a country, the culture takes a
backseat. People may adapt to the culture of the resident country. They tend to follow
the foreign culture more, forgetting their own roots. This can give rise to cultural
conflicts.
Uneven Wealth Distribution
o It is said that the rich are getting richer while the poor are getting poorer. In the real
sense, globalization has not been able to reduce poverty.
Environment Degradation
o The industrial revolution has changed the outlook of the economy. Industries are using
natural resources by means of mining, drilling, etc. which puts a burden on the
environment.
Disparity
o though globalization has opened new avenues like wider markets and employment,
there still exists a disparity in the development of the economies. Structural
unemployment owes to the disparity created. Developed countries are moving their
factories to foreign countries where labor is cheaply available.
o Conflicts
o it has given rise to terrorism and other forms of violence. Such acts not only cause loss
of human life but also huge economic losses.
o Cut-throat Competition
o Opening the doors of international trade has given birth to intense competition. This has
affected the local markets dramatically. The local players thereby suffer huge losses as
they lack the potential to advertise or export their products on a large scale. Therefore
the domestic markets shrink.
Activity 1

Complete the following exercise by reading the short passage about a brief history of the Coco-
Cola Company and fill in the blanks.

The Coca-Cola Company

The Coca-Cola company was founded in the United States in 1886. The company set up bottling plants in
Canada in 1906. In 1928, it introduced the soft drink Coca-Cola at the Olympic Games which were held in
Amsterdam. In the 1940s, the company began to set up bottling plants in countries around the world.
Coca-Cola is popular because it has been advertised as a brand of soft drink connected with fun, friends
and good times. Its international image was successfully promoted by a 1971 commercial, where a
group of young people from all over the world gathered on a hilltop in Italy to sing "I'd Like to Buy the
World a Coke." In 1978, the Coca-Cola Company was selected as the only non-Chinese company allowed
to sell packaged cold drinks in the People's Republic of China.
Today, the company produces nearly 400 brands in over 200 countries. More than 70 percent of the
company’s income comes from outside the United States. Coca-Cola is an extraordinarily successful
example of multinationalization.Its success raises the question of why and how it has been so successful.
The multinationalization of the Coca-Cola Company is also often used as an example to illustrate the
concept of economic globalization.

Fill in blanks.
1886 The company was founded in __________ in _________.
1906 It set up bottling plants in ____________________.
1928 The soft drink Coca-Cola was introduced at the __________________.
1978 The company was allowed to sell its cold drinks in _______________.
Today It produces nearly ______ brands of drinks in over ______ countries.
Activity 2

What are the driving forces behind the process of globalization?

mass media international economic technological
political politicians distances

The driving forces behind the process of globalization

1. _______________ forces: planning 2. _______________ forces: the

by ________ to break down borders integration of national economies
hampering trade so as to increase into the _____________ economy
prosperity and interdependence among through trade, foreign direct
nations investment and capital flows

GLOBALIZATION

3. _______________ forces: the 4. _______________ forces: the

worldwide export of western development and growth of
culture through the international transport and
__________such as film, radio, telecommunication shorten the
television and the Internet ________ in the world and promote
close connection between people.
Globalization has various aspects which affect the world in several different ways. These aspects
include:

Industrial globalization – development of worldwide production markets and broader access

to a range of foreign products for consumers and companies involving particularly
movement of material and goods between and within national boundaries.

Financial globalization – development of worldwide financial markets and better

access to external financing for borrowers.

Economic globalization – establishment of a global common market, based on the

freedom of exchange of goods and capital.

Political globalization - creation of international organizations to regulate the

relationships among governments and to guarantee the rights arising from social and
economic globalization.

Informational globalization – increase in information flows between geographically

remote locations. (This can also be seen as a technological change related to the
advent of fibre optic communications, satellites, and increased availability of
telephone and Internet.)

Cultural globalization - sharing of ideas, attitudes and values across national borders. This
sharing generally leads to an interconnectedness and interaction between peoples of
diverse cultures and ways of life. Mass media and communication technologies are the
primary instruments for cultural globalization.
Activity 3
Study the 7 events in the table and decide which of the following aspects of globalization the event
illustrates: economic, informational, cultural or political. The first one has been done for you as an
example. You may work in pairs and discuss the exercise with your partner. In your discussion,
please agree on the reasons for your decisions.

Aspect of
Events
Globalization
Disneyland, the American theme park, has been set up in Hong
1
Kong, Japan and France.
The parts of a car come from all over the world: Germany, Japan,
2
Korea etc. and the car is assembled in the U.S.
Businesses are operated with many satellite locations or call
centers in other parts of the world to answer questions in another:
3
for example, someone in India answering a call from the U.S. about
a product or service.
Creation of regional forums such as the European Union, Asia-
Pacific Economic Co-operation (APEC),
and international organization such as the World Trade
4
Organization and the World Health Organization. These
international forums and organizations have new rules and
agreements for participating countries to follow.
The spread of language, products, and customs as people are
5
closely connected.
Franchises for McDonald's hamburgers, Pizza Hut,
6 Burger King, KFC and others carrying U.S. trade names are
operating throughout the world.
Cable News Network (CNN), based in the United States, produces
7 24-hour news broadcasts that can be seen by people around the
world.

RESEARCH ACTIVITY:
1. Research and discuss the Structure of Globalization.
2. Present your research through a powerpoint presentation. You may add videos clips, pictures
and audio in your presentation.