...Did the experience of emerging countries fully justify the prediction of neo-classical model of financial market globalization? Why or why not? Financial Globalization stems from the idea of Neoclassical Economics where efficient allocations of resources will bring prosperity to nations through globalization. Financial globalization is an aggregate concept that refers to increasing global linkages created through cross- border financial flows. The theory predicts the capital will flow from the more to less developed countries and all nations will gain as a result. However, in reality where market failures and information asymmetries exist, the results of financial globalizations are conflicting with its ideology. Especially in the emerging markets where the economies are even more highly distorted than the developed ones. Studies show mixed results regarding the effects of financial globalization on developing economies. Though the strong supporter of financial globalization are international organization such as IMF, World Bank and United Nations, many academics argued that the theory did not benefit the developing economies, yet worsening them. This essay will be critically analyzed the impacts of financial globalization on emerging countries in economic and social aspects. Growth In principle, financial globalization is greatly beneficial to economic growth in developing countries. Reduction in cost of capital, technology transfer and development of financial sectors...
Words: 970 - Pages: 4
...financial globalization to emerging-markets: lower cost of capital, foreign capital and financial institutions can improve the allocation of capital and globalization promotes the development of better property rights and institutions. Though he acknowledges that the benefits of financial globalization is controversial. Some argues that it facilitates financial crises and others argue that emerging-markets is not constrained in finance. But he argues that the point of globalization is to optimize the allocation of capital. Strong property rights is crucial in improving economic efficiency. To make globalization good for emerging countries, they have to improve their financial systems through a good institution that allocate capital efficiently. A way to improve efficiency is to promote export sector so that there is right incentive to improve efficiency through institutional reform. Stiglitz, on the other hand, thinks that liberalization is harming the economy because there are several conditions for globalization to be beneficial to emerging countries such as perfect information, perfect capital markets and perfect competition. Globalization impairs the ability of government to intervene the macro-economy, the investors are not actually rational and even good governance cannot guarantee elimination of irrational pessimism due to imperfect information. Owing to the pro-cyclical movement of capital flow, globalization actually amplifies volatility of consumption and economy. If there...
Words: 461 - Pages: 2
...Globalization trends in America and the World What are the main trends in globalization that changed America and the World? Goldberg (2015) illustrated an overview and macro analysis of some key trends in globalization is changing or will change America and the rest of world. Firstly, America great again, he argued that America's economy has experienced the least impacts of globalization comparing to other economies around the world. As an example, the percent of Gross National Product (GNP), exports account sequentially 52 percent, 32 percent, 27 percent for Germany's, UK's, China's economy and only 14 percent of America's economy. For this lesser dependency on exports, the United States was being protected from the European debt crisis....
Words: 684 - Pages: 3
...Globalization According to Held and McGrew, ‘Globalization denotes the expanding scale, growing magnitude, speeding up, and deepening impact of interregional flows and patterns of social interactions’. It has been called upon to account for developments as diverse as the value of euro, world-wide popularity of ‘Harry Potter’, and the rise of Third Way politics and religious fundamentalism. The concept of ‘Globalization’ came to be used in the 1960s and early 1970s, which has been recognised as the ‘golden age’ of rapidly expanding political and economic interdependence – mostly between Western states. In this inter-dependent world, events abroad readily acquired impacts at home, while developments at home had consequences abroad. The world was fast becoming a shared social and economic space, at least for its most affluent inhabitants. Globalization has been variously conceived as ‘actions at distance’, whereby actions of social agents is one location have significant consequences for distance others; time-space compressions, where the way electronic communication erodes the constraints of time and distance; accelerated interdependence among countries; a shrinking world, with an erosion of boarders and geographical boundaries through socio-economic activity. The ‘flows and interactions’ of globalization are not confined to economic trade, capitals, and spread of MNCs. There is a growing emphasis on the need for broaden approach, including communication (internet)...
Words: 2434 - Pages: 10
...Management 22 (International Business and Cross-Cultural Management) Jan Ray O. Macanas 3rd Year BSBA FM The Importance of Investment in an Emerging Country Developing countries, also known as emerging markets, are becoming the driver of global growth. It is expected to grow two to three times faster than developed countries like the US according to the International Monetary Fund. And because of the growth many investors are being pulled in to invest to some emerging markets. This growth is very important among investors because it simply enables them to foresee the future of their investment. (Forbes. “What Makes Emerging Markets Great Invesment?”.www.Forbes.com.) China has become a leading foreign investor among all emerging countries, According to the main stream of international business literature on the topic of multinationals from emerging countries, there are generally five motivations for multinationals to invest abroad; they seek resources, technology, markets, diversification, and strategic asset. A careful analysis of the data and the investment by Chinese multinationals indicates the similar motivations provided by China. Chinese government has, to a great extent, played a crucial role in shaping the structure of the country's outward investment; this is consistent that China's FDI has been part of the government's development scenario. Since the 1980s, the government has required the overseas subsidiaries to achieve one of the four goals--introduction...
Words: 2849 - Pages: 12
...Friedman depicts how globalization has broken the restrictions of country border and is transforming the world into an interconnected, flat world. Based on his observations, Friedman groups these globalization phenomena into 10 so-called “flatteners”, such as Collapse of the Berlin Wall, outsourcing, offshoring, and informing. He is a firm advocate of free trade. He recounts several examples of Chinese and India companies that take advantage of low cost labor to integrate into the whole world trade supply chain. From his view, the world is really becoming a seamless world factory where every country works in cooperation along this supply chain. Meanwhile, globalization is bringing a set of globalized values to every corner of the world. Indeed, the world seems like a truly fair playing ground. However, in my view, the world is just far from being flat. The world is in a huge imbalance. Due to the comparative advantage of labor between developing countries and developed countries, the world capital is flowing from the US and European countries which have high labor cost to emerging economies like China and India where there are abundant supply of cheap and skilled labor. On one hand, China and the other emerging economies are accelerating their integration into the interdependence world factory. Gaps in living standards, wage and technology are quickly shrinking. The benefits of economic boom are spreading from those advanced economies to emerging economies. On the other hand...
Words: 1392 - Pages: 6
...State Capitalism and Globalization 1. Although state-owned enterprises (SOEs) are diminishing, they still comprise one third of China’s and Russia’s Gross Domestic Product (Wooldridge, 2012). According to The Economist, China, alone, has 121 SOEs over which the government has direct control (2011). When bank loans are granted, the favored SOEs are the recipients and government controls the reins by retaining a controlling stake of shares. Likewise, SOEs are given preferential interest rates and allowed access to land at prices that are below market value (The Economist, 2011). Government intervention affects the prospects for economic and business development in a negative way by encouraging inefficiency and biased decision-making that may not be in the long-run interests of the company. In China, favoritism is rampantly on display and the government picks the winner and losers (The Economist, 2011). Furthermore, while many free trade economies – like the United States – often encourage foreign investment, China only appears to do so. SOEs are often given preferential treatment while foreign investors are subject to over-regulation (The Economist, 2011). 2. The globalization of markets and of production has lowered the barriers to business development. These barriers stood in economic, political, and social sectors of the world market. This rise in free trade and has led to an increase in the private sector, but this is miniscule compared to the control and power of State...
Words: 939 - Pages: 4
...The Impact of Globalization on Employment Adrian Armijo April 21, 2016 Abstract This paper focuses on the impact of globalization on employment and provides a thorough analysis based on its pros and cons, as well as its effect on wages in OECD nations. With faster interaction or communication of ideas, the stride of industry growth in the emerging world amplified, producing an upsurge in the job markets. As a result, many emerging countries are now undergoing very positive growth rates. In developing nations, predominantly developing nations, globalization led to an increase in employment, either through new businesses being created or businesses offshoring from industrialized nations. While it may be tough to put an accurate number on this, it can be said that globalization generated more jobs in total than it eliminated. In some countries, globalization has played an extremely important role in relation of enhancing employment. Given these points, globalization has enhanced employment and salaries in emerging nations mainly because of inflows of foreign investment or rises in the price of an emerging nation's export products. Introduction First of all, the primary reason and result of globalization is worldwide trade, which has increased significantly. An increasing trade has frequently been followed by greater financial advance, though not in all cases. The correlation between globalization and employment is of rising importance to policy makers in developing countries...
Words: 2989 - Pages: 12
...Does globalization support economic growth in developing countries? Even though globalization in developing countries does not assist in maintaining proportional wealth distribution, it can increase growth rate, productivity, and technological changes which helps increase economic growth (Bigman 2002). Economic Growth is “an increase in the capacity of an economy to produce goods and services, compared from one period of time to another. Economic growth can be measured in nominal terms, which include inflation, or in real terms, which are adjusted for inflation.”(www.investopedia.com). As mentioned by (Bigman2002), globalization has had a major impact on the economic growth of most developing countries except a few countries in South Asia and Latin America. In East Asia, countries such as China and Japan underwent rates of economic growth during the last 30 years. This resulted in the well-being of a large portion of their population. As confirmed by the IMF, international trade has improved the world economy heavily. “Integration into the world economy has proven a powerful means for countries to promote economic growth, development, and poverty reduction. Over the past 20 years, the growth of world trade has averaged 6 per cent per year, twice as fast as world output.” (IMF Staff 2001). When an economy is open to foreign investment, sustained economic growth can be achieved. This can be proven because no country over the past years has achieved economic success without...
Words: 538 - Pages: 3
...Topic: Why Globalization Is Going Into Reverse Date: November 25, 2013 Source: http://www.businessweek.com Summary of the news item Study showed that cross-border investment and trade flows declined worldwide in 2012 and weak economic conditions were partly to blame for the downturn. The article revealed that the largest threat to globalization comes from policy fumbles rather than macroeconomics fundamentals. These fumbles are an increased of protectionist measures of more than 2,000 was enacted by national governments and the failure of multinational companies to capitalize on growth in emerging markets. It revealed that trade and investment flows would rise if multinational corporations would learn to crack the code for competing in emerging economies where growth is strongest. The 100 largest companies headquartered in advanced economies derived only 17 percent of their revenues from emerging markets in 2010, even though those markets are projected to contribute more than 70 percent of global economic growth through 2025, The article analyzes data on trade and other indicators to gauge what they term the “depth of globalization.” 1. Trade and investment flows, after increasing robustly until 2007, dropped sharply during the 2008-09 crisis, then started rising again in 2010 and 2011. 2. In 2012, the dollar value of foreign direct investment inflows worldwide dropped 21 percent, while trade in merchandise declined slightly, and trade in services was flat...
Words: 538 - Pages: 3
...effects that international business has had on the environment and what those effects will mean for us in the future. Finally and probably most all encompassing is the idea of the world evolving into one cohesive unit, better known as globalization of industry. BRIC is a grouping acronym that refers to the countries of Brazil, Russia, India, and China that are deemed to all be at a similar stage of newly advanced economic development. Goldman Sachs argues that the economic potential of Brazil, Russia, India, and China is such that they could become among the four most dominant economies by the year 2050. These countries encompass over 25% of the world's land coverage and 40% of the world's population and hold a combined GDP of 18.486 trillion dollars. On almost every scale, they would be the largest entity on the global stage. These four countries are among the biggest and fastest growing emerging markets. Now that we have properly defined what the BRIC is, we must now step back and view this on a global stage. From a global business standpoint we cannot downplay the emerging markets that are forming from the BRIC. These economies are increasing at such a large rate that they will be a driving force as we proceed into a more globalized economy. The one thing that these articles don’t fully address however is the fact that these are still only predictions. As we move forward in the field of global business we cannot solely focus our attention...
Words: 1167 - Pages: 5
...The objective of this paper seeks to summarize Nayyar’s article on globalisation as it relates to the history and development of two epochs and through further analysis determine how far ‘deglobalisation’ has reached after the 2008 recession and crisis. The subject of globalisation and its impact on development is approached from a historical perspective. By comparing the first era of globalization (1870-1914) to a modern present day version (1970-2000) Nayyar demonstrates the similarities and differences that occurred in both epochs and further examines the implications of this process both in the past and in the present as it includes three main characteristics, increases in international trade, investment and finance. Nayyar defines globalisation as a “deepening economic integration in the world economy” and is cautious to advise that this process is neither symmetrical nor new. Paradoxically he points out that whilst globalisation in the new era advocates free trade, this freedom is limited to the flow of goods and services whilst restricting the movement in labour. The period 1870-1914 was a true era of free trade, where the dominant ideology was economic liberalism. This was an era of rapid growth in international trade, finance and investment where statistics showed that Western Europe was the engine of this growth. In theory it was believed that trade liberalization was the sole variable responsible for the expansion in international trade. Nayyar points...
Words: 2400 - Pages: 10
...Globalization can be defined as the growing integration of the world’s economy in terms of capital markets, as well as, the escalating interdependence of the economies of different countries in regards to the markets of goods and services. Economists describe globalization as a universal unification of the commodity, capital and labor markets (Bordo et al., 2003) Baghwati states that “economic globalization constitutes integration of national economies into the international economy through trade, direct foreign investment (by corporations and multinationals), short-term capital flows, international flows of workers and humanity generally, and flows of technology.” (Bhagwati, 2004) In the past few years this increasing integration within the world economies has promoted economic growth and been aligned with the substantial growth in world trade. On the one hand, globalization has been associated with the improvement of living standards within a society. As well as, simplifying the production process. However, this phenomenon could potentially act as a constrain to the societies well being, in addition to aiding the in the restrain of economic emergence. (Daniels, 2001) In this essay, the factors contributing to globalization will be illustrated in regards to the trade barriers and the emergence of MNCs. The benefits and costs of globalization will be demonstrated by evaluating the affects on employment and the impact on the business operations. The emergence of globalization...
Words: 2293 - Pages: 10
...General concept of globalization - business expand from developed to emerging countries and their economies, 'compete with everyone from everywhere for everything (Sirkin et al.) Now "the world is flat" - global competition is characterized by network sod international linkages that bind countries, institutions and people in an interdependent global economy. Economic integration help the lowering of trade barriers and facilitates trade between countries increasing the flow of goods and services, capital, resources, labour and technology around the world. "the invisible hand" of global competition is being propelled by the increasingly borderless world. Globality and Emerging Markets Globalization has narrowed differences in regional output growth rates, economic activities have increased mainly in China, India and Russia. Trade had grown by 133% (worth $54 trillion) in the last 15 years and is still growing. The 2007 FDI confidence index has shown China leading with 2.21, India with 2.09, USA with 1.86…. Fareed Zakaria (American Journalist specialized in international business) states that even though USA is a traditional industry leading in nanotechnology and biotechnology, it is declining and the "other" countries are picking up opportunities as their economic markets are growing because they provide growth markets for developed countries. Globalization is no longer synonym to Americanization due to the investment opportunities in other emerging countries. Apple vs...
Words: 466 - Pages: 2
...Globalization in South Africa Regarding the globalization of South Africa, the lifting of the apartheid policy caused a dramatic shift in the both the political and economic policies of the nation. Furthermore, this was absolutely pivotal to the growth and progression of a nation that has now become a major emerging market and one of the world’s largest exporters of metals and minerals. South Africa is a country located on the southern tip of Africa. South Africa has had a long history of colonialism under both the British and the Dutch. The discovery of diamonds and gold in this region spurred the development of the area and immigration to the region while suppressing its native populations. And while the control the empires retained over their colonies was crumbling, South Africa as a colony did as well. It was granted independence in 1931, but when the Nationalist Party took power in 1948, it strengthened the segregationist policies that were established under colonial rule. South Africa finally achieved a full democracy with the elections of 1994, the first time the black population was allowed to vote, bringing the African National Congress (ANC) to power with Nelson Mandela as its leader. This officially brought an end to apartheid and marked the beginning of new era for the country. Although South Africa was formally granted independence in 1931, the South Africa that we know today didn’t exist until early 1990’s when apartheid was lifted. The policy of...
Words: 1338 - Pages: 6
