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Lecture 1:
Introduction: Economic Growth
and the Global Economy
Lecturer
Dr. Diego Vazquez, E-mail: D.A.Vazquez@rhul.ac.uk
Workshops:
Dr. Diego Vazquez,
A political view
globalisation is not just economic. It is also a
political and security phenomenon.
I believe the world has changed in a more fundamental way. Globalisation
has transformed our economies and our working practices.. We live in a
world where isolationism has ceased to have a reason to exist. By
necessity we have to co-operate with each other across nations.
Many of our domestic problems are caused on the other side of the world.
Financial instability in Asia destroys jobs in Chicago and in my own
constituency in County Durham. Poverty in the Caribbean means more
drugs on the streets in Washington and London. Conflict in the Balkans
causes more refugees in Germany and here in the UK. These problems can
only be addressed by international co-operation.
We are all internationalists now, whether we like it or not. We cannot
refuse to participate in global markets if we want to prosper. We cannot
ignore new political ideas in other countries if we want to innovate. We
cannot turn our backs on conflicts and the violation of human rights within
other countries if we want still to be secure.
A businessmen view
opening of world markets, global supply chains,
shifts in factors of production across borders,
multinationals
'
An Economist View
(Stiglitz, 2001,p. 9)
Theories of Globalization:
Sceptics
Hirst & Thompson
Does globalization
exists?
Radicals
Giddens:
Globalization is real and its
consequences can be felt
everywhere. The task is to
analyse and understand
Ohmae:
The borderless triad.
Globalization is an inexorable,
irreversible, homogenising force
Pragmatics
Dicken:
The globalizing economy. Significant qualitative changes in the
international model of production and consumption. The global
economy is a dynamic web of transnational production networks and
geographically localised political, economic and cultural systems.
Scholte:
Conceptual confusion: Some authors use the word globalization to talk
about universzalization, westernization, or neo-liberalism
Definitions
Globalization" is a spread of trans-planetary
connections through organisations that coordinate
the activities of individuals across the planet:
Communications, ideas, social relations, knowledge, people,
production processes -global factories, global sourcing-,
consumption, money, and responses to supranational
challenges environment, health-(Scholte, 2006)
Capital Movements:
Movement of People:
Movement of People
International migration, has enormous
implications for growth and welfare in
both origin and destination countries
Workers move from one country to
another partly to find better
employment opportunities. Most
migration occurs between developing
countries. But the flow of migrants to
advanced economies is likely to provide
a means through which global wages
converge.
International Emigration
International Immigration
Dicken (2005)
Globalization as Processes:
Localizing
processes.
Internationalizing
processes
Globalizing
processes
Regionalizing
processes
Localizing processes
4 types of processes
Pure
Globalization
Internationalizing processes
High
Summary
Ongoing debate on whether we have a globalised
economy: sceptics vs radicals.
Pragmatic view recognised that we do not have a
globalised economy but evidence suggest we have a
globalising economy.
Although some regions are more globalised than
others, globalization processes are accelerating.
Globalization as a concept describes a new
phenomenon, different from internationalization,
universalization, westernization and neo-liberalism
Economic Globalization is is a complex of interrelated
processes of qualitative and quantitative change in
economic activities.
This quantitative change is an unique phenomenon
changing traditional north=south political economy.
Definitions
Foreign Investment (FI): Investment of resources outside the
home country.
Sum of foreign portfolio investment plus foreign direct investment
Foreign Portfolio Investment (FPI): investment in foreign
financial instruments (Gov Bonds, foreign stocks). Involves loans
paying a fixed rate of interest
Foreign Direct Investment (FDI): investment in business
activities to produce and/or market a product in a foreign country.
Involves investments over which the firm maintains control
FDI Flows : FDI going out of a county ( outwards) and getting into
a country ( inwards)
FDI stock: Total amount of FDI in a given country or region.