Globalization

International Business Management

EMBA Cohort 7
Presented to: Dr. Hanan ElZeiny.
Presented By: Akram Mohamed Wahba

Nowadays, there is much talk and discussion about cultural globalization, i.e.,
a common culture is developing across the globe. To some extent, it is true
despite some resistance from national culture, as both are developing side by
side. Generally, the word culture is used to mean the total way of life to include
economic, political and social norms, values and behavior.
Is seen as the intermixing of people, cultures, economies and technologies.
Modem cultural globalization is a new phenomenon. It started with economic

globalizationspread of transnational corporations and global commodities,

especially food and drinks items like pizza and coke, and dress material such as
Levi jeans, Reebok and Nike shoes, etc.
In this way, we are all sharing in a common transnational form of consumption.
This developing consumerism has encouraged mass common consumer culture
which reflects a powerful grip on societies throughout the world. As consumerism
spreads, changes are visible in lifestyles, cultural tastes, food habits, dress
patterns and in modes of entertainment also. As globalization is affecting
everyonefrom nations to businesses, communities and Individuals alikethe
winners will be those that are prepared to benefit from it, not to disregard it.
How does Globalization affect the labor market?

Positive Effects
Positive

effects can occur as a result of the increased capacity of

developing countries to create new opportunities for work and production

following the alleviation of price distortions with respect to both labor and
capital.
FDI

has both direct and indirect effects on employment creation in the

recipient countries. This depends on the size and type of investment, the
type of technology adopted and the ability of the host country to master the
imported technology and adapt it to its needs.
FDI

also has indirect effects on employment through the vertical links to

the TNCs, and there may also be spillover effects of TNCs on local science,
technology, education and training

Negative Effects

Neg
ativ
effe
cts
occ

res
ult
larg
scal
tec
hno
logi
cal
dev
elo
pm
ent
that
acc
om
pan
this
phe
me
non
whi
will
red
uce
the
ma

nd
on
uns
kille
d
lab
or
Eve
n
dire
ct
fore
ign
inv
est
me
nt
doe
s
not
car
e
for
che
ap
wor
ker
s
but
onl
y
for
hig
hly
skill
ed
wor
ker
s.

An increase in hidden unemployment, a lack of new job openings, and a

deterioration of real wage rates are the consequences of globalization in
most developing economies, which were unable to adapt the new
technologies.

Moreover if the labor clause, will be enforced through the WTO, this will
have a negative impact on economic growth and employment in many
developing countries, where child labor exists and where working
conditions are miserable (Nassar,2003).

Most trade liberalization benefits will be received by the manufacturingproducing countries, while the smallest share will be going to the
agricultural-producing countries (developing countries).

In addition policies of structural adjustment such as privatization imply

an increase in unemployment since privatization is accompanied usually
by a reduction in the demand for labor.

Finally the theoretical predictions about the employment consequences

of trade liberalization are based on assumptions of full employment of
resources and flexible labor markets. These assumptions, might not hold
true in developing countries where labor markets are inflexible due to
structural factors.

Labor supply trends by region,1980-2015

Working age
(15-64)
population
( millions)
1980

1999

East
Asia
&Pacific

820

1220

Eastern
Europe
&Central
Asia

274

Latin
America
&
Caribbean
Middle East
&North
Africa

Average Annual
Labor Force Growth
(%)
(1980 1999)

Formal %
of
Labor
Projected Annual
Force
Population Growth Rate
(%),
1999-2015
0-14

15-64 65+ 1980 1999

1.9

-0.6

1.2

2.5

42.5

44.4

318

0.5

-1.2

0.4

0.7

46.7

46.2

201

319

2.7

-0.1

1.7

2.8

27.8

34.6

92

172

0.5

2.5

2.8

23.8

27.3

South Asia

508

797

2.2

0.1

2.5

33.8

33.3

Sub-Saharan
Africa

195

340

2.6

1.6

2.7

1.8

42.3

42.2

High-income
World

505

595

-0.6

0.2

1.8

38.4

43.1

2595

3761

1.9

0.1

1.4

2.1

39.1

40.6

Educational Levels of Female Workers in The Services Sector

in

Selected Arab Countries in 1980's and 1990's

Country
Year Illiterate Primary

Intermediate Secondary University Unidentified

& Upper

Bahrain

1991

46

15

10

Kuwait

1985

30

24

23

Qatar

1986

36

Saudi
Arabia

1987

79

11

United Arab 1980

Emirates

83

Egypt

1986

65

Iraq

1987

52

17

Jordan

1979

48

18

13

Syria

1994

27

33

12

Yemen

1991

79

Effect on real wage levels of the work force

Trade flows lead to shifts in the demand for labor, as more workers are
needed in newly profitable sectors and fewer in unprofitable sectors.

If the supply of labor is fixed these demand changes lead to a rise in

wages to more profitable industries.

Competition by imports might lower the price of products by low skilled

labor relative to the price of products made by skilled labor, so that
domestic firms shift toward producing skill intensive goods, which will
lead to a lower real wage level for the majority of work force, the
unskilled in developing countries (Rama,M.2003 , Fontana, M.1998)

Financial liberalization is likely to result in a fall in the net income

received by workers. This is because countries are lowering taxes to
attract FDI, relatively to high tax rates on labor, as labor is less mobile
to resist high taxes

Globalization has affected cultures in two ways: Firstly, it has tried to homogenize
the cultures. We can see this in dress pattern such as pent and shirt and to some
extent in food recipespizza, Chinese noodles, etc. On the other hand,
globalization has helped in the resurgence of local culture. This we can observe in
the revival of traditional cultures and reforming of the identity.
Cultural globalization is also marked with some new trends in human relations.
Recognition of a worldwide ecological crisis, the development of worldwide
concern about health problems such as AIDS and other diseases, extension of the
concept of human rights and the creation of global democratic movements are a
few examples of integration that is taking place between different nations
And from my point of view, manufacturing firms leaders in Egypt should know
that globalization will allow the easy flow of materials, parts and components
between factories and countries. In turn, they have to plan and control their
inventories in order to avoid the risks of any shortage or surplus in the inventory.
Manufacturers in Egypt should pay more attention to the importance of
technology as one of the very fundamental paths for confronting globalization
threats.
The government should study how to enhance the opportunities to make Egypt
green

zone

for

foreigners

investors,

by

facilitating

the

infrastructure

of

manufacturing, fiscal policies, taxation, business regulations..Etc.

It was mostly Egypt's domestic scene and foreign policy that prevented the
country from achieving its full potential for development and industrialization.
Egypt needs to take advantage of the opportunities that globalization affords, yet
should strive to minimize its harmful consequences. To do so, the country needs

to see its options clearly -- not an easy task when ideologues continue to
suppress any attempt to offer realistic analysis. Essentially, two things are
needed: full comprehension of the objectives, choices, priorities, and policies of
globalization as well as a clear vision of Egypt's interests, goals, and options.
We need a fair assessment of globalization and its course, for only such an
assessment will provide us with a historical and theoretical outlook. Once we have
defined globalization, we may proceed to consider the intricacies of managing and
assessing it. Unlike the case with early colonial conquests, globalization did not
come to this country through military invasion.

The processes and policies associated with globalization have been in evidence
since the early 1990s, and have affected every single aspect of the international
scene. Although globalization is an ongoing process, we can identify at least three
of its main characteristics: the shift from industrial to information society, the
opening up and merger of various economies, and the propensity to standardize
all aspects of human life, economic as well as non-economic.
Globalisation is not a mere continuation of the course taken by the world
economy since the mid-19th century. Back then, the Egyptian economy was made
a subsidiary of industrial economies, with Egypt providing raw materials -- cotton
mostly -- as well as a market for European industry.
Since the 1990s, a quantum leap has been made in the opening up and
integration of the local economy into the global. The domestic market is now
more open to foreign goods, services, and investment. And as a result of the
information revolution, this is happening at a lower cost and higher speed than
ever. The main features of this process are freedom and growth of international
trade, increased foreign direct investment, liberalization of stock and money
markets, and freedom of capital movement in what one may describe as a global
financial village.
The market economy, in short, has eclipsed the command economy in matters of
productivity and modernization. Globalization has provided better jobs and higher
productivity, and made the world a more prosperous place. But the resulting
wealth has not been evenly distributed. Most countries, including Egypt, have
failed to benefit from globalization or affect its course. As a result, uneven
development has continued unabated and only a handful of countries can claim to
be in control of the global economic scene.