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CHAPTER
Globalization
McGraw-Hill/Irwin 2004 The McGraw-Hill Companies, Inc., All Rights Reserved.
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Globalization:
World Economy becoming more integrated and interdependent
Accelerating rate of change of this trend
McGraw-Hill/Irwin
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Globalization of Markets
Historically distinct and separate markets are merging into a huge global marketplace
Mostly not consumer product markets Mostly industrial products Tastes and preferences of consumers converging (??)
MNCs creating global marketplace? MNCs foreign operations becoming more vulnerable to competition in their home markets
McGraw-Hill/Irwin
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Globalization of Production
Individual MNCs disperse different parts of their operations to narrow set of locations around the world because of:
National advantages in factors of production key to the where to produce? decision
Labor, land, capital, energy, expertise
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Drivers of Globalization:
Declining Trade and Investment Barriers GATT, WTO; Removal of FDI restrictions/barriers Average Tariff Rates on Manufactured Products
(% value)
McGraw-Hill/Irwin
1913 21 20 18 30 5 20 21
1950 18 26 25 11 9 23 18
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Output 63 40.3 5.5 9.7 6.3 6.5 3.4 3.0 n.a. n.a.
Output Exports 00 98 27 14.2 7.3 5.2 4.1 4.1 2.0 3.2 1.4 12.7 7.3 10 5.7 4.5 4.5 4.0 3.4 2.5
Exports 01 11.9 6.6 9.2 5.2 4.4 3.9 4.3 4.3 2.4
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McGraw-Hill/Irwin
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