Globalization Group

No. 1

TERM REPORT
On
GLOBALIZATION

Presented To:
Sir Sajid Tufail

Presented By:
MUHAMMAD IRFAN

MBA 4 Th

Department of Business Administration

Bahauddin Zakariya University

Sahiwal Campus

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GLOBALIZATION

History of Globalization
Globalization is a process that has been going on for the past 5000 years (Tehranian, 2005), but it
has significantly accelerated since the demolishing of the Soviet Union in 1991. In considering
the history of globalization, some authors focus on the events since the discovery of America in
1492, but most scholars and theorists concentrate on the much more recent past.
But long before 1492, people began to link together disparate locations in the world into
extensive systems of communication, migration, and interconnections. This formation of
interaction between the global and the local has been a central driving force in world history.
Roughly, Economic Globalization means that world trade and financial markets are becoming
more integrated.

According to Friedman (1999), globalization is: “The inexorable integration of markets, nation
states, and technologies to a degree never witnessed before- in a way that is enabling individuals,
corporations and nation-states to reach around the world farther, faster, deeper and cheaper than
before, the spread of free-market capitalism to virtually every country in the world. On the other
hand, a great number of economists assert that globalization is an on-going historical process that
reached its apex toward the end of the 20th century. This process leads to the increasing
integration of the production of goods, services, ideas, culture, communication, and
environmental pollution on a world-wide scale, imparting locality of populations and labor.

Dimensions of Globalization
Globalization has some dimensions. It can be related to every fields of daily life. For instance, a
marketing staff versus an engineer could interpret globalization in different ways. Dimensions
are as follows:
• Economics – related to globalization in trade, money, corporations, banking, capital,
• Political – science, governance, wars, peace, IGOS, NGOS, and regimes,
• Sociology-communities, conflict, classes, nations, agreements,
• Psychology-individuals as subjects and objects of global action,
• Anthropology- cultures overlapping, adapting, clashing, merging,
• Communications- information as knowledge and tools-internet,

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• Geography- Everything, provided it can be anchored in space.

Each of these social sciences looks at a special aspect of the whole system of interdependent
parts that constitutes our world system. Each discipline constructs a concept of globalization that
reflects its special point of view.

The Globalization of Markets

The globalization of markets refers to the merging of historically distinct and separate national
markets into one huge global marketplace. Falling barriers to cross-border trade have made it
easier to sell internationally. The tastes and preferences of consumers in different nations are
beginning to converge on some global norm, thereby helping to create a global market.

The Republic of Technology

Daniel J. Boorstin, author of the monumental trilogy The Americans, characterized our age as
driven by "the Republic of Technology [whose] supreme law . . . is convergence, the tendency
for everything to become more like everything else." In business, this trend has pushed markets
toward global commonality. Corporations sell standardized products in the same way
everywhere -autos, steel, chemicals, petroleum, cement, agricultural commodities and
equipment, industrial and commercial construction, banking and insurance services, computers,
semiconductors, transport, electronic instruments, pharmaceuticals and telecommunications, to
mention some of the obvious.

Everywhere everything gets more and more like everything else as the world's preference
structure is relentlessly homogenized. Consider the cases of Coca-Cola and Pepsi-

Cola, which are globally standardized products sold everywhere and welcomed by everyone.
Both successfully cross multitudes of national, regional and ethnic taste buds trained to a variety
of deeply ingrained local preferences of taste, flavor, consistency, effervescence and aftertaste.
Everywhere both sell well. Cigarettes, too, especially American-made, yearly make global
inroads on territories previously held in the firm grip of other, mostly local, blends.
The most effective world competitors incorporate superior quality and reliability into their cost
structures. They sell in all national markets the same kind of products sold at home or in their
largest export market. They compete on the basis of appropriate value, the best combinations of

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price, quality, reliability and delivery for products that are globally identical with respect to
design, function and even fashion.

Example of Japan
That, and little else, explains the surging success of Japanese companies dealing worldwide in a
vast variety of products - both tangible products like steel, cars, motorcycles, hi-fi equipment,
farm machinery, robots, microprocessors, carbon fibers, and now even textiles, and intangibles
like banking, shipping, general contracting, and soon computer software. Nor are high-quality
and low-cost operations incompatible, as hosts of consulting organizations and data engineers
argue with vigorous vacuity. The reported data are incomplete, wrongly analyzed and
contradictory. The truth is that low-cost operations are the hallmark of corporate cultures that
require and produce quality in all that they do. High quality and low costs are not opposing
postures. They are compatible, twin identities of superior practice.

Japan's companies are global because they export cars with left-hand drive to the United
States and the European continent, while those in Japan have right-hand drive, or because
they sell office machines through distributors in the United States but directly at home.
The same is true of Safeway and Southland retail chains operating effectively in the
Middle East, and to not only native but also imported populations from Korea, the
Philippines, Pakistan, India, Thailand, Britain and the United States. National rules of the
road differ, and so do distribution channels and languages. Japan's distinction is its
unrelenting push for economy and value enhancement. That translates into a drive for
standardization at high quality levels.

The Globalization of Production

The globalization of production refers to the sourcing of goods and services from locations
around the globe to take advantage of national differences in the cost and quality of factors of
production. By doing this, companies hope to lower their overall cost structure and improve the
quality or functionality of their product offering, thereby allowing them to compete more
effectively.

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Outsourcing History
For the past several years, many companies have been outsourcing more and more of their
operations in order to focus on core competencies, such as research, development, sales, and only
the final assembly aspect of manufacturing.
Some companies have even outsourced manufacturing altogether. Here is an example the logic
that justifies such a move. The head of third party manufacturing for a major food
company, in discussing core competencies, used the following analogy: For example,
maintaining roofs and parking lots is not a core capability of ours, so we would look to an
outside company to provide this service. The same applies to manufacturing operations.
In the last several years, much of part manufacture and material processing was outsourced
to specialists who were assumed to be a better at it, thinking that this would save cost and
increase profits.

Advantages of outsourcing
1. Focus on core competencies: Outsourcing enables companies to divert their attention
from supplementary tasks and focus on their core functions. Customer care,
documentation, IT up gradation and administrative tasks such as internal audit and
payroll processing are the non-core tasks for many companies and consume the time of
the management if handled in-house. When these tasks are outsourced, the company
management can focus on the company’s core competency and bring better services and
products into the market. For example Hero Honda Motors outsources its IT maintenance
work so that its staff can focus on user requirements to deliver better services instead of
spending time on routine complaints.
2. Cost savings: Cost savings is an important consideration in outsourcing decision.
Outsourcing enables companies reduce their costs on resource management, labor, space,
etc. According to outsource Partners International estimates the cost savings to reach up
to 50 percent when the outsourced work is off shored
3. Quality: Vendors have expert employees along with specialized processes and
technology that ensure better quality of output for the customer. However, the customer
has to carefully select a vendor that will provide it with the quality of services that it
requires.

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4. Flexibility: Outsourcing provides flexibility to the customer as the buyer can change a
vendor if required. Changing a vendor in case of poor delivery is much easier than
changing a full-time employee. Many outsourcing deals incorporate conditions for
change in requirement or termination of contract ensuring flexibility.
5. Time-to-market: Offshore outsourcing offers round the clock work benefits and hence
reduces the time-to-market. Both on-shore and offshore outsourcing may also result in
time saving if the vendor has skills and expertise that are not internal to the customer
organization.
6. Access to diverse technologies: Vendors have focus on particular services and play in
volume. This enables them to keep themselves up-to-date with the technology required in
these services. The customer can thus avoid technology obsolescence and leverage the
vendor’s access to diverse and advanced technologies.

In addition to the above advantages, outsourcing offers other benefits such as provider
alternatives, transfer of risk to vendor, elimination of internal policies, elimination of
recruitment, training and staff retention in non-core functions.

Bharti Airtel–Perfect example of outsourcing all its activities

Airtel is one of the most prominent telecom companies in the world with its services spanning 19
countries in South Asia and Africa. It has a number of firsts to its credit which has positioned it
much ahead of its competitors. It’s bouquet of fixed – line services, mobile services and also
broadband have positioned it in a league of its own.
These statistics are a pointer of its growing dominance over others –
 140+ million subscribers as of July 2010 (Vodafone comes way behind at 111 million
subscribers)
 World’s third largest single country operator and fifth largest telecom operator in the
world
 First Indian telecom operator to achieve the Cisco Gold certification for good
competency, service, support and customer satisfaction standards
 First mobile telephony company to outsource everything except marketing, sales and
finance

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It is the last point which made me thinking. This has turned out to be the reason for the wide gulf
between the best and the rest.
This made me understand and analyse as to what Airtel really did.
Airtel outsourced their IT processes to IBM, entire network operations to Ericsson and Siemens
along with Alcatel Lucent recently and the transmission towers to another company
So what did this initiative bring for them?
It reduced has their costs considerably and they were able to acquire more customers and were
able to pass on these savings to the customers instead of the shareholders and this increased their
customer base even more and they again followed this pattern
Airtel was also able to differentiate themselves easily from the rest in the market who were and
have been in the RED for a long period of time. Being in a position where they reduced their
costs considerably, they had the opportunity to control the market and introduce various
initiatives without being majorly affected in terms of revenues / profits.

ROLE OF GLOBAL INSTITUTIONS IN GLOBALIZATION

Who Are the Main Players in the Globalization?

Globalization focused on the World Trade Organization. However, the WTO is just one of
many players in the globalization debate. These players can be divided into four main groups:
international organizations, nongovernmental organizations, multinational corporations, and
sovereign nation-states.

• International Organizations
Some of the main targets of globalization critics are international organizations like the
WTO. Other key players in this group are the United Nations, the World Bank, and the
International Monetary Fund.

• World Trade Organization.

An international agency which encourages trade between member nations administers
global trade agreements and resolves disputes when they arise. WTO works to protect
the interests of wealthy countries and corporations at the expense of poor countries."
Trade is the ally of working people, not their enemy,"

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• United Nations
An international organization composed of most of the countries of the world. It was
founded in 1945 to promote peace, security, and economic development the mission of
united nation analyzes economic issues and provides aid to poor countries.

• World Bank
Popular name for the International Bank for Reconstruction and Development (IBRD).
Established together with International Monetary Fund (IMF) in 1944 as part of Bretton
Woods system to rebuild the Western economies shattered by Second World War
through financing of commercial and infrastructural projects. Its initial goal was to help
Europe recover from the war. Later, its focus shifted to helping poor countries develop
their economies.

Second effort, the World Bank has funded large projects aimed at improving the
economic infrastructure of poor countries.

• International Monetary Fund

IMF plays three major roles in the global monetary system. The Fund surveys and
monitors economic and financial developments, lends funds to countries with balance-
of-payment difficulties, and provides technical assistance and training for countries
requesting it.

Today the IMF offers economic advice and assistance to countries with financial
problems. The IMF is often called on to help countries experiencing a financial crisis.
Such a crisis typically arises when a government accumulates too much foreign debt.
When debt levels rise too high, a poor country may have trouble servicing its debt.

• Nongovernmental Organizations

Another player in the globalization debate consists of nongovernmental organizations.

NGOs are nonprofit organizations that operate outside of governments.

NGOs speak out on social issues associated with globalization. Examples include Oxfam
International, CARE, Global Fund for Women, and Save the Children.

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• Multinational Corporations

Multinational corporations are both central players in the globalization process.

Multinationals are companies that have a home base in one country and operations in
other countries. These large companies promote globalization by moving goods, capital,
information, and people across borders to do business multinationals will move their
operations to countries that are unable to protect their workers or the environment from
abuse. The result, critics fear, will be a "race to the bottom" in terms of wages, working
conditions, or pollution.

Supporters of globalization counter that multinational corporations generate trade,

investments, jobs, and other economic benefits in countries where those corporations do
business. The multinationals also train workers in new technologies and business
methods,

• Sovereign Nation-States

Last major players in the globalization debate are the world's sovereign nation-states.

A nation-state is an independent political body with full authority over its territory and
inhabitants. The members of the United Nations are all nation-states. A nation-state, in
theory, has the sovereign power to regulate trade and capital flows across its borders.

Capital flows are movements of money and investments from one country to another.
To secure the benefits of global trade, however, many nation-states have agreed to limit
their use of trade barriers by signing free-trade agreements and joining the WTO.

How The IMF, World Bank & WTO Work Together?

International Financial Institutions (IFIs) propagate is that of ‘economic growth’ and ‘free-
markets’ as the only means of generating wealth for development and poverty reduction.

Developing countries find themselves in a position where they do not have enough foreign
currency reserves to invest in growth-promoting policies as they may have spent their reserves
on imports and debt repayments. They might then lent money by the World Bank to finance
large development projects in the hope that such projects (such as extracting oil) will facilitate

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economic growth and have a knock-on effect on development.

The IMF clearly states that it is not a development bank and is not concerned with poverty
reduction. It is, however, closely allied with Wall Street bankers and the US Treasury, and
ensures that economic policies are implemented that benefit private investors and financial
speculators in the free-market. It lends to governments on the strict condition that they priorities
the repayment of the loan (over and above domestic welfare needs). Countries must also agree
to adjust domestic economic policies to ensure that their balance of payment problems do not
occur again.

The WTO’s trade agreements work alongside the IMF and World Bank measures, ensuring all
barriers to trade and domestic restrictions on how to manage foreign investment are lifted This
enables foreign corporations to purchase and control everything from water, heath-care and
education facilities to agricultural technology and indigenous plants and knowledge. All in all,
there is a huge migration of control and financial resources away from local enterprises and
industries that would otherwise benefit society and strengthen local economies.

WHICH IS MOST BENEFICIAL ISTITUTION FOR WORLD MARKET?

The WTO, IMF and World Bank have been major counterparts in the creation and management
of the modern world economy. Together these institutions encourage economic structural
adjustment, privatization and market liberalization in emerging markets.

• To create balanced trade, stable international finance and effective development in

poorer countries, the regulation of the global economy must be returned to United Nations.
• The global public must, through their governments, demand cooperative control over
those resources which are essentials to life and should be shared internationally according to
human need - not corporate profit.

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FEATURES AND BENEFITS OF GLOBALIZATION:

FEATURES OF GLOBALIZATION:

The features of globalization may be discussed as follows:

1. Split of restrictions imposed

It means free access to the markets in the world without any physical (quota) or fiscal (tariff) or
any other governments) restriction. Hence, global consumers emerge demanding high quality
products and more value for their money without any restrictions like parochial, regional or
national consideration.

2. Globally standardized products

Globally standardized products need be marketed all over the world. There are already many
such products having world market. It includes the "lead" products in a region taking care of
dominant needs of that region.

3. Requirement of resources

Globalization requires resources like raw materials, finance and technology. Free access to
quality raw materials, latest technology and cheap finance are important characteristics of this
process at less cost.

4. Free mobility of managerial personnel and entrepreneurs

In globalization, free mobility of managerial personnel and entrepreneurs result into mergers,
takeovers and structural regrouping in countries across the globe.

BENEFITS OF GLOBALIZATION:

Globalization of the world economy can bring immense benefit to the countries that are able to
harness the resulting opportunities to the proper development of their material and human
resource endowment. Globalization is a dual sided phenomenon which has been beneficial to
many countries and has not helped matters in the same or many other countries especially the

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developing countries. This is so because most developing countries have very weak capacities to
take advantages of global markets as they are still grappling with the provision of basic
necessities and amenities such as roads, railways, food, and water among others, it becomes
difficult to fully utilize the opportunities and benefits of globalization.

The benefits and opportunities of globalization include:

• Specialization of production processes:

Globalization brings about greater specialization between nations in their production
processes thereby increasing national output and world output in both quantity and
quality which is expected to translate into higher living standards of the world population.

 Expansion of global markets and corporations.

The expansion of global markets and corporations as a result of globalization promotes
efficiency through competition and division of labor that allows people and economies to
focus on their best. Global markets offer greater opportunity for people to tap into more
and larger markets around the world. It makes people to have access to capital flows,
technology, cheaper imports and larger export markets.

 Transfer of technology:
It provides opportunity for the transfer of technology through research and development
and exposure to new ideas and products through the operations of multi-national
corporations ( MNCs ). In most cases, it entails better quality products are produced and
give wide options to consumers.

 Increase in international capital flows:

It has led to increase in international capital flows which enhance foreign exchange
earnings to supplement domestic savings and increase investment levels for the host
countries, transfer of technology and increase sources of revenue for government of the
host countries through taxes and royalties.

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 Global financial integration:
It enables a global financial integration which enables countries especially developing
countries to access a diversified investor base for bonds and equity issue and also access
capital market of the developed countries.

 Opportunity for generating revenues:

It gives the domestic market, enhanced opportunity for generating revenues from foreign
investment through the inflow of portfolio investment.

 Opportunities for export led growth of an economy:

It provides opportunities for export led growth of an economy fuelled by increased
exportation on manufactured goods.

 Opportunities for increased foreign direct investment:

It provides opportunities for increased foreign direct investment which helps in
industrialization, building up of economic overhead capital and upgrading domestic
human capital through managerial capacity building.

 Ability to counter any financial risks

It has enhanced capital flow in each and every country with which a country may always
remain prepared to counter any financial risks.

 World allocation of money

Due to financial globalization the capital flows between nations increases which cause
well-organizes world allocation of money.

 Safeguard to defend against national shocks

Financial globalization is a safeguard to defend against national shocks and an excellent
system for more efficient global allocation of resources.

 Affecting capitalist economic and social relations

It brings the reorganization of production, international trade and the integration of
financial markets, thus affecting capitalist economic and social relations via

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multilateralism and microeconomic phenomena, such as business competitiveness, at the
global level.

 Marginalizing the less educated and low-skilled workers

Globalization is now seen as marginalizing the less educated and low-skilled workers.
Business expansion will no longer automatically imply increased employment.
Additionally, it can cause high remuneration of capital due to its higher mobility
compared to labor.

 Labor’s best option

Firms continue to seek the best workers for the money, wherever they may be found,
especially as advances in telecommunications, transportation and supply-chain
management bring the world closer together. Labor’s best option in a globalize world is
to adapt, compete and get stronger.

 Efficient mobility of money

Money is probably the most mobile factor of production. In a nanosecond, it can scurry to
any part of the world with a squeak of a computer mouse.

The benefits of globalization for poorer countries

• Relieving poverty
Supporters believe that globalization holds out the best hope for relieving poverty around
the world.

• Exceed in GDP
As the pace of globalization has picked up, GDP growth in poor countries has often
exceeded that of wealthy countries. In 2006, for example the World Bank reported that
the growth rate for the developing world as a whole since 2000 was more than double
that of developed countries.

• Benefits of globalization are also reflected in the human development index

The benefits of globalization are also reflected in the human development index. A
number of countries with low HDI scores in 1985 have improved significantly since then.

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Examples include China, India and Indonesia. Many economists attribute this
improvement to the fact that these countries opened themselves up to global trade.

• Decline in people living in extreme poverty

Globalization has also helped lifts million of people out of poverty. The number of
people living in extreme poverty has declined since 1981.

The benefits of globalization for the developing countries

It is claimed that globalization increases the economic prosperity and opportunity in the
developing world. Such as:

• Enhancement in civil liberties

The civil liberties are enhanced and there is a more efficient use of resources.

• Multi-dimensional effects
All the countries involved in the free trade are at a profit. As a result, there are lower
prices, more employment and a better standard of life in these developing nations.

• Positive-sum chance
It is feared that some developing regions progress at the expense of other developed
regions. However, such doubts are futile as globalization is a positive-sum chance in
which the skills and technologies enable to increase the living standards throughout the
world.

• Efficient tool to eliminate penury

Liberals look at globalization as an efficient tool to eliminate penury and allow the poor
people a firm foothold in the global economy. In two decades from 1981 to 2001, the
number of people surviving on $1 or less per day decreased from 1.5 billion to 1.1
billion. Simultaneously, the world population also increased. Thus, the percentage of
such people decreased from 40% to 20% in such developing countries.

The benefits of globalization for developed countries

• Promotion of growth

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Trade among nations via the use of comparative advantage promotes growth, which is
attributed to a strong correlation between the openness to trade flows and the affect on
economic growth and economic performance. Additionally there is a strong positive
relation between capital flows and their impact on economic growth.

• Foreign Direct Investment's impact on economic growth:

FDI’s impact on economic growth has had a positive growth effect in wealthy countries
and an increase in trade and FDI resulted in higher growth rates. Empirical research
examining the effects of several components of globalization on growth using time series
and cross sectional data on trade, FDI and portfolio investment found that a country tends
to have a lower degree of globalization if it generates higher revenues from trade taxes.
Further evidence indicates that there is a positive growth-effect in countries which are
sufficiently rich as are most of the developed nations.

• Lowered government outlays

Globalize countries have lower increases in government outlays, as well as taxes, and
lower levels of corruption in their governments.

• Reduces macroeconomic volatility

One of the potential benefits of globalization is to provide opportunities for reducing

macroeconomic volatility on output and consumption via diversification of risk.

Some other benefits:

There are some other advantages of globalization.

• Goods can now move from one part of the world to another at great speed.
• Due to the economic interdependence, war is less likely to happen.
• Free trade, global media, free movement of ideas, flexibility, ease of communication,
environment concern, they are now all possible due to globalization.
• The global village, where all people work together towards a common goal, may become
reality.

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• Time, distance, and geography are fast becoming irrelevant when it comes to doing
business due to globalization and technological advancements.
• Worldwide financial markets emerge
• Cross-cultural contacts grow and cultural diffusion takes place.
• Subsidies for local businesses decrease
• Capital controls reduce or vanquish

THE FOUR ASIAN TIGERS: A case study of Export-Led development:

Among the greatest gainers benefiting from globalization are the four economies nicknamed the
Four Asian Tigers. The name refers to the counties of South Korea, Singapore, and Taiwan,
along with the former British colony of Hong Kong. In the 1960s, all four were relatively poor.
Today rank among the world’s developed economies.

Beginning in the 1970s, the tigers adopted an economic model known as export-led
development. This model emphasizes the production of goods for export as a way of expanding
economy. The sale of exports brings in money to buy machinery for factories. With the new
machines, more goods are produced, which adds to economic growth.

Following a pattern established by Japan after the Second World War, the Tigers developed
export industries that took advantage of their low labor costs, South Korea, for example, became
a major producer of clothing and sneakers. Taiwan built factories that assembled electronic
goods. At the same time, their governments kept tariffs high to protect their new industries from
foreign competition.

The result was two decades of spectacular economic growth. Between 170 and 1989, the average
annual GDP growth in the Tigers ranged from 7 to 10 percent. In contrast, the world average
growth rate hovered between 3 and 4 percent.

As their economies grew, the tigers invested heavily in education and other services to improve
the lives of their citizens. As a result, their levels of human development rose rapidly. Today all
four ranks in the “high human development” category.

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The success of the Four Asian Tigers was so impressive that the IMF and World Bank began
recommending the export-led development model to their clients. From China to Chile,
developing countries embraced the new model. By the 1990s, the Tigers faced fierce competition
from countries like Vietnam and Bangladesh, which had even lower wage rates. As a result, the
Tigers’ GDP growth began to slow.

Critics of export-led development point to a number of problems with this model. The most
obvious is that it depends on a high level of demand for exports in wealthy countries, especially
the United States. If that demand drops because of an economic downturn, countries that rely on
U.S. consumers to buy their exports will also suffer. As has often been observed, “When
America sneezes, the world catches cold. “

Technology in Globalization

Technology can be defined as:

“The socialized knowledge of producing goods and services”.

We can describe the term technology with five important elements:

• Production

• Knowledge

• Instruments

• Possession

• Change.

Technology is the vital force in the modern form of business globalization. Technology has
revolutionized the global economy and has become critical competitive strategy. Technology is
one of the leading factors in the evolution of globalization. Information technology is helping
further develop globalization. The cost efficiency of much technology is increasing, and these
technologies are beginning to impact everyday life.

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The technological advancement has helped a lot in creation and growth of global market.
Multinational Corporations (MNC) can be seen as a central actor in globalization. Markets have
become global at a rapid pace, as indicated by several kinds of trade extended to foreign
countries. The innovation in host country is often undertaken by MNC based in one country and
due to the technological advancement MNC(s) have expanded to other countries by some kinds
of FDI also facilitating the movement of research and development. In past when we used our
lives to shape technology, now days our lives are actually being shaped by new technology.

Effects of Technological Developments on Globalization Process

• It has something to do with production (of goods and services). We need technology to
produce something either goods (ex: clothes, television set, cars etc.) or service (ex: banking,
security, teaching etc.) Technology improves our capacity to produce.

• Technology has something to do with knowledge. Technology is a result of intellectual

activities. Therefore technology is type of intellectual property.

• Technology has something to do with instruments. The instruments are the extensions of the
human body, whenever an instrument is used there is technology involved. The instruments
indicate the usage of technology by human beings. Instruments are mostly physical such as
computers, vacuum cleaners or pencils, but sometimes there are immaterial instruments too,
such as databases or algorithms in computer programming.

• Technology has something to do with possession. Those people who possess technology also
control it. Controlling technology has usually something to do with economics and politics.
Therefore we can speak of technologically rich and poor countries and the struggle among
them usually in the forms of patents, transfers and protection of intellectual rights.
• Technology has something to do with change. With technology, the world has changed
drastically. Most of the innovations from the technological advances have very important
effects on the lives of peoples of the world, which has witnessed radical changes especially
after 1960’s revolutions on the microelectronics technologies. Even there are some people
who argue that the history is made by technology as a result of their highly criticized techno-
determinist view.

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Role of Technological Developments on Globalization Process

The main driving forces behind the transformation in world’s economy are:

• Due to technological advancement distance, time and location doesn’t matter now.

• Concept of E-commerce, E-business and E-banking has been the latest trend of doing
business as it allows voluminous transaction to be done speedily and easily through
Internet.

• Large pools of skilled and quality human resources

• Dramatic fall in international telecommunication cost.

• Government bodies changing their mind sets and promoting privatization of various
sectors.

How technology helps in removing the hurdles in the field of globalization?

1) Technology advancement has lead to the progress and prosperity of various business firms
throughout the world. Indirectly it leads to the improvement and advancement of other sectors of
economy and also benefits the consumer by providing them up-to-date information when and
where required. It leads to industrial growth by saving energy and time and thereby bringing
improvement in productivity and reduction in cost.

For example,

In India the concept of Software Technology Park (STP) was introduced in 1986 with objective
of promoting software exports to other countries and in pursuance thereof first Technology Park
was set up in 1987. The companies operating under STP exported software worth Rs16 crores up
to Dec 1996 against India’s total software export of Rs.675 crores at the end of 1996-97.

2) The technology has increased the productivity and flow of information stimulating
competition within short time span across the world. ElectronicTrade is one of the examples of
the applications of Internet economy in the socio-economic activity. The new pressures occur
and urge business enterprises to fastly adapt themselves to and creatively use wonderful
achievement in Internet.

For example:

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General Motors, Ford & Daimler – Chrysler announced to consolidate their Internet supply
networks for product and materials exchange with other auto companies and sales agents.

3) Global networks help in realization, maintenance and reproduction of the system – basically
the capitalist system.

For example:

Electronic banking has made it much easier for consumers and trading firms to send and receive
financial assets among banks.

4) Internet has facilitated opportunities for economic development in MNCs. The technology has
reduced the communication gap between the trading firms. For developing countries Internet is
an opportunity to gain access to knowledge and services from all around the world. A poor land
line telephone system is being by passed by mobile phone with Internet access which has
allowed developing countries to step forward in their development of infrastructure and business.

5) Research shows that improved access to technology imports is improving the demand for
skilled labor in many low income countries which will provide job opportunities for the
professionals and in turn will bind to work in its own country.

6) With invent of technology, the company has become globalize and one has not to restrict
within his own country. No mediator is required to run the business online.

Impact of Globalization and Technology on Indian Economy

India focus on the approach of Techno-globalism. Techno-globalism can be summarized as the

ideology which rationalizes globalism on technological grounds. So, due to this, India's
economic growth has been high, exports have boomed, incidence of poverty has been reduced,
employment has surged, dependence by India for economic aid has stopped, long-term inflation
rate has gone down, scarcity of goods have disappeared, the quality of products available have
improved substantially and overall India has become progressively vibrant and internationally
competitive. Indian companies are setting up companies abroad, India has better technological
development for the benefit of the common man ( mobiles, road transport, cheap clothes, etc -
only because of globalization. The new economic reform, popularly known as, Liberalization,
Privatization and Globalization (LPG model) aimed at making the Indian economy as fastest

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growing economy and globally competitive. The series of reforms undertaken with respect to
industrial sector, trade as well as financial sector aimed at making the economy more efficient.
Effect of globalization on Indian industry has been very positive, though some industrial firms
with the baggage of high cost, inefficient plants and processes inherited from the past because of
closed economy's government dictated industrial policies and priorities had to face serious
problems in the beginning. But soon most of the industries have become more and more
efficient; customer focused and improved their international competitiveness in terms of costs,
prices, product quality and variety. Industrial growth has been very high and strong during the
past decade because of globalization. Exports have increased tremendously. Indian industries are
also expanding abroad. Foreign companies have substantially increased their investments in
Indian industries. Wages of industrial labor has increased substantially as they have become very
productive. Global success of Indian IT sector is a technological development that further
enhances globalization. And all this is happening only due to the globalization.

Drawback of Technology

The main drawback of this new technology is that it is creating new gaps between the rich and
the poor. As we are moving from industrial age to information age. Poor countries are not taking
part in this information revolution and are falling further behind.

SO in one sense, when we say that technology is promoting globalization, in other sense it is
“eating up” certain kinds of jobs.

Anti-globalization protests

In shift toward a more integrated and interdependent global economy, a good thing. Many
influential economists, politicians, and business leaders seem to think so. They argue that falling
barriers to international trade and investment are the twin engines driving the global economy
toward greater prosperity. They say increased international trade and cross border investment
will result in lower prices for goods and services. However despites the existence of a
compelling body of theory and evidence, globalization also critics.

The large protests at the WTO meetings, at IMF, World Bank, G8 and other such summits that
are seen today have typically been against the current forms of globalization and the

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marginalization it is causing, as well as the increasing disparities between the rich and the poor
that it has predictably led to already. These issues have motivated people all over the world to
protest in many ways.

The mainstream media has concentrated on only a few of these global protests, such as:

• Seattle in 1999
• Washington D.C. in 2000 and 2002
• Quebec in 2001
• Genoa in 2001

These protests, directed at the World Trade Organization (WTO), the International Monetary
Fund (IMF)/World Bank, the FTAA and the G8 respectively, were all protests at the effects of
the current forms of globalization which go along the lines of a neoliberal/corporate capitalism
ideology.

While protests have been aimed at different international bodies and blocs, the underlying
themes are similar, while the actual themes of the protests have been different. For example:

 The WTO protest of Seattle was about the trade policies being drawn up in undemocratic
ways yet affecting people all around the world.

• Here too, the elite’s “front guard” was mobilized to protect the image of the
multinational corporations and institutions that support their “rights”.

• The police crackdown was often violent and unprovoked.

 The IMF and World Bank protests in Washington D.C. were about the policies of the IMF
and World Bank towards developing countries.

• Their methods of “assistance” have been criticized for a long time, for things like:

 increasing dependencies on the richer nations

 promoting a form of development whereby developing nations continue to

provide cheap resources and labor to the richer nations

 The protests seen at various G8 summits have included issues such as debt relief.

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Both before and since Seattle, millions of people around the world have turned up in waves
of protests at various IMF, World Bank, WTO meetings or policies in various nations.
Repression has been equally brutal and sometimes worse. For example there have been
protests in:

 Angola

• January 2001 and August 2001 saw national strikes resulting from IMF-prescribed
adjustment policies

• October and December 2002 saw similar protests

 Argentina

• Up to 80,000 protested against the IMF in May 2000.

• Over 7.2 million workers support a 24 hour general strike in defiance of the new
IMF-prescribed labours laws, June 2000.

• July and August 2001 saw at least 100,000 people protest at further IMF-related
measures that would lead to large pay cuts.

• December 2001, saw two days of violent protests at further austerity measures, and
economic meltdown that brought down the government. 16 people are said to have
been killed. (See also report from Radio Netherlands).

• Protests, both peaceful and violent continued throughout 2002

 Australia

• During the 2000 Olympics in Sydney, there have been various protests to do with
globalization issues.

• September 11, 2000 saw from 10,000 to 30,000 protestors in Melbourne at the
World Economic Forum. There were subsequent protests on other days with
turnouts in the mid thousands.

• A wave of protests have started at different events related to aspects of current

forms of globalization.

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 Colombia

• August 2000 saw 15,000 workers go on protest and strike regarding IMF loan
conditions requiring further opening up of the economy and cutting back on social
provisions and jobs.

• In August 2001, thousands of small farmers across the country protest at impact of
food imports and lack of help from government.

• Throughout 2002 there were protests at changes resulting from IMF prescriptions.

 India

• November 30, 1999

• There were some instances in 2000 where there were forced and violent attempts to
stop protestors gathering or forming.

• More than a million electricity workers protested for a day in December 2000
against a proposed bill that follows “World Bank prescriptions” to privatize the
power sector in India.

 Indonesia has suffered badly from the global financial crisis that hit in 1997. Since then,
there have been numerous protests, both peaceful and violent, many times.

 Pakistan has seen protests from what has been regarded as policies formulated by the
dictates of the IMF and World Bank.

 The June 18 campaign in 1999 was another highly publicized event, with biased media
reporting. This was another international protest, where many major cities in the world
on the same day saw large protests. In fact, as this report shows, the June 18 protests
occurred all over the world, including:

• Argentina ,Australia, Austria, Bangladesh, Canada, Chile, Colombia, France

• Germany, Greece, India, Indonesia, Israel, Italy, Malaysia ,Malta, Mexico

• Netherlands, Nepal, Nigeria, Pakistan, Spain, Sweden, Switzerland

• Thailand, UK, USA, Zimbabwe

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IMF & World Bank Protests, Washington D.C.

While not the only part of the global financial system that has been destructive for most people
of the world, the IMF and World Bank policies have been a major instrument to structure the
global economy (via structuring the national economies of developing countries) to allow a form
of neoliberal globalization to be pursued that has led to the criticisms mentioned above.

Critics also point out that the beneficiaries will be largely the wealthy people in western nations
and the transnational corporations, while the majority of people in the world will not benefit.

The Challenges of Globalization

The domestic economic choices that governments make will have a major impact on
international patterns of trade and investment, as well as on the prosperity of individual
countries.

Globalization presents governments with three principal challenges:

First, how should we further shape a new international economic architecture?

Second, what are the new issues and rules which globalization requires us to address?

Lastly, how can we attempt to assure that all countries and all segments of society benefit from
globalization?

I. Economic Architecture

In the post-World War II era, the United States gave strong support to the establishment of a
formal international architecture based on the Bretton Woods institutions, the GATT, the OECD,
and the European Common Market. Despite occasional setbacks, this architecture served the
needs of its era well, and promoted global prosperity and security. But the demands of the
current era of globalization on international institutions are likely to be much greater.

The international financial institutions will remain an important element of our economic
architecture in coming decades. They will need to continue providing guidance and assistance to
developing and transition countries seeking to reform their economies and to follow a market-led
strategy of development. They will also become increasingly involved in assisting
environmentally sustainable development, alleviating poverty, promoting good governance, and
encouraging private capital flows.

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The United States is building new economic relationships through regional efforts in Asia, in the
Americas, and in Europe. Our participation in the Asia Pacific Economic Cooperation forum, or
APEC, reflects the great importance the United States attaches to economic engagement in that
dynamic region. First established in 1989 as a loose consultative organization, APEC reached a
turning point in 1993 when President Clinton brought the 18 APEC leaders together for the first
time in Seattle. The following year, APEC leaders pledged to achieve free and open trade and
investment in the Asia-Pacific region by 2010 for developed countries and 2020 for developing
ones. This fall in Manila, APEC members will put forward explicit national and regional action
plans to open markets.

Finally, business is an especially active participant in each of these regional arrangements. Last
year in Osaka, the APEC leaders established a Business Advisory Council to institutionalize the
critical role of business in APEC and to ensure that the views of the business community are
fully considered in setting new polices. In Europe, a Transatlantic Business Dialogue composed
of 200 CEOs from American and European companies keeps us focused on actions of potential
benefit to the private sector.

II. Emerging Issues

In addition to designing a new international economic architecture, we also need to redefine the
agenda of these institutions and to identify those issues which need to be addressed more
effectively in the future. The potential list is too extensive to cover comprehensively today. Let
us focus on three which should be of particular important: investment, telecommunications and
corruption.

Foreign direct investment has become perhaps the single most powerful force behind global
economic integration.

The current revolution in telecommunications is another key factor in the accelerating pace of
globalization. Increased competition and improved accelerate technology have led to a dramatic
decline in communications costs.

III. Spreading the Benefits

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The third and final question likes to consider today is perhaps the most difficult and troubling:
How can we spread the gains of globalization more broadly, so that developing countries and all
segments of society in wealthy industrial countries also benefit?

Globalization presents challenges for developed countries as well. It has been blamed for high
unemployment in Europe and the stagnation of real wages in the United States. But increased
competition from imports is at most a secondary explanation for the decline in real wages of less
skilled American workers. Two other factors are almost certainly more important:

1) Some slowdown in U.S. productivity growth

2) Technological changes that increase the demand for better-educated workers.

Conclusion

President Clinton has made preparing Americans to compete in the 21st Century a top priority of
his administration. The Clinton Administration has stressed the need to invest in training and
education to ensure that American workers have the skills needed to succeed in the new global
market. It has committed to ensure access for all Americans to telecommunications and
information technology. It has reduced the budget deficit, creating a more stable macroeconomic
environment for private saving and investment. And it has taken the lead in reforming the
international economic architecture, increasing trade and investment opportunities for American
firms and creating jobs for American workers.

The future impact of globalization will vary from country to country and within countries. But
efforts to resist the powerful technological and economic forces behind globalization by
appealing to protectionism are misguided, and in the long run, futile. Rather than fear the future,
we must redouble our efforts at international economic cooperation. We must strengthen the
architecture of global and regional institutions to promote open trade and investment and
prosperity for all. This is the best way to ensure that the benefits of globalization will spread to
all corners of the world and to all sectors of society.

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References:

 Recep YÜCEL, Osman DAĞDELEN, Globalization of markets, marketing ethics and

social responsibility
www.intechopen.com/download/pdf
 Theodore Levitt, The globalization of markets
www.vuw.ac.nz/~caplabtb/m302w07/levitt.pdf
Dr. David M. Anderson, OUTSOURCING ARTICLE
www.halfcostproducts.com/outsourcing.htm
 Advantages of outsourcing
www.tutorial-reports.com/business/outsourcing/advantages.php
 Fred Pearce & Andrew Leonard, The-Costs-and-Benefits-of-Globalization
www.scribd.com/doc/51997844

 Globalization’s hidden benefits

www.globalenvision.org/library/8/1159
 Abhay Burande, Advantages of globalization in developing world
www.buzzle.com/articles/advantages-of-globalization.html
Nicolas Pologeorgis, How Globalization Affects Developed Countries
www.investopedia.com/articles/economics/10/globalization-developed-countries.asp
 Pete Geddes, The Benefits of Globalization
www.free-eco.org/articleDisplay.php?id=378
GLOBALIZATION COULD MAKE MIGRATION STEEP AND RELENTLESS
http://download-reports.blogspot.com/2010/02/globalization-could-make-migration.html
 The costs and benefits of globalization

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http://search.ebscohost.com/
 Effects of Technological Developments on Globalization Process
http://mediaif.emu.edu.tr/pages/atabek/GCS7.html
 Harmeet Malhotra,Role of Technology in Globalization with reference to Business
Continuity
www.ejournal.co.in/gjeis/Index.php/GJEIS/article/view/56/32
 Anup Shah, Public Protests Around The World
www.globalissues.org/article/45/public-protests-around-the-world.
Anup Shah, IMF & World Bank Protests, Washington D.C.
www.globalissues.org/article/23/imf--world-bank-protests-Washington-dc
 "The Challenges of Globalization"
www.state.gov/www/issues/economic/960926.html

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