Global Marketing MKT2001
L1
Understanding Globalisation
A short history of globalisation
First traces of globalisation found in 1870, started by development in steam power, iron
making and textile manufacture.
Because of reduced transportation costs and trade barriers between most developed
countries it allowed for productive specialisation – lower unit cost of production and
sparked global trade.
Social benefits of introduction to global trade;
World Bank estimation: trade nearly doubled while foreign investment in
developing counties tripled (Africa, Asia and Latin America).
• 60 million people migrated from Europe to the USA, Canada, Australia and
New Zealand.
• Wave of migration from China and India to Sri Lanka and South East Asia.
10% of the world’s population changed where they were living
First wave of globalisation ended with the first world war...
Global stagnation 1914-1945
• The immediate aftermath of WWI saw incompetent economic policies
(protectionism in USA, Germany, UK, France, Italy, Japan) massive
unemployment and social instability
• Raising tariffs and restricting imports worsened the global
depression and led to sharply reduced trade
,The proof that globalisation is not an irreversible process: economic
integration (trade) clearly took several steps backward.
The Second Wave: 1950-1980
• Integration among the industrial countries (including Germany
and Japan) by restoring trade relations, economic growth and stability.
• Multilateral trade liberalisation negotiations under the GATT
(predecessor to the WTO) to reduce tariffs and quotas
• In the OECD countries the economic growth was exceptional with
a modest trend towards greater income equality, aided by social
welfare policies and programmes (e.g. the NHS in the UK).
• Most developing economies were isolated, concentrated on
exporting primary commodities (e.g. coffee, tea, sugar, cotton) and
pursuing inward-oriented policies.
• The gap between the rich developed economies and the poor
developing economies widened, as the commodities being sold by the developing countries
were too cheaply priced on the market.
The Third Wave: 1980’s onwards
• Driven by significant technological advances in computing,
telecommunications and transportation, and internationalisation of
business corporations in search for new customers, cheaper
resources, and skilled labour.
The golden era for developing countries: share in world
exports of manufactured goods rose from less than
25% in 1980 to 80% in 1998.
,• Since 1990, per capita economic growth in many developing countries
(China, India, Brazil, Malaysia and Indonesia) has exceeded that of the
developed economies narrowing the gap between the rich
developed economies and the poor developing economies.
The discourse of globalisation
Capitalist vs Anti-globalist views on Economic Globalisation
Is Cultural
Globalisation
good?
Reduces diversity = Americanisation – TNCs taking over globally and setting up in
other countries taking away cultural uniqueness making countries around the world
become similar culturally.
, + Increases diversity = Coexistence of cultures – able to try foods, listen to music,
wear clothes from all around the country without having to physically travel,
intertwining cultures.
Hybrid cultures - Hybrid cultures are mergers that combine past and present, local
and trans local, space and place and technoscape.
Opportunities of globalisation
Market access
• Trade liberalisation by GATT (tariffs reduced
for 2/3 of trade between members) and WTO
(decreases in tariffs (from 40 to 5%) and nontariff barriers)
• Encouragement of trade within Europe by EFTA
• Many countries joining world trade after
political changes
- New opportunities for consumers, businesses,
governments
- Increasing competition – increasing productivity
and quality of goods– reduced prices
Financial integration
– free movement of capital to support exchanges:
1. portfolio capital - short term loans, e.g. between banks in
L1
Understanding Globalisation
A short history of globalisation
First traces of globalisation found in 1870, started by development in steam power, iron
making and textile manufacture.
Because of reduced transportation costs and trade barriers between most developed
countries it allowed for productive specialisation – lower unit cost of production and
sparked global trade.
Social benefits of introduction to global trade;
World Bank estimation: trade nearly doubled while foreign investment in
developing counties tripled (Africa, Asia and Latin America).
• 60 million people migrated from Europe to the USA, Canada, Australia and
New Zealand.
• Wave of migration from China and India to Sri Lanka and South East Asia.
10% of the world’s population changed where they were living
First wave of globalisation ended with the first world war...
Global stagnation 1914-1945
• The immediate aftermath of WWI saw incompetent economic policies
(protectionism in USA, Germany, UK, France, Italy, Japan) massive
unemployment and social instability
• Raising tariffs and restricting imports worsened the global
depression and led to sharply reduced trade
,The proof that globalisation is not an irreversible process: economic
integration (trade) clearly took several steps backward.
The Second Wave: 1950-1980
• Integration among the industrial countries (including Germany
and Japan) by restoring trade relations, economic growth and stability.
• Multilateral trade liberalisation negotiations under the GATT
(predecessor to the WTO) to reduce tariffs and quotas
• In the OECD countries the economic growth was exceptional with
a modest trend towards greater income equality, aided by social
welfare policies and programmes (e.g. the NHS in the UK).
• Most developing economies were isolated, concentrated on
exporting primary commodities (e.g. coffee, tea, sugar, cotton) and
pursuing inward-oriented policies.
• The gap between the rich developed economies and the poor
developing economies widened, as the commodities being sold by the developing countries
were too cheaply priced on the market.
The Third Wave: 1980’s onwards
• Driven by significant technological advances in computing,
telecommunications and transportation, and internationalisation of
business corporations in search for new customers, cheaper
resources, and skilled labour.
The golden era for developing countries: share in world
exports of manufactured goods rose from less than
25% in 1980 to 80% in 1998.
,• Since 1990, per capita economic growth in many developing countries
(China, India, Brazil, Malaysia and Indonesia) has exceeded that of the
developed economies narrowing the gap between the rich
developed economies and the poor developing economies.
The discourse of globalisation
Capitalist vs Anti-globalist views on Economic Globalisation
Is Cultural
Globalisation
good?
Reduces diversity = Americanisation – TNCs taking over globally and setting up in
other countries taking away cultural uniqueness making countries around the world
become similar culturally.
, + Increases diversity = Coexistence of cultures – able to try foods, listen to music,
wear clothes from all around the country without having to physically travel,
intertwining cultures.
Hybrid cultures - Hybrid cultures are mergers that combine past and present, local
and trans local, space and place and technoscape.
Opportunities of globalisation
Market access
• Trade liberalisation by GATT (tariffs reduced
for 2/3 of trade between members) and WTO
(decreases in tariffs (from 40 to 5%) and nontariff barriers)
• Encouragement of trade within Europe by EFTA
• Many countries joining world trade after
political changes
- New opportunities for consumers, businesses,
governments
- Increasing competition – increasing productivity
and quality of goods– reduced prices
Financial integration
– free movement of capital to support exchanges:
1. portfolio capital - short term loans, e.g. between banks in
