Globalization Case

1. What are the drivers of globalization?

_The factors underlie the trend toward greater globalization:

 Economic development of countries.

 Government's international agreement.

 Utilization of comparative advance.

 The decline in barriers to the free flow of goods, services, and capital that has occurred since the end of World War II.

 Technological change.

 Declining trade and investment barriers:

* International trade occurs when a firm exports goods or services to consumers in another country.

* Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country.

* After World War II, advanced countries made a commitment to lower barriers to trade and investment.

* Since 1950, average tariffs have fallen significantly and are now at about 4%.

* Countries have also been opening markets to FDI.

* Lower barriers to trade and investment mean:

 Firms can view the world, rather than a single country, as their market.

 Firms can base production in the optimal location for that activity.

 The Role Of Technological Change:

* Technological change has made the globalization of markets a reality.

* Important advances have occurred in:

 Microprocessors and telecommunications.( vi mạch và viễn thông)

 The Internet and World Wide Web.

 Transportation technology.

* Implications of technological change for the globalization of production include:

 Lower transportation costs that enable firms to disperse production to economical, geographically separate locations.

 Lower information processing and communication costs that enable firms to create and manage globally dispersed production systems.

* Implications of technological change for the globalization of markets include:

 Low cost global communications networks help create electronic global marketplace.

 Low-cost transportation help create global markets.

 Global communication networks