2.1 Drivers and Dimensions of Globalization

Globalization is reshaping the world economy, driven by economic integration, technological advancements, and political factors. These forces are creating interconnected markets, global supply chains, and new opportunities for businesses to expand internationally.

The impact of globalization extends beyond economics, influencing cultural dynamics and business practices worldwide. Companies must adapt to diverse cultural contexts, navigate ethical considerations, and leverage digital platforms to succeed in an increasingly globalized marketplace.

Drivers of Globalization

Economic Integration and Political Factors

Top images from around the web for Economic Integration and Political Factors

• 

  Foreign Direct Investment, Trade Openness and Economic Growth: Evidence from Ghana View original

  Is this image relevant?

• 

  Factors Affecting Investment Decision of FDI Enterprises in Thanh Hoa Province, Vietnam View original

  Is this image relevant?

• 

  Most Common Potential Determinants of FDI: Review of Literature - Research leap View original

  Is this image relevant?

• 

  Foreign Direct Investment, Trade Openness and Economic Growth: Evidence from Ghana View original

  Is this image relevant?

• 

  Factors Affecting Investment Decision of FDI Enterprises in Thanh Hoa Province, Vietnam View original

  Is this image relevant?

1 of 3

Top images from around the web for Economic Integration and Political Factors

• 

  Foreign Direct Investment, Trade Openness and Economic Growth: Evidence from Ghana View original

  Is this image relevant?

• 

  Factors Affecting Investment Decision of FDI Enterprises in Thanh Hoa Province, Vietnam View original

  Is this image relevant?

• 

  Most Common Potential Determinants of FDI: Review of Literature - Research leap View original

  Is this image relevant?

• 

  Foreign Direct Investment, Trade Openness and Economic Growth: Evidence from Ghana View original

  Is this image relevant?

• 

  Factors Affecting Investment Decision of FDI Enterprises in Thanh Hoa Province, Vietnam View original

  Is this image relevant?

1 of 3

• Economic integration and interdependence among countries characterized by increased cross-border trade, investment, and financial flows drive globalization
• Political factors accelerate the globalization process
  • Fall of trade barriers
  • Deregulation policies
  • Privatization initiatives adopted by many governments
• Foreign direct investment (FDI) facilitates the transfer of capital, technology, and knowledge across national boundaries
• Global financial markets and institutions enable rapid movement of capital and increased economic integration worldwide

Technological Advancements and Corporate Expansion

• Technological advancements reduce costs and increase speed of global interactions
  • Improvements in transportation (container ships, air freight)
  • Enhanced communication systems (fiber optic networks, satellites)
  • Advanced information systems (cloud computing, big data analytics)
• Multinational corporations (MNCs) intensify economic interconnectedness across borders
  • Establishment of global supply chains
  • Outsourcing and offshoring of business functions
• Rise of e-commerce platforms enables small businesses to engage in international trade (Alibaba, Amazon)

Globalization's Cultural Impact

Cultural Dynamics and Business Adaptation

• Cultural convergence and divergence theories explain globalization's effects on cultural norms, values, and practices across societies
• Glocalization describes adaptation of global products and services to local cultural preferences and market conditions
  • McDonald's offering local menu items (McAloo Tikki in India)
  • Netflix producing region-specific content (Money Heist in Spain)
• Cross-cultural communication and management skills become essential for businesses in a globalized environment
• Cultural intelligence (CQ) navigates diverse cultural contexts in international business operations
  • Understanding local customs and etiquette
  • Adapting leadership styles to different cultural expectations

Social Media and Ethical Considerations

• Social media and digital platforms impact cultural exchange and formation of global virtual communities
  • Instagram influencers shaping global fashion trends
  • YouTube creators reaching international audiences
• Ethical considerations in global business practices include
  • Labor standards (fair wages, safe working conditions)
  • Environmental sustainability (reducing carbon footprint, sustainable sourcing)
  • Corporate social responsibility (community development projects, ethical supply chain management)
• Brain drain phenomenon affects both source and destination countries in global talent mobility
  • Skilled professionals moving from developing to developed countries
  • Remittances sent back to home countries

Institutions for Global Trade

International Organizations and Economic Agreements

• World Trade Organization (WTO) establishes and enforces global trade rules and resolves trade disputes
  • Negotiating trade agreements
  • Monitoring national trade policies
• International Monetary Fund (IMF) and World Bank Group promote global financial stability and economic development
  • IMF provides financial assistance and policy advice to member countries
  • World Bank offers loans and grants for development projects
• Regional economic integration agreements impact trade and investment flows
  • European Union (EU) single market
  • North American Free Trade Agreement (NAFTA) / United States-Mexico-Canada Agreement (USMCA)
  • Association of Southeast Asian Nations (ASEAN) economic community

Legal Frameworks and Global Governance

• Bilateral and multilateral investment treaties protect foreign investors and promote cross-border investment
• International standards and regulations impact global business operations and compliance
  • ISO standards for quality management
  • General Data Protection Regulation (GDPR) for data privacy
• International arbitration institutions resolve cross-border commercial disputes
  • International Chamber of Commerce (ICC) International Court of Arbitration
  • London Court of International Arbitration (LCIA)
• Global governance bodies shape international economic policies and cooperation
  • G7 (Group of Seven) industrialized nations
  • G20 (Group of Twenty) major economies

Stages of Globalization

Historical Evolution and Forms of Globalization

• Historical evolution of globalization progresses from early trade routes to modern-day interconnected global markets
  • Ancient Silk Roads connecting Asia, Europe, and Africa
  • European colonial expansion and mercantilism
  • Industrial Revolution and technological advancements
• Distinction between economic, political, and cultural forms of globalization and their interrelationships
  • Economic globalization (international trade, global finance)
  • Political globalization (international organizations, global governance)
  • Cultural globalization (exchange of ideas, cultural products)

Business Models and Future Trends

• Four main stages of globalization in business development
  1. Domestic focus
  2. International expansion
  3. Multinational operations
  4. Global/transnational integration
• Born global firms contrast with traditional internationalization models
  • Rapidly engage in international markets from inception
  • Leverage digital technologies for global reach
• Global cities serve as hubs of economic activity, innovation, and cultural exchange
  • New York, London, Tokyo as financial centers
  • Silicon Valley, Shenzhen as technology hubs
• Deglobalization trends and protectionist policies impact future trajectory of globalization
  • Trade wars and increased tariffs
  • Reshoring of manufacturing
• Digital globalization emerges with implications for traditional business models and international trade patterns
  • Rise of digital platforms and marketplaces
  • Growth of cross-border data flows and digital services