UNIVERSITY POLITEHNICA OF BUCHAREST

FACULTY OF ENGINEERING
IN FOREIGN LANGUAGES
ELECTRONIC EGINNEERING AND TELECOMMUNICATIONS
MASTER BUSSINESS ADMINISTRATION AND ENGINEERING

2014
UPB-MBA, 1st Year

Sorin Stroian

[INTERNATIONAL TRADE AND TRANSACTIONS]
There is a heated debate about the true effects of globalization and if it really is such a good
thing. Good or bad, though, there isn't much argument as to whether or not it is happening.
Globalization
Sorin Stroian, MBA 2013-2014
2



Table of Contents
1. Definitions: .......................................................................................... 3
2. Is Globalization a Good Thing? ....................................................... 4
a. Positive Aspects of Globalization ..................................................... 4
b. Negative Aspects of Globalization ................................................... 5
3. Globalization with its different characteristics ............................... 6
a. Improved Technology in Transportation and Telecommunications 6
b. Movement of People and Capital ...................................................... 6
c. Diffusion of Knowledge ................................................................... 7
d. Non-Governmental Organizations (NGOs) and Multinational
Corporations ........................................................................................... 7
4. Does globalization influence poverty? ............................................. 8
5. Conclusion .......................................................................................... 9
6. References ......................................................................................... 10

Table of Figures:
Figure 1 Globalization ............................................................................... 3
Figure 2 Improved Technology in Transportation and
Telecommunications ................................................................................. 6
Figure 3 Capital Movements ..................................................................... 7
Figure 4 Example of pre-globalization ..................................................... 7
Figure 5 Example of post-globalization .................................................... 7


Globalization
Sorin Stroian, MBA 2013-2014
3

GLOBALIZATION

1. Definitions:
Globalization as a concept refers both to the compression of the world and intensification of
consciousness of the world as a whole...both concrete global interdependence and consciousness
of the global whole in the twentieth century (Robertson, 1992: 8).
Anthony Giddens's adds an important dimension to the picture by emphasizing the interactive, or
dialectical dimensions of the process.
Globalization can thus be defined as the intensification of worldwide social relations which link
distant localities in such a way that local happenings are shaped by events occurring many miles
away and vice versa. This is a dialectical process because such local happenings may move in an
obverse direction from the very distanced relations that shape them. Local transformation is as
much a part of globalization as the lateral extension of social connections across time and space
(Giddens, 1990: 64).
Globalization is the process of increased interconnectedness among countries most notably in the
areas of economics, politics, and culture. McDonalds in Japan, French films being played in
Minneapolis, and the United Nations, are all representations of globalization.
Figure 1 Globalization
Globalization
Sorin Stroian, MBA 2013-2014
4


The pace of global change is extremely rapid, and even those trained to track and analyze
it have difficulty keeping up with new developments. However, trends are regularly observed
and named, and these new terms become "buzz words" in the lexicons of governments, academia
and the media. Such a term is globalization. Though it is, admittedly, rather vague, and the
phenomena it is employed to describe extremely diverse, it does express a prevailing sentiment
at century's end that our lives are increasingly influenced by forces which have transcended
borders, and which, precisely because of their scope and power, are changing, irreversibly, life
on this planet. All levels of society are being reshaped by this process: the individual may find
her/his livelihood threatened or identity thrown into question; localities and whole regions are
forced to recreate themselves or die in the face of new economic forces; and nation-states
themselves experience steadily decreasing freedom of action and ever closer ties to each other.
At the moment there is a serious contradiction between the fact that globalization is in
full swing, and the fact that existing processes of global governance lack sufficient power,
authority and scope to regulate and direct this process toward beneficial ends. As a result
globalization is often disruptive and inequitable in its effects. It has also posed new challenges
for existing public institutions while at the same time weakening their autonomy and support;
and, paradoxically, provided the means for those it excludes culturally or economically to
organize against its subordinating and homogenizing force. Many analysts have pointed to the
turbulent nature of this planetary process and to the increasing frequency and variety of reactions
to it. The primary vehicles for this process have been the increasing trans-nationalization of
production, and the resulting rise in influence of multinational enterprises, and even more
importantly, the explosion in the volume and scope of transactions on international financial
markets. In this regard, consider the following commentary on contemporary change in the
banking industry:
Banking is rapidly becoming indifferent to the constraints of time, place and currency...an
English buyer can get a Japanese mortgage, an American can tap his New York bank account
through a cash machine in Hong Kong and a Japanese investor can buy shares in a London-based
Scandinavian bank whose stock is denominated in sterling, dollars, Deutsche Marks, and Swiss
francs (Waters, 1995: 89).
2. Is Globalization a Good Thing?
There is a heated debate about the true effects of globalization and if it really is such a good
thing. Good or bad, though, there isn't much argument as to whether or not it is happening.
a. Positive Aspects of Globalization
As more money is poured in to developing countries, there is a greater chance for the
people in those countries to economically succeed and increase their standard of living.
Globalization
Sorin Stroian, MBA 2013-2014
5

Global competition encourages creativity and innovation and keeps prices for
commodities/services in check.
Developing countries are able to reap the benefits of current technology without
undergoing many of the growing pains associated with development of these
technologies.
Governments are able to better work together towards common goals now that there is an
advantage in cooperation, an improved ability to interact and coordinate, and a global
awareness of issues.
There is a greater access to foreign culture in the form of movies, music, food, clothing,
and more. In short, the world has more choices.
b. Negative Aspects of Globalization
Outsourcing, while it provides jobs to a population in one country, takes away those jobs
from another country, leaving many without opportunities.
Although different cultures from around the world are able to interact, they begin to
meld, and the contours and individuality of each begin to fade.
There may be a greater chance of disease spreading worldwide, as well as invasive
species that could prove devastating in non-native ecosystems.
There is little international regulation, an unfortunate fact that could have dire
consequences for the safety of people and the environment.
Large Western-driven organizations such as the International Monetary Fund and the
World Bank make it easy for a developing country to obtain a loan. However, a Western-
focus is often applied to a non-Western situation, resulting in failed progress.


Globalization and Conflict
Globalization is evaluated as an "engine" of social conflict. Much of the literature distinguishes
between conflicts which focus on issues of culture and identity, and others which appear to be
primarily economic, and the discussion that follows adopts this approach while acknowledging
that in practice the two elements are interrelated. Conflicts of world views and interests should
not, however, be seen as inherently threatening or negative. Indeed many of the tensions of social
change are largely unavoidable, and some are undoubtedly creative in their effects. At the same
time, however, the analysis which follows suggests that if the human needs and rights issues
Globalization
Sorin Stroian, MBA 2013-2014
6

involved are not adequately addressed, the incidence and intensity of social conflict associated
with globalization are likely to increase steadily in the years ahead.
Social change, in and of itself, has historically been associated with increasing levels of conflict
(P. A. Sorokin in Volume III of his classic Social and Cultural Dynamics). Generalizing
Sorokin's findings to the world as a whole, there may be grounds to conclude that the process of
globalization is inherently disruptive and that an increasing incidence of conflict is an inevitable
bi-product of it.

3. Globalization with its different characteristics
a. Improved Technology in Transportation and Telecommunications

What makes the rest of this list possible
is the ever-increasing capacity for and
efficiency of how people and things
move and communicate. In years past,
people across the globe did not have the
ability to communicate and could not
interact without difficulty. Nowadays, a
phone, instant message, fax, or video
conference call can easily be used to
connect people. Additionally, anyone
with the funds can book a plane flight
and show up half way across the world in
a matter of hours. In short, the "friction
of distance" is lessened, and the world
begins to metaphorically shrink.


b. Movement of People and Capital
A general increase in awareness, opportunity, and transportation technology has allowed for
people to move about the world in search of a new home, a new job, or to flee a place of danger.
Most migration takes place within or between developing countries, possibly because lower
standards of living and lower wages push individuals to places with a greater chance for
economic success.
Figure 2 Improved Technology in Transportation and
Telecommunications
Globalization
Sorin Stroian, MBA 2013-2014
7

Additionally, capital (money) is being moved globally with the ease of electronic transference
and a rise in perceived investment opportunities. Developing countries are a popular place for
investors to place their capital because of the enormous room for growth.
The most commonly cited measure of
financial globalization is the degree of
cross-border capital flows. One way of
looking at this is to add up all inflows of
capital into every country in the world
and to scale the result by world GDP.
Here the picture is pretty clear: there has
been a sharp increase in the movement
of capital around the world since the mid
1990s. Between 1980 and 1995,
aggregate capital flows averaged the
equivalent of 5 per cent of global GDP.
In 2006, the figure was more than three
times this.

c. Diffusion of Knowledge
The word 'diffusion' simply means to spread out, and that is exactly what any new found
knowledge does. When a new invention or way of doing something pops up, it does not stay
secret for long. A
good example of this
is the appearance of
automotive farming
machines in Southeast
Asia, an area long
home to manual
agricultural labor.

d. Non-Governmental Organizations (NGOs) and Multinational Corporations
As global awareness of certain issues has risen, so too has the number of organizations that aim
to deal with them. So called non-governmental organizations bring together people unaffiliated
with the government and can be nationally or globally focused. Many international NGOs deal
Figure 3 Capital Movements
Figure 5 Example of post-globalization Figure 4 Example of pre-globalization
Globalization
Sorin Stroian, MBA 2013-2014
8

with issues that do not pay attention to borders (such as global climate change, energy use, or
child labor regulations). Examples of NGOs include Amnesty International or Doctors without
Borders.
As countries are connected to the rest of the world (through increased communication and
transportation) they immediately form what a business would call a market. What this means is
that a particular population represents more people to buy a particular product or service. As
more and more markets are opening up, business people from around the globe are coming
together to form multinational corporations in order to access these new markets. Another reason
that businesses are going global is that some jobs can be done by foreign workers for a much
cheaper cost than domestic workers; this is called outsourcing.
At its core globalization is an easing of borders, making them less important as countries become
dependent on each other to thrive. Some scholars claim that governments are becoming less
influential in the face of an increasingly economic world. Others contest this, insisting that
governments are becoming more important because of the need for regulation and order in such a
complex world system.
4. Does globalization influence poverty?
Globalization provides a strong potential for a major reduction in poverty in the
developing world because it creates an environment conducive to faster economic growth and
transmission of knowledge. However, structural factors and policies within the world economy
and national economies have impeded the full transmission of the benefits of the various
channels of globalization for poverty reduction.
World income distribution continues to be very unequal and many poor countries
particularly in Africa are stagnating. Moreover, there is much empirical evidence that openness
contributes to more within-country inequality. China is a good example with coastal provinces as
opposed to inland provinces reaping the major benefits of globalization. Progress on poverty
reduction has also been uneven. Although the share of the population of developing countries
living below US$1 per day declined from 40 per cent to 21 per cent between 1981 and 2001, this
was mainly achieved by the substantial reduction of the poor in Asia, in particular in China.
Notwithstanding the drop in relative poverty, the total number of people living under US$2 per
day actually increased worldwide. In particular, poverty has increased significantly in Africa in
both absolute and relative terms.
The risks and costs brought about by globalization can be significant for fragile
developing economies and the worlds poor. The downside of globalization is most vividly
epitomized at times of global financial and economic crises. The costs of the repeated crises
associated with economic and financial globalization appear to have been borne overwhelmingly
by the developing world, and often disproportionately so by the poor who are the most
vulnerable. On the other hand, benefits from globalization in booming times are not necessarily
Globalization
Sorin Stroian, MBA 2013-2014
9

shared widely and equally in the global community. Though any trend in poverty and income
inequality observed so far cannot be exclusively or even mainly attributed to globalization
without rigorous analyses, even the most optimistic estimates cannot dismiss concerns that the
globalization process, as it has proceeded to date, may have had some adverse effects on poverty
and income distribution. These concerns have generated a passionate debate worldwide as well
as a powerful anti-globalization movement.
5. Conclusion
It seems judicious to conclude that though the process is in several respects irreversible--
i.e. there are no plausible scenarios for "de-globalizing" the planet.
Plus, the continuing gap between unity and integration in the contemporary world order
foreshadows further tensions and conflicts until its institutions and processes of governance can
accommodate both the universalizing and the localizing effects of globalization.
















Globalization
Sorin Stroian, MBA 2013-2014
10

6. References
Ake, Claude. 1995. "The New World Order: A View from Africa."
Giddens, Anthony. 1990. The Consequences of Modernity. Cambridge: Polity Press.
Hirst, Paul and, Grahame Thompson. 1992. "The Problem of 'Globalization': International
Economic Relations, National Economic Management and the Formation of Trading Blocs."
Polity and Society, Vol. 21, No. 4.
Holm, Hans-Henrik and Georg Srensen. 1995. "Introduction: What has Changed." In Holm and
Srensen, Whose World Order: Uneven Globalization and the End of the Cold War. Boulder:
Westview.
http://geography.about.com/
Federal Reserve Bank of Chicago and International Monetary Fund Conference on
Globalization and Systemic Risk
Chicago 27-28 September 2007
www.mtholyoke.edu
http://i.unu.edu/media/unu.edu/publication