[국제경영론] Globalization_세계화, changing demographics of global economy, multinational enerprise

국제경영론 International Business

Chapter. Globalization (2) 

 

changing demographics of global economy

• 1800s to 1914
  • The first wave of globalization and its downfall
  • Starting in the 1800s with the rise of British empire’s global trade and financial network
    • an empire on which the sun never sets
  • This wave subsequently crashed in 1914 with the start of WWI&WWII
• early 1960s
  • U.S. dominated the world economy, world trade
  • U.S. dominated world FDI
  • U.S. MNEs dominated international business
  • About half the world was off limits to Western international business
• 1970s to 2008 onwards
  • The second wave of globalization and its downfalls
  • The US gain supremacy overthe Soviet Union;
  • China open it’s economy in 1978; China joined WTO in 2001.
  • But the 2008 global financial crisis saw the wave finally crash and it continues with China’s ever-increasing reliance on domestic demand
• changing worlds output and world trade picture
  • Early 1960s
    • U.S. was dominantin industrial power, accounting for about 38 percent of worldmanufacturing output
  • Today
    • U.S. accountsfor only 24 percent
    • Germany, France,theU.K., and Canada had similar decline
    • Rapid economic growth now in countrieslike China, India, Russia, andBrazil
    • Chinese economy could surpassU.S. within a decade
    • Further relative decline by the U.S. and others is likely
• changing foreign direct investment picture
  • World output generated by developing countries has been steadily increasing since 1960s
  • Stock of foreign direct investment(total cumulative value of foreign investments) generated by rich industrial countries is declining
  • Cross-border flows of foreign direct investment is rising
  • Largest developing country recipients of FDI are China, Mexico, and Brazil
  • FDI outward stock as a percentage of GDP
  • FDI inflows (in millions dollar) 1990 to 2019
• can china dominate the world economy?
  • necessary and sufficient conditions for dominating world economy
    • The size of the economy must be large enough for the country's currency to be acceptedasaninternational reserve currency.
    • There must be an international financial center to support international financial transactions and various financial techniques conducted in CNY, not dollars(Currently, Wall Street>London>Frankfurt>Singapore, Tokyo, Beijing, Shanghai, etc).
    • China must be able to establish a new international financial system that can replace the current Bretton Woods system
    • Communictaion? Language?
      • The world's most common language？ Chinese?
    • Production : Q= f (K, L)
      • Is it possible that the U.S. population growth rate will be 0% after 2050? How about China?Immigration and abortion ban, Benefits of government support for multi-children etc inUS. Fear of marriage, DINK tribe in China....
      • How about K ? China has high investment (K) through capital stock, and developed countries have hightechnology.A decrease in population leads to a decrease in the labor force, which can make up for theshortfall byincreasing working hours, but if even this falls too sharp, it becomes difficult to chase the production of US

 

changing nature of the multinational enerprise

• A multinational enterprise (MNE) is any business that hasproductiveactivities in two or more countries
• In last 50 years, rise of non-U.S. multinationals and growthof mini-multinationals
• Non-U.S. Multinationals
• Large number of U.S. multinationals reflects U.S. economicdominance
• Today, world economy is shifting away fromNorth AmericaandwesternEurope
• national share of the largest 2000 multinational corporation 2020
• the rise of mini multinationals
  • More small- and medium-size businesses(mini-multinationals) are involved in international trade and investment
  • Internetlowers barriers that smaller firms face in building international sales
  • born global
    • A born global firm is a type of company that from its inception seeks to derive significant competitiveadvantage from the use of resources and sales in multiple countries.
    • These firms don't go through the traditional progression from domestic to international, thenmultinational, and finally global.
    • Instead, they start with a global view in their operations, products, or services fromor near theirinception.
    • Common characteristics: a vision of a global market from the outset, proactive international entrepreneurial orientation, and the capability to leverage resources globally
    • domestic → international → multi → globla
    • but what is born global? : born global must have the resources like connection resources or international knowledges, etc.
  • born digital
  • A born-digital firm is a digital native enterprise which starts its operations by relying ondigital andinternet technologies from the outset, rather than transitioning from traditional methods todigital ones.- These firms are native to the digital realm and often have business models that are primarilyorsolelybased on digital platforms, tools, or services. - Popular examples include companies like Uber, Airbnb, and Snapchat

 

changing world order

• Collapse of communism throughout eastern Europe
• Greater export and investment opportunities, but political unrest isanincreasing risk
  • Economic development in China
• Huge opportunities despite continued government control, but alsonewcompetition from Chinese firms
  • Free market reforms and democracy in Latin America
• New markets and new sources of materials and production, but economicand political risk remain high
• Global financial crisis of 2008 to 2009 and drop in global output that occurred led to more calls for trade barriers to protect jobs at home.
  • Resulting trade wars,such as one betweenU.S. and China−
  • May slow the rate of globalization and production
• COVID-19 global pandemic has had a significantimpact onglobalsupplychains,and thus on globalization.
  • Anti-globalization? − De-globalization? − Slowbalization?

• globalization debate
  • globalization, jobs, income
    • Critics of globalization worry thatjobsin advanced economies are being lost to low-wagenations.
    • Supporters of globalization disagree, claiming that the benefits of free trade outweigh its costs. While some jobs may be lost,the economy as a whole is better off
    • Supporters argue that free trade will result in countries specializing in production of those goods and servicest hat they can produce most efficiently, while importing good sand services thatt hey cannot produce as efficiently, and that in doing so, all countries will gain.
  • globalization, labor policies, environment
    • Criticsof globalization argue that free trade encourages firms from advanced nations to move manufacturing facilities offshore to less developed countries with lax environmental and labor regulations.
    • Supporters of free trade point out that tougher environmental regulation and stricter labor standards go hand in hand with economic progress and that as countries get richer as a result of globalization,they raise their environmental and labor standards. Free trade does not lead to more pollution and labor exploitation; it leads to less.
  • globalization, national sovereignty
    • Critics of globalization worry that economic power is shifting away from national governments and toward supranational organizations such as WTO,the European Union (EU), and the UN
    • Supporters of globalization argue that power of these organizations is limited to what nation-states collectively agree to grant
      • The organizations must be able to persuade member states to follow certain actions
      • Without the support of members,the organizations have no power
  • globalization, world’s poor
    • Critics of globalization argue that gap between the rich and poor has gotten wider and that benefits of globalization have not been shared equally
    • Supporters of free trade suggest that actions of governments have made limited economic improvement in many countries
      • Many ofthe world’s poorest nations are under to talitarian regimes,suffer from endemic corruption, have few property rights, are involved in war, and are burdened by high debt