Globalization and movement of capital. Made by IFF 2 -3 students Kagermazova Diana Zhirkova Sargylana
Plan of presentation n Globalization n Components of Globaliztion n Movement of Capital
n Globalization refers to the increasing unification of the world’s economic order through reduction of such barriers to international trade as tariffs, export fees, and import quotas. n Several significant effects of economic globalization. Economic globalization comprises the globalization of production, markets, competition, technology, and corporations and industries.
Components of Globalization and its effects on the economy. n Economic globalization comprises the globalization of production, markets, competition, technology, and corporations and industries. While economic globalization has been occurring for the last several hundred years (since the emergence of trans-national trade), it has begun to occur at an increased rate over the last 2030 years. This recent boom has been largely accounted by developed economies integrating with less developed economies, by means of foreign direct investment, the reduction of trade barriers, and in many cases cross border immigration.
n Economic globalization is the increasing economic interdependence of national economies across the world through a rapid increase in cross-border movement of goods, service, technology and capital. Whereas the globalization of business is centered around the diminution of international trade regulations as well as tariffs, taxes, and other impediments that suppresses global trade, economic globalization is the process of increasing economic integration between countries, leading to the emergence of a global marketplace or a single world market. Depending on the paradigm, economic globalization can be viewed as either a positive or a negative phenomenon.
n Movement of Capital - The production base of a developing economy gets enhanced due to capital flows across countries. It was very much true in the 19 th and 20 th centuries. The mobility of capital only enabled savings for the entire globe and exhibited high investment potential. A country's economic growth doesn't, however, get barred by domestic savings. Foreign capital inflow does play an important role in the development of an economy. To be specific, capital flows either can take the form of foreign direct investment or portfolio investment. Developing countries would definitely prefer foreign direct investment because portfolio investment doesn't have a direct impact on the productive capacity expansion.
n Transnational commerce is an important part of the current phase of globalization. Economist Joseph Stiglitz suggests that the “driver” behind the current phase of globalization is corporate interests As corporations extend their reach across political boundaries, they extend not only the economic aspects of globalization, but disseminate culture and law as well. n The movement of capital across national boundaries has also become critically important. Following the liberalization of capital markets that began in the 1970 s, the amount of private capital available for investment in companies and national economies has grown dramatically. Indeed, private capital has eclipsed international financial institutions as a source for capital.
n A different type of advantage connected with unrestricted capital movements is that individuals have the opportunity to diversify their investment risks more effectively. By reducing yield variability, the apportionment of investment between different countries where there is no interconnection between economic shocks enhances the utility of risk-averse individuals. In addition, the diversification of risk between countries enables different countries to specialize in specific areas of production without having to be over-apprehensive of the risk arising from involvement within a narrow field of activity.
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