#global integration

[instantlymaximumblaze]

[golbscimonoceym]

Globalisation

Globalisation is the increasing integration and interdependence of the world’s economies arising from increased trade and international mobility of factors of production like capital, labour and enterprise.

Reasons for rapid globalisation:

Advancements in technology, making transportation and telecommunications much more efficient --> eases the flow of goods and services

Proliferation of commercial air travel --> enables people and goods to fly more cheaply to faraway places

Enhances labour and capital mobility

Companies now able to break up their supply chain to multiple locations over the globe --> New International Division of Labour [NIDL] which facilitates the specialisation in production of goods and services according to comparative advantages of respective countries

HQs and RHQs usually found in developed countries/country of origin 

Manufacturing and assembly facilities AKA branch plants or screwdriver plants usually found in developing countries with lower labour costs (CA)

Containerisation (vs the traditional cumbersome method of Break-in-Bulk)

Containers are easily stacked and moved --> increased efficiency in which goods and raw materials can be transported

The Internet

Able to transmit and transfer massive amounts of information over long distances

Multimedia modes of communication e.g. video conferencing, phone calls, email

Businesses can coordinate operations across different countries --> this facilitates flow of FDI (long term capital) between countries

Facilitates short term capital flows as well --> funds easily transferred between financial markets to purchase financial assets

Global movement away from protectionism

Establishment of supranational trade organisation that facilitate international trade and factor flows after WWII e.g. UN, IMF, WTO and the World Bank

Global shift from import substitution industrialisation (Advocates the purchasing of domestically produced goods rather than imported goods from foreign countries) to export-oriented industrialisation 

Economic benefits of globalisation

+ Higher consumption possibilities

+ Lower costs and better quality

+ Greater product variety

+ Engine of growth for the economy

+ Increased factor mobility --> countries find it easier to acquire factors of production and better quality resources, shifting their PPC outwards and LRAS to the right, causing long run economic growth

Increased labour mobility

Decreases the burden of a burgeoning population in LDCs

Workers’ remittances from foreign countries as a source of income for consumption ad investment (LDCs)

Overcome labour shortages in DCs

Capital mobility (long-term)

Increases rate of capital accumulation in LDCs

Increase the number of better paying jobs in LDCs

LDCs get to acquire superior foreign technology and business practices (technology transfer) which enhances productivity

Firms in DCs get to enjoy lower production costs and higher profits

Consumers in DCs benefit from cheaper imported manufactured goods

Capital mobility, short term --> usually from DCs to LDCs

Additional funding for capital auumulation for LDCs

Higher returns for owners of such financial capital in DCs

Benefit from risk diversification --> capital at multiple locations 

- Structural unemployment especially within the sunset industries that are unable to compete with the sunrise industries

- Economies are now more vulnerable to external demand shocks --> more volatile and less predictable 

- More vulnerable to imported inflation 

- Bane of labour mobility

Loss of skilled labour “brain drain” in LDCs

Structural unemployment and depressed wages in the sunset industries in DCs

Increased income inequality in DCs due to the influx of cheap foreign labour --> cheap foreign labour depress wages on one hand, while the global competition for high skilled workers pulling wages up on the other hand --> income inequality

Social costs --> strain on social services in the DCs which have to provide for the existing local population as well as the migrants

- Bane of short-term capital mobility

Exchange rate fluctuations

Rapid inflow of hot money causes currency to appreciate and reduces export competitiveness

Rapid outflow of hot money on the other hand causes currency to depreciate, causing imported inflation which would be a more severe impact on economies that rely heavily on imported inputs e.g. Singapore

Asset bubbles 

Speculative demand further increases asset prices (increases prices of residential properties and commercial properties thereby raising the cost of a home for those who need to buy a house and eroding international competitiveness of firms respectively)

Bursting of the asset bubble will trigger an economic downturn

- Bane of long-term capital mobility

Exploitation of weak labour and environmental laws in LDCs leading to social problems arising from labour exploitation as well as environmental degradation 

[newstfionline]

The Reasons For Russia's Trade Woes Are Stowed Inside That DHL Package

By Kirill Zhurenkov, Sergei Melnikov, Olga Filina, Kommersant, Dec. 11, 2012 MOSCOW--There are four global logistics companies (DHL, FedEx, UPS and TNT) that are generally considered barometers of the global economy. They told of a crisis before it had engulfed the world, when international exchanges began to lag as trade was slowing down, and the price of shipping packages became cheaper.

That's why economists are interested in these companies. And a study done by DHL last year has caught the attention of a lot of experts around the world: an index of global integration, showing which countries were open to globalization and which ones were closing in on themselves.

The most recent edition of the index came out just recently. It shows that global integration is not more than 20 percent for most countries in most categories, and that the difference between well-integrated and more isolated countries is wide. The Netherlands, considered the most integrated country, scored 88% integration on the index, while Burundi, the lowest, ranked 10.

Russia, already low, dropped two places in the rating compared with last year, falling to 68th place in 2012. Russia isn't able to break into the world's leadership in globalization not only because of a weak economy, but also because of bureaucracy, which can especially be a problem for logistics companies like DHL.

The study reports that major logistics companies complain about problems with the Russian customs systems, and the requirement that they gather hundreds of documents to transport even the most simple, everyday goods. This helps explain why in Russia global integration has been fueled primarily by private individuals who want to buy goods overseas and communicate with the rest of the world.

"Of course, the level of globalization in any country comes from the intensity of the country's commercial and business contact," explained John Pearson, general director of DHL Express in Europe. "But the sum of all private packages is also considered. In Russia's case, that is fair. Russia's e-commerce is very active, and people buy household items and clothes from overseas. Ahead of the holidays the private international packages send to Russia increases, which means that Russians buy gifts from overseas."

But Russian experts say that if the country doesn't solve its infrastructure problems, it is not going to be able to get around the problems with integration on a national level.

Anatoli Fedorenko, head of the department of logistical infrastructure at the National Research University, notes that the World Bank surveys rank Russia 138th in terms of the functioning of the customs service. "We're 83rd in terms of the railroad system. For comparison, Ukraine and the Baltic states are close to the top of those lists," said Fedorenko.

One problem leads to another--the low speeds required for commercial traffic on Russian roads means international road shipments comparable with Soviet times. There is also a technical problem: The railroads in Russia are slightly wider than European railroads, so European trains can't run on Russian tracks, and train cargo has to be transferred from one type to the other in Belarus.

There is yet another connection that Russia is not doing so well with. According to DHL, the average Internet connection speed in Russia was 32 bytes per second, compared to 163 bytes per second in the Netherlands. Here, you can feel the difference.

[meaningfulmakings-blog]

Global Integration launched a competion about 'working globally'. I entered three videos (didn't win by the way) and this is one of the three I made. It is a tongue in cheek look at however much we think we speak the same language as our American friends we often mean very different things.

[meaningfulmakings-blog]

Global Integration launched a competition about 'working globally'. I entered three videos (didn't win by the way) but this was the one I liked the most. It shows how The Shard, although built in London required suppliers of goods and services from all over the world to get it made, demonstrating that we are indeed connected globally.

[afrowayfarer]

One Common Faith: A Poetic Interpretation Part 2

As the world shrinks due to this evolutionary upheaval Multiple walls come tumbling down People of various shades traversing various oceans, mountains, and plains Landing in places their forefathers would consider foreign land Now, elbow to elbow with Bible-quoters and Qu’ranic chanters Buddhist practitioners and down-to-earth pragmatists Who’s right? Who’s wrong? Many not feeling that song More in Rodney King mode ‘Can we all just get along?’

Multiple heartaches caused by feelings of this world passing them by So many questions, so little answers Many feel ashamed because they feel like little kids Always wondering ‘Why?’ Knowledge is everywhere But Divine wisdom is in short supply Feeling the cold of Revelation’s winter Hoping for Spring Still, need eyes to see and ears to hear these things

For some the answer is shoving their God down The collective throats of humanity Fearful of diversity, and the unknown Committing acts that their Lord would never condone But many more are opening their hearts Showing a willingness to explore The beliefs of good people, living good lives, Refusing to shut the door

The walls keep crashing down They keep crashing The walls keep crashing down Despite clashing

The walls keep crashing down!