world trade 

 

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One way in which globalization is evident, and is without historical precedent, is to look at how MNC's have dominated the various economies of the world. The conventional measure is to look at the scale of Foreign Direct Investment (FDI) and its patterns overtime. Over the last twenty years or so, there has been a sharp increase in FDI, which now means that more and more people are working for MNC's, more goods and services used are produced by MNC's , and they now have more and more resources to lobby the governments. As a result, MNC’s overtime having become the key players in international economy. A better measure though is to measure FDI as a ratio of World GDP, as FDI would increase overtime as economies grow. Over the past twenty years or so, there has been a significant growth of FDI in terms of World GDP, along with a growth in Sales and Assets by MNC's in terms of World GDP. Moreover, MNC's are now increasingly outsourcing parts of their production or services to other countries. Examples include Nike outsourcing its production, or perhaps increased use of call centers (sub-contractors) for sales and administration to countries like India. This, however, is difficult to measure, and does not show in the FDI pattern.

As a result, there has been a strong evidence of MNC’s becomes more globalize. The second evidence suggesting the prevailing phenomena of globalization is in relation to patterns of trade. Now, when looking at the mere volumes of trade, we will see that those are raised. So overall levels of exports and imports have risen quite significantly. Exports have increased quite dramatically in France, Germany and US in the last twenty five years or so. However, similar to FDI, a proper comparison should be to look at the value of exports and imports in relation to GDP. When one does that, then certainly the world trade clearly outstrips the world output (economic growth), qualifying that globalization is clearly taking place. So, quantitatively trade has grown faster than output in the last twenty five years or so. This is regarded as significant as qualitatively, as consumer tastes seem to have become more homogenous and increase in trade means that development of products in one country are available to consumers in other countries.

The third aspect of the "Strong Globalization Thesis" is in relation to Business Services. Previously, services such as accounting, auditing, and consulting, were provided by national firms tailored to national markets and were different from counter markets. In recent years, markets have been increasingly dominated by a number of highly globalized business services firms. Such firms have widely diffused fashionable concepts like JIT (Just-in-time), or perhaps Business-Process-Reengineering, in a range of different countries.

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