okay hi there and welcome to an update video covering the characteristics and causes of globalization a macroeconomics video it's quite important to have a solid definition of globalization ready to use in an exam essay this definition comes from the oecd and it captures the essence i think of what the process of globalization is all about globalization is a process of economic integration of different countries through growing freedom of movement across borders of goods of services of capital and people essentially communities countries being drawn deeper together and more interconnected and helped of course by the spread of technology and global media it's important to understand some of the key characteristics of globalization key characteristics what are the main features or characteristics of globalization uh just reading through some of the top ones the left hand side there and increasing the ratio of trade so a lot more countries now more open the value of exports and imports is a share of gdp it's very high sometimes above 100 for some countries increase in the flow of capital financial capital across borders both in terms of acquisition as well as foreign direct investment the rise in the number of global brands including many from emerging developing countries globalization associated with the creation of much deeper specialization of labor so making specific component parts for a particular product that that gets that gets morphed into embedded into global supply chains the idea for example that apple's iphone is sourced from nearly 50 different countries across six continents we're seeing the emergence of new trade and investment routes including the one that china is trying to build at the moment globalization has also of course been associated with high levels of cross-border labor migration and more generally how much greater inter connectivity of people and businesses and communities through networks some key evaluation points first of all globalization is not an inevitable process it's not inevitable some people are now talking about deglobalization secondly some countries are far more globalized than others so you have dynamic globalizers countries like malaysia and who knows vietnam increasingly globalized ethiopia and rwanda and africa becoming more globalized obviously lots of countries inside the european union other countries are more closed less exposed to global trade and investment sometimes by policy sometimes by by virtue of geography a third really key point in your vision is that the benefits of globalization are not evenly spread there's a skew in terms of who benefits who gains fundamentally in the long term from globalization there's actually some evidence of the increased regionalization in the world economy increasing emphasis on regional trade agreements for example rather than overarching global trade deals the fifth key point i want to really stress is that we live in a multi-polar world the idea that there's one center of real economic dynamism and growth and if you like charge is not long it's no longer the case there are many different parts of the world economy so we've been going quickly but there's less so there's there's no one unique uh pole against which we can we can track globalization what are some of the main factors driving the process of globalization deeper integration between countries i've put here four there's many more but we're just worth highlighting four containerization is a popular explanation from students the cost of ocean and air shipping have come down due to containerization and bulk shipping and lots of other efficiencies essentially the cost of transporting products across the world has come down technology is of course driving television advances driving globalization it's cutting the cost of transmitting and communicating information so the latest digital technology platforms of course are are associated with a global world we're seeing the rise of transnational activities i'll say more about that in a second but the poster charles of of apple and google tutored to you etc they're the obvious poster charts for a global economy and until recently there were a lot more trade deals the average level of import tariffs was falling although there's some signs that's now reversing lots of ways you can track globalization trade against gdp ratios the volume of for the value of foreign direct investment against the country's national income you can track it by for example a number of overseas visitors around the world economy this is a nice little measure the number of nike retail stores worldwide worldwide continues to grow now well over well over a thousand nike stores across the globe one point i really want to make and this i think is crucial to evaluation is that we're now starting to see a big shift in the world economy the center of gravity in the world economy is moving it's shifting these are the 20 emerging market countries officially as of 2018 including countries like brazil and china india's inner of course and nigeria mexico thailand and turkey well those of those 20 countries businesses from those countries now account for 30 percent of the global fortune 500 biggest companies in the world compared to only seven percent in 2005. we're now starting to see lots of transnational corporations from emerging developing countries china mobile alibaba of course the biggest global online retailer the amazon of china the tartar group indian conglomerate which owns for example jaguar land rover hallway technologies massive competitor now to to samsung and apple majili motors from china which bought swedish from volvo in 2010. infosys one of the world's biggest information system businesses well over what nearly a quarter of a million people it employs so transnational corporations are really starting to emerge from the emerging parts of the world and we're starting to see bands these are the top 10 brands according to the brand directory for 2018 from china from south korea and from india alibaba's in the tencent hallway samsung kia motors uh tell emphasis i think it's really good for your exam to have just a handful of good examples of emerging transnational corporations and global bans from these emerging economies they are challenging in many ways the hegemony the power the market dominance of some of the of the well-established um industrial conglomerates and brands from western countries and this is a really key chart for understanding globalization in 2019 if you look at the share of world gdp adjusted for purchasing power parity according to the imf in 2017 emerging market and developing countries accounted for just under 60 percent of world output advanced countries just over 40 percent european union 16 so the what's this chart showing that saying that the bulk of the world economy now is coming from emerging market developing countries that will be the main catalyst if you like for growth and development going forward but notice on the right hand side that sub-saharan africa despite its relatively fast growth in recent years still still only accounts for three percent of the world economy there are threats to globalization globalization is not inevitable what are some of those threats let me just pick out a few for you obviously you'll be following hopefully ahead of the exam the high-profile tariff wars and threats of tariffs between china and the united states we will look to see how far that develops there's also been quite a big increase in non-tariff barriers to trade including quotas and other forms of trade protectionism many countries now are moving towards managed exchange rates instead of allowing their country's currency to float in the world of increasing trade and balances other countries now thinking they can use the exchange rate as a lever of policy to try to achieve their macroeconomic objectives we've also seen a decade's worth of high levels of debt so we got through the global financial crisis not unscathed but we emerged from it in the last 10 years we've had essentially a decade of very low interest rates and in many countries around the world including in china united states and the uk obviously countries like greece and italy as well there is a much much higher level of debt than there was in the previous cycle public sector debt household debt corporate debt and that is a threat because in the past big buildups of debt and asset price inflation that tends to come to an end and you're left with a big hangover we've also seen a big backlash against the free flow of labor with calls obviously for much tighter controls of immigration including in the uk it influenced the brexit vote but i think more even more important than all of these things and debt and migration are significant issues but we now face up to the threat of that's really significant systemic risk that comes from the environment issues to do with energy security and water scarcity loss of biodiversity these are huge threats they're also big opportunities for the global economy but there are threats to the process of globalization globalization tends to break down during financial crisis and i think we're still living a decade on from the aftermath of that and here's a lovely quote just to finish with from the imf in 2016 which published a very detailed report on the costs and benefits of globalization and they said the following globalization driven by the mobility of people capital and ideas aided by information technology brings opportunities for a better life for some but dislocation and hardship to others in other words globalization has consequences uh positive and negative benefits and costs that are unevenly spurred from country to country within countries and across the world these are the big challenges facing the world economy in 2019 well i hope this this short video just gave you a little bit of an update on some of the key characteristics and key causes of globalization and we also touched on some of the threats to globalization going forward thank you