2020-10-10
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Globalization refers to the growing interdependence of countries resulting from the increasing integration of trade, finance, people, and ideas in one global market place. International trade and cross-border investment flow are the main elements of this integration.
Globalization started after World War II but has accelerated considerably since the mid-1980-s, driven by two main factors. One involves technological advances that have lowered the transportation, communication, and computation costs to the extent that it is often economically feasible for a firm to locate different phases of production in different countries. The other factor has to do with the increasing liberalization of trade and capital markets: more and more governments are refusing to protect their economies from foreign competition or influence through import tariffs and non-tariff barriers such as import quotas,export restraints, and legal prohibitions. A number of international institutions established in the wake of World War II – including the World Bank, the International Monetary Fund (IMF) and General Agreement on Tariffs and Trade (GATT), succeeded in 1995 by the World Trade Organization (WTO) – played an important role in promoting free trade in place of protectionism.
Empirical evidencesuggests that globalization has significantly boostedeconomic growth in some countries (e.g. Hong Kong, Korea, Singapore). But developing countries are rather slow to integrate with the world economy because for countries that are actively engaged in globalization the benefits imply new risks and challenges. The balance of globalization’s costsand benefits for different groups of countries and the world economy is one of the hottest topics in development debate.
For participating countries the main benefits of unrestricted foreign trade stem from the increased access of their producers to larger international markets with an opportunity to benefit from the international division of labor, on the one hand, and the need to face stronger competition in world markets, on the other. In addition, an actively trading country benefits from the new technologies that “spill over” to it from its trading partners, such as through the knowledge embedded in imported production equipment. These technological spilloversare crucial for developing countries as they give them a chance to catch up more quickly with the developed countries in terms of productivity.
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Active participation in international trade also entails risks, particularly those associated with the strong competition in international markets. A country runs the risk that some of its industries will be forced out of business. Reliance on foreign suppliers may be unacceptable when it comes to industries which relate to national security. In addition, developing countries often argue that recently established industries require temporary protection until they grow more competitive and less vulnerable to foreign competition. Thus governments often prohibit or reduce selected imports by introducing quotas, or make imports more expensive and less competitive by imposing tariffs. Such protectionist policies can be economically dangerous because they allow domestic producers to continue producing less efficiently and eventually lead to economic stagnation.
A country that attempts to produce almost everything it needs domesticallydeprives itself of the economic benefits of international specialization. Some diversification of production and export can be prudent even if it entailsatemporary decrease in trade. Every country has to find the right place in the international division of labor based on its comparative advantages, such as thesize of domestic market, natural resources endowment, and geographic location.
Despite the risks, many countries have been choosing to globalize their economies to a greater extent. And the way to measure the extent of this process is by the ratio of a country’s trade (exports plus imports) to its GDP (gross domestic product) or GNP (gross national product). By this measure globalization has roughly doubled on average since 1950.
from Beyond Economic Growth
Practicum 5.4
Translate the italicized word combinations in text 5a into Russian
Practicum 5.5 
Practicum 5.6 
Practicum 5.7
- Consider the clothes and shoes you are wearing, and those you wore last weekend. Where were they made?
- Try to recall the meals you’ve eaten in the last 24 hours. How much of the food came from abroad? Where do your car, TV, stereo, camera, watch, and other appliances and gadgets come from? Where was the last CD you bought manufactured?
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- Can you imagine living in a country that does not import anything, where only locally produced foods, textiles and products are available?
III. Communication Practice
Brainstorming
A team of journalists is inquiring a spokesperson for the WTO on protectionist policies they pursue (target countries, tariffs, foreign supplies, international division of labour, etc.)
Text 5b
The text to follow deals in talking economics. Study the text and use it as a starting point for communication
E-Commerce & Outlet Shopping
E-Commerce (Electronic Commerce) is buying and selling products and services over the Internet by either business-to-business, business to consumer, or consumer-to-consumer. Like in traditional commerce, there is an exchange of goods, but it is conducted online through the use of technologies such as electronic data exchange, email, electronic fund transfers or smart cards to receive payment and keep track of transactions.
The bulk of e-commerce transactions were retail transactions at the closeof the 20th century but as security and encryption technology over the Internet improved, the growth of transactions over the Internet increased. The explosive growth in e-commerce is largely due to the expansion of the Internet in the late 1990s. Since that time transactions grew and business-to-business commerce became one of the fastest growing segments of e-commerce with the following advantages: increased access for consumers to buy all around the country and even the world. Businesses can not have to worry about pickup, the use of e-commerce has made it easier for businesses to run the operations without thehassle of going to their supplier; convenience, because businesses and consumers now don’t have to go out of their way to buy products and services as they simply go to their supplier’s website and order the products they need; expansion, which means that businesses are no longer restricted to either their countries or certain areas because it was too costly to set up offices in different areas – they now have access to consumers and businesses in the entire world. So, both businesses and consumers profit from this new technology and can expand easier. More jobs were developed in the Internet field since the boom of e-commerce which helped those stuck without jobs in the slowing of the job market.
For a business to succeed in e-commerce it is necessary, first, to have a strong business proposition, or putting it simplistically, to have a way of bringing to the market place; and using e-technology seems a brilliant idea. Second, you need to have a management team that has experience of the market place you are seeking to penetrate. And the third thing you need is resources. In blunt terms, even the best idea executed by the best management teams will not be a success unless you have got the resources and the finance to actually bring it to reality. Many e-commerce step-up companies fail because they run out of cash. But those who successfully integrate into the industry will fully realize its advantages.
Outlet shopping refers to the process of shopping at retail outlets, which are stores that sell brand-name merchandise at discounted prices. An outlet store may be situated by itself, but is most often located amongst other outlets as part of an outlet mall, to facilitate outlet shopping. Outlets are often located at a distance from the retailer’s main wholesale accounts and just outside major cities, in order to keepoverhead prices and retailer competition ata minimum. Items most commonly found on an outlet shopping excursion include clothing, fashion accessories, electronics, sporting goods, toys, and cosmetics.
Outlet shopping first developed in the US, with retail store attached to the warehouse or factory which manufactured the outlet goods. Today outlet malls can be found all across the world, and are referred to as “Designer Outlets” in many parts of Europe. The items that are shipped to outlets from their manufacturers are often made up of a combination of surplus inventory which does not sell quickly enough at major retail locations, and items that feature slight damages or imperfections. For this reason, clothing found while outlet shopping may come in erratic sizes or one size only, compared to a retail location which often stocks one item in avariety of sizes. Outlet shopping items may also be out-of-season compared to merchandise of the same brand name found in a regular retail mall. While outlets have long been associated with discount savingsand bargain hunting, many major retail malls have begun to lower their prices comparably to compete.
Customers can often maximize their outlet savings by doing some research in advance of outlet shopping. Visiting the outlet mall’s customer service station to receive a coupon book, checking out the outlet’s website, and signing up for theoutlet’s mailing list are all ways to increase the chances of finding a bargain. Outlets also typically feature tax-free weekend specials during the summer months. One-stop-shop outlet shopping websites offer links to savings information for outlet malls all across the country and the whole world.
(www.wisegeek.com) (www.ecommercetimes.com)
Practicum 5.8
Translate the italicized word combinations in Text 5b into Russian
Practicum 5.9 
III. Communication Practice
Brainstorming
Hold a brainstorming session to discuss
- In present-day environment companies that are not exploiting the opportunities offered by selling through the Internet are doomed to failure. Suppose we all abandoned old ways of doing business and switch to Internet, what do you think would happen?
Practicum 5.10 
Practicum 5.11
Read the text below and study current smart shopping practices with the Brits
