Globalization goes back to the great maritime expeditions of the 15th and 16th centuries (in particular the first round-the-world voyage by Ferdinand Magellan in 1522) which led to the creation of colonial empires.

The term "globalization" appeared in French in 1964 in the context of economic and geopolitical work to designate the extension of industrial markets at the level of geopolitical blocs at the time of the Cold War.

It became widespread in the 1990s, based on the theses of the philosopher Marshall MacLuhan on the emergence of a "global village", but above all because of the anti-globalization and alter-globalization movements which wanted to draw the public's attention to the extent of the phenomenon.

2- Definition

Globalization refers to the increasing interconnectedness and interdependence of people, businesses, and political systems on a global scale. This process has a wide-ranging impact on various fields and results in unique effects that vary in timeline. The concept of globalization encompasses not only economic activity, but also the international exchange of knowledge and labor.

Economic globalization is a significant aspect of the larger phenomenon of globalization and involves the convergence of markets, integration of businesses on a global scale, and the internationalization of companies' operations and trade. The widespread dissemination of information through digital technology and the Internet has also had a significant impact on economic globalization and is often used to refer to this specific aspect of globalization.

In short, globalization refers to the increased interconnectedness and interdependence among people, businesses, and political systems worldwide, especially through the growth of international trade and investment. Economic globalization specifically encompasses the convergence of markets, global business integration, and the internationalization of companies' operations and trade.

3) Globalization Characteristics

A)Globalization of the information

The great novelty of globalization at the beginning of the 21st century is the implementation of information technologies (ICT), in open or closed sources, also on a global scale.

With access to these tools, globalization affects individuals as much as states or companies, with a very different perception depending on the individual.

The Internet serves as a prime example of how globalization has been influenced and accelerated by the widespread use of ICT.

B). The internationalization of economies

The internationalization of economies refers to a complex process that takes into account the volume of transactions, their location and their structure.

1. Opening up of international trade

* International trade has expanded rapidly since the end of the Second World War. In value terms, international trade rose from $57 billion to $3,650 billion between 1947 and 1992

* Two indicators of the openness of economies: (i) the dependency ratio: the ratio of imports to GDP, which expresses the country's dependence on external supplies; (ii) the external openness ratio: the ratio of exports to GDP, which measures the country's dependence on external outlets. For countries such as Germany and France, foreign demand provides an increasingly important share of economic growth (34.2% and 24.3%), whereas for the United States and Japan, the external openness coefficient is 10% and 11% respectively.

* A more detailed analysis of the structure by country shows a significant change since the end of the Second World War.

The 1960s and 1970s saw the United States lose its position of undivided domination (the share of US exports in world exports has in fact fallen significantly, from nearly 25% of world trade in the 1950s to just over 10% today). The rise of Germany, Japan, China, and what has long been called the NICs (new industrial countries) (Brazil...).

* Rapid development of international trade in commercial services: Exports of services now represent about 20% of total world exports of goods and services.

2. The organization of international trade

* Globalization is not only an economic reality. It is also an active approach by States to establish common rules on a global scale. The General Agreement on Tariffs and Trade (GATT)

C). Foreign direct investment

* FDI is a capital commitment made to acquire a lasting interest in a company operating abroad. FDI can be used to :

- create a company by a foreign investor -acquire at least 10% of the share capital of an existing foreign company

- reinvest profits by the subsidiary

- to carry out operations between the parent company and the subsidiaries (loans, capital increase...)

* These direct investments were the work of multinational firms (MNF): these are companies that have established production units outside their national territory.

* According to the latest UNCTAD report, total direct investment in the world rose from 349 to more than 1,000 billion dollars between 1996 and 2007. This boom was stimulated by the acceleration of mergers and acquisitions of companies, especially in the USA and Western Europe.

D) Offshoring

* Offshoring refers to the relocation of service or production activities of certain companies to low-wage countries.

* This phenomenon began in the 1970s by American companies [ref. needed]. After having stayed away from this movement for a long time, European companies gradually realized that they could also reduce their costs by relocating

* Companies can find the skills they need for their development by calling on specialized subcontractors in other countries: in this case, we talk about offshore outsourcing. If these companies are subsidiaries of the company, we speak of direct investment abroad (FDI).

* These relocations are mainly aimed at providing services such as the maintenance of computer applications, call centers, management, purchasing, etc.

E). International finance

- The birth of the International Monetary System (IMS)

- This is a set of rules and institutions that govern how, in what and at what price currencies are exchanged between them. The rules are written (Bretton Woods IMS in 1944, the revised IMS in 1976), the institutions are official and enforce the rules (the IMF): the currency must be convertible into internationally accepted means of payment that will constitute the foreign exchange reserves of the central banks

Capital movements by several ways:

the 3 D rule :

-disintermediation

- decompartmentalization

-deregulation

- Disintermediation is the direct recourse of international operators to financial markets (direct finance) without going through financial and banking intermediaries (indirect finance) to carry out their investment and borrowing operations.

- The decompartmentalization of markets is the abolition of borders between separate markets, the opening up of national markets to the outside world and also to the inside world (the IFS is the mega-money market). The network is interconnected and in continuous operation.

- Deregulation facilitates the international circulation of capital.

4) Advantage and disadvantage of globalization

Three phenomena are implicitly linked to globalization:

- After the virtual elimination of customs duties on many goods, attention was focused, on the one hand, on non-tariff barriers, and on the other hand, on barriers to trade in services waves of deregulation in the 1980s

- Technical progress has also been a powerful factor in globalization thanks to the reduction of economic distance between countries.

- Interactions developed between technical progress and waves of deregulation. These interactions have been particularly strong in the field of telecommunications (networks, multimedia, Internet ....) and finance (financial innovations, improvement of financial techniques).

A. Advantage and disadvantage for the countries

the advantages and disadvantages of globalization for both rich and poor countries:

Advantages for Rich Countries:

Increased Trade and Investment: Rich countries can benefit from increased trade and investment opportunities, leading to economic growth and job creation.
Access to New Markets: Rich countries can access new markets and sources of revenue, helping to diversify their economies.
Improved Technology: Rich countries can benefit from exposure to new technologies and best practices, leading to increased efficiency and productivity.
Greater Cultural Exchange: Rich countries can foster greater cultural exchange and understanding, breaking down barriers and promoting peace and cooperation.

Disadvantages for Rich Countries:

Job Losses: Some rich countries may experience job losses as a result of outsourcing and the relocation of production processes to lower-wage countries.
Environmental Concerns: Increased trade and production can result in environmental degradation, particularly in countries with weak environmental regulations.
Dependence on Foreign Markets: Rich countries may become overly dependent on foreign markets, leaving them vulnerable to changes in demand or economic conditions.

Advantages for Poor Countries:

Increased Trade and Investment: Poor countries can benefit from increased trade and investment opportunities, leading to economic growth and job creation.
Access to New Markets: Poor countries can access new markets and sources of revenue, helping to diversify their economies.
Improved Technology: Poor countries can benefit from exposure to new technologies and best practices, leading to increased efficiency and productivity.
Greater Cultural Exchange: Poor countries can foster greater cultural exchange and understanding, breaking down barriers and promoting peace and cooperation.

Disadvantages for Poor Countries:

Widening Income Inequality: Globalization can lead to a widening income gap between different groups within a poor country.
Job Losses: Some poor countries may experience job losses as a result of outsourcing and the relocation of production processes to lower-wage countries.
Environmental Concerns: Increased trade and production can result in environmental degradation, particularly in countries with weak environmental regulations.
Dependence on Foreign Markets: Poor countries may become overly dependent on foreign markets, leaving them vulnerable to changes in demand or economic conditions.
Cultural Homogenization: Globalization can result in cultural homogenization, as local cultures and traditions are replaced by globalized norms and values.

B. Advantage and disadvantage for companies

Advantages and Disadvantages of Globalization for Companies:

Advantages:

Wider Market Reach: Companies can sell their products or services in multiple countries, either directly through subsidiaries or local distributors, or through the internet.
Efficient Resource Utilization: By expanding their market reach, companies can take advantage of economies of scale, reducing costs and improving efficiency.
Diversification of Risks: By having a presence in multiple countries, companies can reduce their exposure to risks such as poor sales or changes in currency exchange rates, and minimize the impact of disruptions caused by strikes or conflicts.
Access to Global Investments: Companies can attract investment from a wider pool of sources, potentially increasing their competitiveness.
Flexibility in Supply Chain Management: Globalization allows companies to distribute production processes across multiple countries, allowing them to take advantage of lower costs and specialized expertise in different locations.

Disadvantages:

Increased Competition: A larger market can also mean increased competition, which can be a challenge for companies.
Complex Regulations: Companies operating in multiple countries must navigate a complex web of regulations and compliance requirements, which can be costly and time-consuming.
Job Losses: The globalization of production and supply chains can lead to job losses in some countries, particularly in those with higher labor costs.
Ethical Concerns: Relocating to lower-wage countries to reduce costs can raise ethical concerns and attract criticism.
Negative Consequences: Globalization can also result in negative outcomes such as environmental degradation and the spread of diseases.
Circulation of Cheap and Unregulated Products: Globalization can facilitate the circulation of cheap and uncontrolled products, such as some products from China.
Financial Crises: Globalization can also facilitate the spread of financial crises, as evidenced by the recent global financial crisis.

5- conclusion

Globalization appears to be a double-edged sword, with two opposing forces engaged in a fierce struggle. Analyzing only one aspect of it while ignoring the other would present us with a skewed view. Depending on the perspective one adopts, globalization can either be seen as a paradise on earth or a horrible hell; the angel and the beast are united in one entity. As Nobel Peace Prize winner Amartya Sen has noted, 'we can mitigate the damage caused by globalization, but we cannot stop the process.

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Cours et Exercices

Globalization and its impact

1) History

2) Definition

3) Globalization Characteristics

A. Globalizationof information

B. Theinternationalization of economies

C. Directinvestments abroad

D. Offshoring

E. Internationalfinance