![five major drivers of globalization five major drivers of globalization](https://www.researchgate.net/profile/Werner-Delfmann/publication/236681100/figure/fig3/AS:654059983888385@1532951460140/Globalization-drivers-according-to-YIP-1992.png)
Capital market flows also include remittances from migration, which typically flow from industrialized to less industrialized countries. bonds) ( Stiglitz, 2003). Since 1980, global flows of foreign direct investment have more than doubled relative to GDP ( World Briefing, Paper, 2001).Ĭapital market flows: In many countries, particularly in the developed world, investors have increasingly diversified their portfolios to include foreign financial assets, such as international bonds, stocks or mutual funds, and borrowers have increasingly turned to foreign sources of funds ( World Briefing, Paper, 2001). For example, China’s economy is heavily dependent on the exportation of goods to the United States, and the United States customer base who will buy these products.įoreign Direct Investment (FDI): According to the United Nations, FDI is defined as “investment made to acquire lasting interest in enterprises operating outside of the economy of the investor”.ĭirect investment in constructing production facilities, is distinguished from portfolio investment, which can take the form of short-term capital flows (e.g. In the constant changing business market, countries are now more interdependent than ever on their partners for exporting, importing, thereby keeping the home country’s economy afloat and healthy. The importance of International trade lies at the root of a country’s economy. Between 19, the percentage of exports and imports in total economic output (GDP) rose from 32.3 per cent to 37.9 per cent in industrialized countries, and from 33.8 per cent to 48.9 per cent in low and middle-income countries ( World Briefing Paper, 2001). In the 1980s, about 20 per cent of industrialized countries’ exports went to less industrialized countries today, this share has risen to about 25 per cent, and it appears likely to exceed 33 per cent by 2010 ( Qureshi, 1996). International trade: An increasing share of spending on goods and services is devoted to imports and an increasing share of what countries produce is sold as exports. The growth in cross-border economic activities takes five principal forms: (1) international trade (2) foreign direct investment (3) capital market flows (4) migration (movement of labor) and (5) diffusion of technology ( Stiglitz, 2003). At one point in 2007, for the first time in history, US automaker’s share of their home market fell below 50 percent. Global Market Share, 2007-2008 (, 2007)Īs this figure suggests, the “Big Three” must adapt to changes in the market and globalization factors to remain key players in the automotive market. Economic globalization refers to the “quickly rising share of economic activity in the world seems to be taking place between people in different countries” ( World Bank Briefing Paper, 2001). More specifically, economic globalization is the result of the increasing integration of economies around the world, particularly through trade and financial flows and the movement of people and knowledge across international borders ( IMF Issue Brief, 2000). The focus here is on the economic dimension of globalization. Globalization is difficult to define because it has many dimensions-economic, political, cultural and environmental. While the future of Ford is uncertain, one thing is clear, globalization will continue to affect the way domestic and foreign companies do business. As the globalization of the auto industry continues, how should Ford market its vehicles? What target markets should Ford appeal to? How can it continue to improve production and quality and adhere to the needs of even more demanding customers? And, how should Ford position itself, as a company, in the face of formidable competition? Today, Ford faces a number of important questions. However, Ford has recently decided to sell its stake in both Jaguar and Land Rover to the Indian automaker, Tata, and may divest other divisions as well. This is evident, as Ford decided that it was more cost-effective to buy existing networks than to start from scratch, by bringing Jaguar, Volvo, Mazda, Aston Martin and Land Rover under its control. As a result, Ford is challenged to constantly reevaluate and revamp its market strategy. Today, Ford is in dire competition with not only their domestic competitors, but also now foreign car manufacturers such as Toyota, Volkswagen and Hyundai.Īt the current pace, the automotive market is approaching a 50/50 split between United States and overseas-based control of the US market. Nowhere are the effects of globalization seen more drastically than in the automobile industry, especially for the United States “Big 3” automakers: General Motors, Chrysler, and Ford.įord’s history dates back to the Model T created by Henry Ford, with the goal of building a car for every family. Case: United States Domestic Automaker, Ford