Geography 2152F/G Chapter Notes -Toronto Stock Exchange, Horizontal And Vertical, Nyse Euronext

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Globalization: 22/01/2013 7:40:00 AM
Two extremes:
Hyperglobalists:
o Global economy is borderless
o Capital, information and innovation flow quickly enabled by
technology
Sceptics:
o The opposite
The political right things that the positive economic impacts outweigh the
drawbacks
The political left thinks that globalisation is a problem leads to greater
levels of inequality
This occurs at both an international and interregional level
Argue that globalization is a driving force for inequality
Political and moral question as to whether and to what level
inequality should grow to how much is too much?
o Two extreme examples of this are china and US, both have
high division of classes
Scale needs consideration:
Where does a company put certain offices
Also has to look at local markets although you may be a global
corporation, still have to worry about local conditions
McDonalds!
o Success store, have been steadily growing since their
founding
o 34,000 restaurants in the world
o have not been immune to price inflation
o big mac index fairly good indicator of what the currency
will do in the next few years
o have customized their menu to accommodate local trends
presence of multinationals:
apparent at the local level
as far as cars go, different parts are all from different places, no
longer such thing as “American cars”.
Whether or not multinationals belong to one particular country is
not clear
Foxconn:
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o Worlds single largest industrial parts provider
o Make iphone materials
o Famous for extremely harsh working conditions, particularly
in china.
o 2011, had over a million employees
when we think of firms, we generally think of a hierarchical structure
true for about 99% of companies, but there are a few that don’t
Automattic web firm:
o Claims that they don’t really have a headquarters
o Possible to establish a firm without this hierarchical structure
o 123 employees, small firm, everyone works at home
o size of company is imperative to structure
two globalization periods:
both eras are pretty much identical, save for the current period
having more democracy than first period, and that there are fewer
wars than in the first period.
Foreign direct investment:
Key ingredient in the integration of global world economy
Creates a stable, long lasting financial relationship between the
investor (firm or national level) and country or firm that the money
goes to
Outward: money going out
Inward: money coming in
Most countries have both inward and outward FDI
US dominates FDI Scale
Big player before the US was the UK
Canada doesn’t have big enough internal financial market to sustain
foreign investments itself, tends to rely on investments from
outside
Why would you want to invest externally?
o You see investment opportunities somewhere else that you
don’t have at home
And investing within?
o Provides capital not able to raise and trade of technology
Home country = money comes from here
Host country = receives money
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1938, Germany erased from the map in terms of investments due
to war
o concentrated in relatively few number of countries
o UK declining in importance in terms of investment, US rises
FDI Distribution where did the money go?
o 55% natural resources in 1914
FDI Inward stock who is getting the money:
o US, Russia and Canada getting the most
o Canada is a sink for money coming in but not a source for
money going out.
Globalization Index:
Canada higher up than US
Canadian economy is “branch plant” economy most of production
owned by foreigners.
o Profits don’t stay in Canada, go across the border
Country with highest level of investment in Canada = US
Up until around 2008/09, fairly steady growth in globalization
2011, total number of FDI projects increased by 5.6%
Ontario is third most popular site for FDI in North America, also the
third largest source of FDI, mostly going to the US
US is interested in Canada, but not the same as it was 10 years ago
coal, oil and natural gas-wise.
FDI Continued:
Luxembourg which is a small country appears fairly high on the list
of outflows and inflows of FDI for 2008
o This is due to their low corporate taxes, therefore lots of
companies have their headquarters there.
Global scale, Canada is not a big player in terms of global FDI
But given size of Canadian economy, more prevalent than would be
expected
1996, net outward FDI grows higher than net inward
compared to global scale, 1980 Canada had about 10% of worlds
total.
But, ever since then has declined steadily.
One of biggest ways that FDI is generated is via Mergers and Acquisitions
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