DEVELOPMENT AFTER INDUSTRIALIZATION: POOR COUNTRIES IN AN ELECTRONICALLY INTEGRATED GLOBAL ECONOMY

CHHOR Serey Bormey HIM Sreyrathnika MEN Sokphirum SREY Sorphea SAN Boromeichan Professor: Dr. KONG Thay

Content
I. Definition of globalization II. Six components of Globalization III. Development in the post-industrial age

I. Definition of Globalization
IMF Definition of globalization :

the growing economic interdependence of countries worldwide through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology.

II. Six Suggested Components of Globalization

1. Deeper and wider integration of national economies. 2. Increased autonomy, scale and velocity of international capital markets. 3. The enormous cost, risk and complexity of technology. 4. The blurring of distinction between manufacturing and services. 5. The digitalization of the economy. 6. Space-time compression and simultaneous awareness in global events.

1. Deeper and wider integration of national economies. Trade: - Intra-firm trade: Trade between affiliates of companies located in different countries. -Intra-industry trade: Trade involves the import and export of similar goods. Direct investment, FDI Capital flow

2. Increased autonomy, scale and velocity of international capital markets

Autonomy: freely movement Bigger scale because of integration and technology Faster velocity (speed)

3. The enormous cost, risk and complexity of technology The enormous cost, risk and complexity of technology in many strategic or leading sectors
Dramatic increase in the scale of technology its cost, risk , and complexity in industries such as semiconductors, aerospace, telecommunications, and pharmaceuticals. There are 2 important implications of dramatic increase in the scale of technology

1. Combination with the growth of electronic networks 2. The largest national markets are now too small to allow recovery of R&D expenses in many of these industries(national markets may no longer be large enough to serve as viable units of the world economy)

The information revolution Electronic information technology has reduced the importance of physical proximity. Facilitates the integration of geographically dispersed operations. Markets are moving, albeit slowly, from geographic space to cyberspace. Ex. International Financial Market

How does IR facilitate in LDCs? As Primo Baga (1996) notes, it provides another source of opportunity for LDCs. It allows services to be provided in developing countries and consumed in the advanced industrial countries. The foremost case example , the Indian software industry the article Bangalore Bytes, stated that

 In 1997/98 the turnover of the Indian software industry reached an estimated at $2.70 billion versus a mere $10 million a decade ago. The Software Industry developed originally in Bangalore, a large Southern Indian city (over 20% of the largest firms are still headquartered there).

 There are a large number of firms, many of them indigenously owned and managed, developing and exporting software services to world market standards.

4. Blurring of distinction between manufacturing and services

Factors led to the growth of the industry over in 1980s :

1. 2. 3.

Standardization and the phenomenal growth of the PC. Hardware import policy was liberalized in 1984 and the introduction of PCs into India. Towards the end of the decade, multinational firms such as Citicorp began to invest in software development subsidiaries and joint ventures in India.

5. Economy Digitalization
Shift from trade in atoms to trade in bits: i. Information revolution ii. Emergence of internet iii. Software innovation Cyberspace market movement i. E-finance ii. E-commerce iii. E-cash iv. Outsourcing v. Insourcing vi. Supply-Chaining vii. Informing Geography, borders and territorial jurisdiction will be irrelevant.

6. Space-time Compression
Awareness of global news around the world Understand the trends and ideas of political leaders. Economic, cultural, political globalization are all important to understand. For example: - Debt crisis in Greece -ASEAN Community in 2015 -Rising China and its influence in Asia -US and China power competition in Asia - Korean soft power influence - Conflict of interests in joining Kyoto Protocol between US and China.

III. Development in the post-industrial age

If a nation becomes post-industrial it passes through a phase of society predominated by a manufacturingbased economy and moves on to a structure of society based on the provision of information, innovation, finance, and services. In the emerging post-modern electronically networked world economy the very idea of territorially is losing meaning.

 Fragmentation and reintegration through electronic networks has its advantages: i. It greatly facilitate integration into the world economy for individuals and firms in the developing countries. ii. It allows for the development of industries that one could not have imagined in India or Malaysia.

iii. It provides opportunities for LDCs such as allowing services to be provided in developing countries and consumed in the advanced industrial countries. iv. The information revolution puts a premium on education and access to computers and communication networks.

 However, there are COSTs:

Greater openness has made small parts of the developing world full fledged members of the global village. There is an increase of polarization of wealth and income among developing countries.