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Disadvantages of Globalization

This information is from 2012.

Governments lose its decision making power over central banks as the ECB and the FED and also over large companies that pressure them to get benefits from favourable laws.

Globalization implies a threat to mass media being controlled by huge corporations as a lot of them are actually shareholders of those media or are linked to them somehow.

5. The increasing power and influence of multinationals can be seen as a threat by governments and mass media.

We are going to talk about 7 disadvantages of globalization:

1. The increase of the wealth’s unequal distribution

2. The environmental degradation by exploitingresources.

3. The industrial relocation (offshoring).

4. The economy is very sensitive to changes.

5. The increasing power and influence of multinationals seen as a threat by governments and mass media.

6. Triumph of large multinational corporations over small businesses.

7. Global identity.

Globalization is an economic, technological, political and cultural process which consists in the rising communication and interdependence of countries around the world. It covers a wide range of aspects but as you will see we have focused on the economic part, specifically on the economical negative effects as we have already said.

Your t-shirt was made in , your jacket was made in and your shoes were made in . Today goods are made and sold all over the world, thanks to globalization.

Introduction

4. The economy is very sensitive to variations.

Evolution of the risk premium

Nowadays due to the interdependence of economies, a negative economic shock in one country can quickly spread to other countries.

  • A decline at the New York Stock Exchange.
  • The collapse of the USA sub-prime housing market -> Greece

Catalina Garí

Sara Mainczyk

M. Esther Landívar

Rubén Peralta

1. Increase of the wealth's unequal distribution

The rich are getting richer and the poor are getting poorer: Most of the capital accumulates in richer countries.

Greater economic inequality between rich countries

Examples of how globalization increaces global inequality:

  • Good politics just for a few group of countries.

  • World decisions taken in order to search the interest of a few.

  • Domain of the first world countries on third world countries.
  • Poor working conditions
  • Low wages
  • Child exploitation

Tax evasion through offshore heavens.

Vitality Air.

  • China has become the world’s factory.

  • Huge emisions of pollutants
  • As countries develop, people tend to shift the production, and hence the pollution, onto less developed nations.

  • You can go out without regrets to buy more goods.

Only with consumption we generate a lot of garbage .

Globalization affects the environment in many ways

2. The environmental degradation by exploiting resources.

Globalization facilitates an increase in consumption.

Offshore Outsourced of Course!

Large companies move their factories to places where labor is cheaper and tax regulations are softer. Also, the companies can outsource the work and again, that leads to an increased unemployment.

The world's most polluted city is Linfen in China.

Offshoring to avoid taxes

3. Industrial relocation (offshoring)

  • Rich countries are making a lot of profit whereas developing or poor countries have to suffer from globalization

Conclusion

7. Global identity.

Is a term to define the identity between a person and a city/ state/ nation

  • Identity is not determined by political borders

VS

Small businesses can not take advantage of the economies of scale to lower costs and prices, which means they can not compete neither in quantity nor in price and often even neither in quality, since they do not have enough resources to be allocated in order to improve or innovate.

VS

  • Small local companies cannot compete anymore with big global companies

  • Clients want to buy cheap brand products and prefer to buy far away imported products than unknown more expensive regional fair trade products → Economics of scale

People prefer to buy worldwide brand products even if they are imported, carried away by fads or fame, and forget national / local products, such as: Coca-Cola vs Tropical (Ecuadorian drink). Nike vs Li-ning

6. Triumph of large multinational corporations over small businesses.

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