An Assignment on Impact of Globalisation on Automobile Industry

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THE DEFINITION The International Monetary Fund defines globalization as the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services, free international capital flows, and more rapid and widespread diffusion of technology. Meanwhile, The International Forum on Globalization defines it as the present worldwide drive toward a globalized economic system dominated by supranational corporate trade and banking institutions that are not accountable to democratic processes or national governments. While notable critical theorists, such as Immanuel Wallerstein, emphasize that globalization cannot be understood separately from the historical development of the…show more content…
Lets focus on new competitors which emerged in countries with relatively low per-capita income. This is because trade models predict that increasing trade between countries at different levels of economic development should have relatively pronounced effects on the intrasectoral distribution of income and employment. In addition to new producers and exporters of finished automobiles, we assess the degree of outsourcing of relatively labor intensive segments of the value chain undertaken by the automobile industry in traditional producer countries.

Nevertheless, the automobile industry is typically considered to be at the forefront of globalization.
All these indicators do not reveal, however, whether new competitors from countries with relatively low per-capita income have become integrated into the international division of labor in the automobile industry. This element of globalization is of utmost importance for analyzing the labor market implications of globalization in traditional producer countries. Labor market effects should be relatively benign as long as international relations remain restricted to intra industry trade between countries that are similarly advanced economically and characterized by comparable factor endowments. By contrast, competition from below, i.e., from considerably less advanced countries with an abundant endowment of less qualified labor is expected to cause significant adjustment pressure, especially on less

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