eCommerce, Globalization, and Deregulation GSB 383

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eCommerce, Globalization, and DeregulationGSB 383
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The Global Drivers

• Globalization
• Technology
• Consolidation of market economies the spread of
  market-friendly reforms
• The reduction of strategic challenges

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The Global Drivers

• Demography
• The Withering away of the State
• Failed States
• The Miracle of Economic Growth

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Globalization

• Definition of Globalization - I
• The growing economic interdependence of
  countries worldwide through the increasing volume
  and variety of crossborder transactions in goods
  and services and of international capital flows,
  and also through the more rapid and widespread
  diffusion of technology.
• -International Monetary Fund

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Globalization

• Definition of Globalization - II
• Globalization also entails the greater movement
  of people across national borders and the
  relentless rise of similar standards across the
  globe. The increasing similarity of standards is
  driven by the diffusion of technology and the
  diffusion of American popular culture and by the
  dictates of industrial and commercial economic
  organizations. But the central element of
  globalization is that it is driven by companies
  in their relentless search for market share and
  profits. Companies are at the heart of
  globalization.

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Globalization How much?
Capital flows to emerging markets 21 billion in 1970 190 billion in 2000
Foreign direct investment flows 44 billion in 1970 865 billion in 1999
International refugees 1.4 million in 1961 22.3 million in 1999
World trade 311 billion in 1950 7.5 trillion in 2000
International NGOs and Non-Profits 985 in 1956 40,000 in 2000
Sources UN World Investment Report, Institute
for International Finance,UNCTAD, UN High
Commission on Refugees, IMF World Economic
Outlook, Union of International Assoc.,World
Health Org
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Real Economic Growth

Source US Dept of Commerce
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Globalization How Much?
Capital Flows to US
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Globalization How Much?Portfolio Flows to US
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FDI in the US
In Millions of dollars not seasonally adjusted
outflows(-)
1998 1999 2000 I 2000 II 2000 III 2000 IV 2000 Total
All countries 181,764 271,169 47,946 99,968 72,357 91,628 311,899
European Union 153,572 228,079 34,339 73,219 57,966 55,174 220,697
Japan 7,563 9,529 -546 1,328 6,970 4,959 12,710
Source US Dept of Commerce, Bureau of Economic
Analysis
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USA Current Account Saving Rate
Source Deutsche Bank
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Growth in USA IT Investment
Source Leto Research
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The Disruptions from Globalization

• Globalization is everywhere disruptive
• Globalization disrupts ideologies
• Globalization disrupts economies
• Globalization diminishes national sovereignty
• Globalization disrupts ways of living

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The Rise of Technology
Source Robert Fogel
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Exponential Growth Technology
Source Robert Fogel
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Technology The Internet Years to Obtain 50
Million Users
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The Digital Economy What Does It Do?

• Kills Geography
• Kills Time
• Allows new entrants
• Shifts power from buyers to sellers
• Kills transaction costs
• Enables new business processes
• Ultimate instrument of democracy

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The Digital EconomyWhat Does It Do?
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The Digital Economy Kills time
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The Digital Economy Allows for New
Entrants
?2000The New Yorker Collection from
cartoonbank.com. All rights reserved
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The Digital Economy Shifts power from
buyers to sellers

• Amazon.com apologizes
• September 27, 2000

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The Digital Economy Kills transaction
costs
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The Digital Economy Enables New Business
Processes
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The Digital Economy Ultimate instrument of
democracy
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The Digital Economy

• Internet users per 1000 people (1998)

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Internet Users Growth

• Projected Growth, 1999-2005

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The Digital Economy

• Internet Generated Revenue 1996-2002

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Number of Web Sites

• Number of web sites 1993-1999

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Online Languages
Percentage of web pages per language
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The Digital Economy

• Registered hosts on the Internet

Source Matrix information and Directory Services