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A Global version of Locals (a case study on globalization, media & the socio-cultural trends in Türkiye)

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• Published: 06 March 2023
• Volume 3 , article number  54 , ( 2023 )

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• Eyad Trabulsi   ORCID: orcid.org/0000-0001-5123-2897 1  

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Globalization creates opportunities to local communities if it is addressed via an organized process and by well-structured institutions. Economy has played a key role in promoting globalization, thus, other aspects/dimensions of globalization (i.e. Socio-Cultural, Communicative, and Political) might be more essential for globalization in order to influence local communities. The paper explores the context of trends captured in the Turkish urban & national plans, their potential consequences (opportunities and challenges), and taking into consideration ‘ globalization ’ impact within their broader dimensions (e.g. Socio-Cultural); in order to achieve this mission, and to identify the future trends, the paper conducts: Text /discourse analysis, capturing the most frequently used words in 2 of the main Turkish urban /national plans; Keywords relevance measure. The paper also draws future scenarios, based on the captured trends, forecasting the future potentials and risks.The paper question is: How globalization trends residing in Turkish urban & national plans influence the Future Scenarios of Türkiye? The study is important in order to draw attention to the significance of Socio-Cultural dimension of globalization in shaping the future of nations, and to the profound consequences of its impact. It demonstrates how powerful is Socio-Cultural aspect of urban /national planning in preparing the ground for better future, in light of the significant challenges of globalization on local communities /states.

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Trabulsi, E. A Global version of Locals (a case study on globalization, media & the socio-cultural trends in Türkiye). SN Soc Sci 3 , 54 (2023). https://doi.org/10.1007/s43545-023-00635-5

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Economic Consequences of Globalisation: Case Study of Thailand

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The paper reviews empirical works examining the effect of globalisation in Thailand, beginning with a discussion of its integration into the economy. Three drivers of economic globalisation are emphasised: international trade, foreign direct investment, and cross-border labour mobility. The findings point to globalisation’s potential to create a favourable economic impact. Opening up to international trade could promote productivity and drive economic growth. Large foreign direct investment inflows enticed by export-oriented industrialisation are likely to generate horizontal technological spillovers within a given industry; vertical spillovers through the linkages were not a robust result. There is no evidence that employing foreign workers retards firm productivity; rather, the opposite is the case. Well-performing firms are in a position to attract foreign workers and maintain production capacity. Global production sharing (GPS) does not necessarily mean the participating countries are trapped at the low end of the quality ladder. The Thai experience supports the case for further globalising its economy. Any possible side effects of globalisation can be mitigated by other policies such as strengthening the social safety net. 

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A Closer Look: Cases of Globalization

Globalization expands and accelerates the movement and exchange of ideas and commodities over vast distances. It is common to discuss the phenomenon from an abstract, global perspective, but in fact globalization's most important impacts are often highly localized. This page explores the various manifestations of interconnectedness in the world, noting how globalization affects real people and places.

Articles and Documents

Chinese imports and contraband make bolivia's textile trade a casualty of globalization (july 6, 2012).

Domestic manufacturing in Bolivia has been crushed by the influx of cheap foreign goods, mainly from China. Bolivian products cannot compete in the global market because of the small scale production, the strict labor law which keeps labor cost high, and the frequent political unrest which hurt competitiveness by raising costs. The Bolivian economy is reliant on raw material extraction, and its trade deficit keeps widening. Although the government is making an effort to raise tariffs and create state-owned companies to save jobs, globalization seems to have caused more bad than good in Bolivia. (Associated Press)

Is France on Course to Bid Adieu to Globalization? (July 21, 2011)

Many in France are blaming globalization for causing high youth unemployment and a stagnated, post recessionary economy. With the 2012 presidential election approaching, the theme of “deglobalization” appears to be growing in popularity due to its nationalistic appeal. Left-wing candidates, including member of Parliament Arnaud Montebourg, are advocating European-based protectionism, and saying that “globalization” has caused France’s high rates of youth unemployment, destroyed natural resources, and made France vulnerable to the fluctuations of interconnected financial markets. While Montebourg is not a likely front-runner for the presidency, his surprising popularity has highlighted the French peoples’ disillusionment and has prompted a discussion of globalization. Ideally, this will “force politicians to work harder on their answers”, and they will work to improve France’s economic recovery plans and their role in a globalized system. (YaleGlobal Online)

350 Movement Video from Bolivia's Climate Summit (April 22, 2010)

Immigrants now see better prospects back home (december 8, 2009), the human effect of globalization (august 30, 2009), following the trail of toxic trash (august 17, 2009), will the crisis reverse global migration (july 17, 2009), in many business schools, the bottom line is in english (april 10, 2007), globalization and child labor: the cause can also be a cure (march 13, 2007), landless workers movement: the difficult construction of a new world (september 29, 2006), for african cotton farmers, more crops equal less pay (august 15, 2006), meet the losers of globalization (march 8, 2006), thanks to corporations instead of democracy we get baywatch (september 13, 2005), global health priorities – priorities of the wealthy (april 22, 2005), guatemala: supermarket giants crush farmers (december 28, 2004).

This article looks at the effects of economic liberalization in Latin America's food retailing system and identifies small scale farmers as the "losers of globalization." Corporate transformations of the regional food sector and its failed trickle-down economics have not generated wealth but rather increased the social inequalities in the region, forcing smaller growers to migrate. ( New York Times )

Campesinos vs Oil Industry: Bolivia Takes On Goliath of Globalization (December 5, 2004)

Privatizations: the end of a cycle of plundering (november 1, 2004), globalization: europe's wary embrace (november 1, 2004), latin american indigenous movements in the context of globalization (october 11, 2004), mixed blessings of the megacities (september 24, 2004), dominican republic: us trade pact fails pregnant women - cafta fails to protect against rampant job discrimination (april 22, 2004), workers face uphill battle on road to globalization (january 27, 2004), money for nothing and calls for free (february 17, 2004), the next great wall (january 19, 2004).

This article examines the growth of geographical, physical and, increasingly, digital immigration barriers to the free movement of people between rich and poor countries. ( TomDispatch.com )

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Globalization and Economic Growth: Empirical Evidence on the Role of Complementarities

Parisa samimi.

1 Faculty of Management, Universiti Teknologi Malaysia (UTM), Johor, Malaysia

2 Department of Management, Mobarakeh Branch, Islamic Azad University, Isfahan, Iran

Hashem Salarzadeh Jenatabadi

3 Applied Statistics Department, Economics and Administration Faculty, University of Malaya, Kuala Lumpur, Malaysia

Conceived and designed the experiments: PS. Performed the experiments: PS. Analyzed the data: PS. Contributed reagents/materials/analysis tools: PS HSJ. Wrote the paper: PS HSJ.

Associated Data

This study was carried out to investigate the effect of economic globalization on economic growth in OIC countries. Furthermore, the study examined the effect of complementary policies on the growth effect of globalization. It also investigated whether the growth effect of globalization depends on the income level of countries. Utilizing the generalized method of moments (GMM) estimator within the framework of a dynamic panel data approach, we provide evidence which suggests that economic globalization has statistically significant impact on economic growth in OIC countries. The results indicate that this positive effect is increased in the countries with better-educated workers and well-developed financial systems. Our finding shows that the effect of economic globalization also depends on the country’s level of income. High and middle-income countries benefit from globalization whereas low-income countries do not gain from it. In fact, the countries should receive the appropriate income level to be benefited from globalization. Economic globalization not only directly promotes growth but also indirectly does so via complementary reforms.

Introduction

Globalization, as a complicated process, is not a new phenomenon and our world has experienced its effects on different aspects of lives such as economical, social, environmental and political from many years ago [1] – [4] . Economic globalization includes flows of goods and services across borders, international capital flows, reduction in tariffs and trade barriers, immigration, and the spread of technology, and knowledge beyond borders. It is source of much debate and conflict like any source of great power.

The broad effects of globalization on different aspects of life grab a great deal of attention over the past three decades. As countries, especially developing countries are speeding up their openness in recent years the concern about globalization and its different effects on economic growth, poverty, inequality, environment and cultural dominance are increased. As a significant subset of the developing world, Organization of Islamic Cooperation (OIC) countries are also faced by opportunities and costs of globalization. Figure 1 shows the upward trend of economic globalization among different income group of OIC countries.

Although OICs are rich in natural resources, these resources were not being used efficiently. It seems that finding new ways to use the OICs economic capacity more efficiently are important and necessary for them to improve their economic situation in the world. Among the areas where globalization is thought, the link between economic growth and globalization has been become focus of attention by many researchers. Improving economic growth is the aim of policy makers as it shows the success of nations. Due to the increasing trend of globalization, finding the effect of globalization on economic growth is prominent.

The net effect of globalization on economic growth remains puzzling since previous empirical analysis did not support the existent of a systematic positive or negative impact of globalization on growth. Most of these studies suffer from econometrics shortcoming, narrow definition of globalization and small number of countries. The effect of economic globalization on the economic growth in OICs is also ambiguous. Existing empirical studies have not indicated the positive or negative impact of globalization in OICs. The relationship between economic globalization and economic growth is important especially for economic policies.

Recently, researchers have claimed that the growth effects of globalization depend on the economic structure of the countries during the process of globalization. The impact of globalization on economic growth of countries also could be changed by the set of complementary policies such as improvement in human capital and financial system. In fact, globalization by itself does not increase or decrease economic growth. The effect of complementary policies is very important as it helps countries to be successful in globalization process.

In this paper, we examine the relationship between economic globalization and growth in panel of selected OIC countries over the period 1980–2008. Furthermore, we would explore whether the growth effects of economic globalization depend on the set of complementary policies and income level of OIC countries.

The paper is organized as follows. The next section consists of a review of relevant studies on the impact of globalization on growth. Afterward the model specification is described. It is followed by the methodology of this study as well as the data sets that are utilized in the estimation of the model and the empirical strategy. Then, the econometric results are reported and discussed. The last section summarizes and concludes the paper with important issues on policy implications.

Literature Review

The relationship between globalization and growth is a heated and highly debated topic on the growth and development literature. Yet, this issue is far from being resolved. Theoretical growth studies report at best a contradictory and inconclusive discussion on the relationship between globalization and growth. Some of the studies found positive the effect of globalization on growth through effective allocation of domestic resources, diffusion of technology, improvement in factor productivity and augmentation of capital [5] , [6] . In contrast, others argued that globalization has harmful effect on growth in countries with weak institutions and political instability and in countries, which specialized in ineffective activities in the process of globalization [5] , [7] , [8] .

Given the conflicting theoretical views, many studies have been empirically examined the impact of the globalization on economic growth in developed and developing countries. Generally, the literature on the globalization-economic growth nexus provides at least three schools of thought. First, many studies support the idea that globalization accentuates economic growth [9] – [19] . Pioneering early studies include Dollar [9] , Sachs et al. [15] and Edwards [11] , who examined the impact of trade openness by using different index on economic growth. The findings of these studies implied that openness is associated with more rapid growth.

In 2006, Dreher introduced a new comprehensive index of globalization, KOF, to examine the impact of globalization on growth in an unbalanced dynamic panel of 123 countries between 1970 and 2000. The overall result showed that globalization promotes economic growth. The economic and social dimensions have positive impact on growth whereas political dimension has no effect on growth. The robustness of the results of Dreher [19] is approved by Rao and Vadlamannati [20] which use KOF and examine its impact on growth rate of 21 African countries during 1970–2005. The positive effect of globalization on economic growth is also confirmed by the extreme bounds analysis. The result indicated that the positive effect of globalization on growth is larger than the effect of investment on growth.

The second school of thought, which supported by some scholars such as Alesina et al. [21] , Rodrik [22] and Rodriguez and Rodrik [23] , has been more reserve in supporting the globalization-led growth nexus. Rodriguez and Rodrik [23] challenged the robustness of Dollar (1992), Sachs, Warner et al. (1995) and Edwards [11] studies. They believed that weak evidence support the idea of positive relationship between openness and growth. They mentioned the lack of control for some prominent growth indicators as well as using incomprehensive trade openness index as shortcomings of these works. Warner [24] refuted the results of Rodriguez and Rodrik (2000). He mentioned that Rodriguez and Rodrik (2000) used an uncommon index to measure trade restriction (tariffs revenues divided by imports). Warner (2003) explained that they ignored all other barriers on trade and suggested using only the tariffs and quotas of textbook trade policy to measure trade restriction in countries.

Krugman [25] strongly disagreed with the argument that international financial integration is a major engine of economic development. This is because capital is not an important factor to increase economic development and the large flows of capital from rich to poor countries have never occurred. Therefore, developing countries are unlikely to increase economic growth through financial openness. Levine [26] was more optimistic about the impact of financial liberalization than Krugman. He concluded, based on theory and empirical evidences, that the domestic financial system has a prominent effect on economic growth through boosting total factor productivity. The factors that improve the functioning of domestic financial markets and banks like financial integration can stimulate improvements in resource allocation and boost economic growth.

The third school of thoughts covers the studies that found nonlinear relationship between globalization and growth with emphasis on the effect of complementary policies. Borensztein, De Gregorio et al. (1998) investigated the impact of FDI on economic growth in a cross-country framework by developing a model of endogenous growth to examine the role of FDI in the economic growth in developing countries. They found that FDI, which is measured by the fraction of products produced by foreign firms in the total number of products, reduces the costs of introducing new varieties of capital goods, thus increasing the rate at which new capital goods are introduced. The results showed a strong complementary effect between stock of human capital and FDI to enhance economic growth. They interpreted this finding with the observation that the advanced technology, brought by FDI, increases the growth rate of host economy when the country has sufficient level of human capital. In this situation, the FDI is more productive than domestic investment.

Calderón and Poggio [27] examined the structural factors that may have impact on growth effect of trade openness. The growth benefits of rising trade openness are conditional on the level of progress in structural areas including education, innovation, infrastructure, institutions, the regulatory framework, and financial development. Indeed, they found that the lack of progress in these areas could restrict the potential benefits of trade openness. Chang et al. [28] found that the growth effects of openness may be significantly improved when the investment in human capital is stronger, financial markets are deeper, price inflation is lower, and public infrastructure is more readily available. Gu and Dong [29] emphasized that the harmful or useful growth effect of financial globalization heavily depends on the level of financial development of economies. In fact, if financial openness happens without any improvement in the financial system of countries, growth will replace by volatility.

However, the review of the empirical literature indicates that the impact of the economic globalization on economic growth is influenced by sample, econometric techniques, period specifications, observed and unobserved country-specific effects. Most of the literature in the field of globalization, concentrates on the effect of trade or foreign capital volume (de facto indices) on economic growth. The problem is that de facto indices do not proportionally capture trade and financial globalization policies. The rate of protections and tariff need to be accounted since they are policy based variables, capturing the severity of trade restrictions in a country. Therefore, globalization index should contain trade and capital restrictions as well as trade and capital volume. Thus, this paper avoids this problem by using a comprehensive index which called KOF [30] . The economic dimension of this index captures the volume and restriction of trade and capital flow of countries.

Despite the numerous studies, the effect of economic globalization on economic growth in OIC is still scarce. The results of recent studies on the effect of globalization in OICs are not significant, as they have not examined the impact of globalization by empirical model such as Zeinelabdin [31] and Dabour [32] . Those that used empirical model, investigated the effect of globalization for one country such as Ates [33] and Oyvat [34] , or did it for some OIC members in different groups such as East Asia by Guillaumin [35] or as group of developing countries by Haddad et al. [36] and Warner [24] . Therefore, the aim of this study is filling the gap in research devoted solely to investigate the effects of economic globalization on growth in selected OICs. In addition, the study will consider the impact of complimentary polices on the growth effects of globalization in selected OIC countries.

Model Specification

This study uses a dynamic panel data model to investigate the effect of globalization on economic growth. The model can be shown as follows:

Methodology and Data

This paper applies the generalized method of moments (GMM) panel estimator first suggested by Anderson and Hsiao [38] and later developed further by Arellano and Bond [39] . This flexible method requires only weak assumption that makes it one of the most widely used econometric techniques especially in growth studies. The dynamic GMM procedure is as follow: first, to eliminate the individual effect form dynamic growth model, the method takes differences. Then, it instruments the right hand side variables by using their lagged values. The last step is to eliminate the inconsistency arising from the endogeneity of the explanatory variables.

The consistency of the GMM estimator depends on two specification tests. The first is a Sargan test of over-identifying restrictions, which tests the overall validity of the instruments. Failure to reject the null hypothesis gives support to the model. The second test examines the null hypothesis that the error term is not serially correlated.

The GMM can be applied in one- or two-step variants. The one-step estimators use weighting matrices that are independent of estimated parameters, whereas the two-step GMM estimator uses the so-called optimal weighting matrices in which the moment conditions are weighted by a consistent estimate of their covariance matrix. However, the use of the two-step estimator in small samples, as in our study, has problem derived from proliferation of instruments. Furthermore, the estimated standard errors of the two-step GMM estimator tend to be small. Consequently, this paper employs the one-step GMM estimator.

In the specification, year dummies are used as instrument variable because other regressors are not strictly exogenous. The maximum lags length of independent variable which used as instrument is 2 to select the optimal lag, the AR(1) and AR(2) statistics are employed. There is convincing evidence that too many moment conditions introduce bias while increasing efficiency. It is, therefore, suggested that a subset of these moment conditions can be used to take advantage of the trade-off between the reduction in bias and the loss in efficiency. We restrict the moment conditions to a maximum of two lags on the dependent variable.

Data and Empirical Strategy

We estimated Eq. (1) using the GMM estimator based on a panel of 33 OIC countries. Table S1 in File S1 lists the countries and their income groups in the sample. The choice of countries selected for this study is primarily dictated by availability of reliable data over the sample period among all OIC countries. The panel covers the period 1980–2008 and is unbalanced. Following [40] , we use annual data in order to maximize sample size and to identify the parameters of interest more precisely. In fact, averaging out data removes useful variation from the data, which could help to identify the parameters of interest with more precision.

The dependent variable in our sample is logged per capita real GDP, using the purchasing power parity (PPP) exchange rates and is obtained from the Penn World Table (PWT 7.0). The economic dimension of KOF index is derived from Dreher et al. [41] . We use some other variables, along with economic globalization to control other factors influenced economic growth. Table S2 in File S2 shows the variables, their proxies and source that they obtain.

We relied on the three main approaches to capture the effects of economic globalization on economic growth in OIC countries. The first one is the baseline specification (Eq. (1)) which estimates the effect of economic globalization on economic growth.

The second approach is to examine whether the effect of globalization on growth depends on the complementary policies in the form of level of human capital and financial development. To test, the interactions of economic globalization and financial development (KOF*FD) and economic globalization and human capital (KOF*HCS) are included as additional explanatory variables, apart from the standard variables used in the growth equation. The KOF, HCS and FD are included in the model individually as well for two reasons. First, the significance of the interaction term may be the result of the omission of these variables by themselves. Thus, in that way, it can be tested jointly whether these variables affect growth by themselves or through the interaction term. Second, to ensure that the interaction term did not proxy for KOF, HCS or FD, these variables were included in the regression independently.

In the third approach, in order to study the role of income level of countries on the growth effect of globalization, the countries are split based on income level. Accordingly, countries were classified into three groups: high-income countries (3), middle-income (21) and low-income (9) countries. Next, dummy variables were created for high-income (Dum 3), middle-income (Dum 2) and low-income (Dum 1) groups. Then interaction terms were created for dummy variables and KOF. These interactions will be added to the baseline specification.

Findings and Discussion

This section presents the empirical results of three approaches, based on the GMM -dynamic panel data; in Tables 1 – 3 . Table 1 presents a preliminary analysis on the effects of economic globalization on growth. Table 2 displays coefficient estimates obtained from the baseline specification, which used added two interaction terms of economic globalization and financial development and economic globalization and human capital. Table 3 reports the coefficients estimate from a specification that uses dummies to capture the impact of income level of OIC countries on the growth effect of globalization.

The results in Table 1 indicate that economic globalization has positive impact on growth and the coefficient is significant at 1 percent level. The positive effect is consistent with the bulk of the existing empirical literature that support beneficial effect of globalization on economic growth [9] , [11] , [13] , [19] , [42] , [43] .

According to the theoretical literature, globalization enhances economic growth by allocating resources more efficiently as OIC countries that can be specialized in activities with comparative advantages. By increasing the size of markets through globalization, these countries can be benefited from economic of scale, lower cost of research and knowledge spillovers. It also augments capital in OICs as they provide a higher return to capital. It has raised productivity and innovation, supported the spread of knowledge and new technologies as the important factors in the process of development. The results also indicate that growth is enhanced by lower level of government expenditure, lower level of inflation, higher level of human capital, deeper financial development, more domestic investment and better institutions.

Table 2 represents that the coefficients on the interaction between the KOF, HCS and FD are statistically significant at 1% level and with the positive sign. The findings indicate that economic globalization not only directly promotes growth but also indirectly does via complementary reforms. On the other hand, the positive effect of economic globalization can be significantly enhanced if some complementary reforms in terms of human capital and financial development are undertaken.

In fact, the implementation of new technologies transferred from advanced economies requires skilled workers. The results of this study confirm the importance of increasing educated workers as a complementary policy in progressing globalization. However, countries with higher level of human capital can be better and faster to imitate and implement the transferred technologies. Besides, the financial openness brings along the knowledge and managerial for implementing the new technology. It can be helpful in improving the level of human capital in host countries. Moreover, the strong and well-functioned financial systems can lead the flow of foreign capital to the productive and compatible sectors in developing countries. Overall, with higher level of human capital and stronger financial systems, the globalized countries benefit from the growth effect of globalization. The obtained results supported by previous studies in relative to financial and trade globalization such as [5] , [27] , [44] , [45] .

Table (3 ) shows that the estimated coefficients on KOF*dum3 and KOF*dum2 are statistically significant at the 5% level with positive sign. The KOF*dum1 is statistically significant with negative sign. It means that increase in economic globalization in high and middle-income countries boost economic growth but this effect is diverse for low-income countries. The reason might be related to economic structure of these countries that are not received to the initial condition necessary to be benefited from globalization. In fact, countries should be received to the appropriate income level to be benefited by globalization.

The diagnostic tests in tables 1 – 3 show that the estimated equation is free from simultaneity bias and second-order correlation. The results of Sargan test accept the null hypothesis that supports the validity of the instrument use in dynamic GMM.

Conclusions and Implications

Numerous researchers have investigated the impact of economic globalization on economic growth. Unfortunately, theoretical and the empirical literature have produced conflicting conclusions that need more investigation. The current study shed light on the growth effect of globalization by using a comprehensive index for globalization and applying a robust econometrics technique. Specifically, this paper assesses whether the growth effects of globalization depend on the complementary polices as well as income level of OIC countries.

Using a panel data of OIC countries over the 1980–2008 period, we draw three important conclusions from the empirical analysis. First, the coefficient measuring the effect of the economic globalization on growth was positive and significant, indicating that economic globalization affects economic growth of OIC countries in a positive way. Second, the positive effect of globalization on growth is increased in countries with higher level of human capital and deeper financial development. Finally, economic globalization does affect growth, whether the effect is beneficial depends on the level of income of each group. It means that economies should have some initial condition to be benefited from the positive effects of globalization. The results explain why some countries have been successful in globalizing world and others not.

The findings of our study suggest that public policies designed to integrate to the world might are not optimal for economic growth by itself. Economic globalization not only directly promotes growth but also indirectly does so via complementary reforms.

The policy implications of this study are relatively straightforward. Integrating to the global economy is only one part of the story. The other is how to benefits more from globalization. In this respect, the responsibility of policymakers is to improve the level of educated workers and strength of financial systems to get more opportunities from globalization. These economic policies are important not only in their own right, but also in helping developing countries to derive the benefits of globalization.

However, implementation of new technologies transferred from advanced economies requires skilled workers. The results of this study confirm the importance of increasing educated workers as a complementary policy in progressing globalization. In fact, countries with higher level of human capital can better and faster imitate and implement the transferred technologies. The higher level of human capital and certain skill of human capital determine whether technology is successfully absorbed across countries. This shows the importance of human capital in the success of countries in the globalizing world.

Financial openness in the form of FDI brings along the knowledge and managerial for implementing the new technology. It can be helpful in upgrading the level of human capital in host countries. Moreover, strong and well-functioned financial systems can lead the flow of foreign capital to the productive and compatible sectors in OICs.

In addition, the results show that economic globalization does affect growth, whether the effect is beneficial depends on the level of income of countries. High and middle income countries benefit from globalization whereas low-income countries do not gain from it. As Birdsall [46] mentioned globalization is fundamentally asymmetric for poor countries, because their economic structure and markets are asymmetric. So, the risks of globalization hurt the poor more. The structure of the export of low-income countries heavily depends on primary commodity and natural resource which make them vulnerable to the global shocks.

The major research limitation of this study was the failure to collect data for all OIC countries. Therefore future research for all OIC countries would shed light on the relationship between economic globalization and economic growth.

Supporting Information

Sample of Countries.

The Name and Definition of Indicators.

Funding Statement

The study is supported by the Ministry of Higher Education of Malaysia, Malaysian International Scholarship (MIS). The funders had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.

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The State of Globalization in 2023

• Steven A. Altman
• Caroline R. Bastian

Data disproves the notion that the world has become more regionalized in recent years.

Plummeting flows of trade, capital, and people at the beginning of the Covid-19 pandemic prompted a wave of speculation about the end of globalization, and Russia’s invasion of Ukraine brought even more predictions of a retreat toward national self-sufficiency. But, according to research for the latest DHL Global Connectedness Index, international flows show no signs of a sustained downturn. The data shows a broad pattern of decoupling between the U.S. and China, but the flows of countries that are geopolitically aligned with the U.S. and China do not — at least yet — indicate a broader split between rival blocs. Nor is there evidence that globalization is giving way to regionalization. While companies do need to adjust for heightened geopolitical tensions, they should not abandon global strategies. Corporate deglobalization, in fact, could be a riskier path than making focused adjustments to mitigate geopolitical risks.

Three key questions lie at the heart of debates about whether global crises and escalating geopolitical tensions have begun to reverse globalization: Has the growth of cross-border trade, capital, information and people flows gone into reverse? Are geopolitical tensions fracturing the world economy into rival blocs? And is globalization giving way to regionalization? The answer to all three questions — despite evidence of U.S.-China decoupling — is still “no.”

• Steven A. Altman is a senior research scholar, adjunct assistant professor, and director of the DHL Initiative on Globalization at the NYU Stern Center for the Future of Management .
• CB Caroline R. Bastian is a research scholar at the DHL Initiative on Globalization.

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Samsung: Globalization Effects on Growth and Performance

Company background.

Samsung Electronics is a South Korean multinational corporation that was established by Byung-Chull Lee in the late 1930s as a grocery store for trade export business. By 1948, the company expanded to milling and confectionery industries before it became a co-operation in 1951. In 1958, Lee founded the Samsung Foundation of Culture to promote and propagate Korean traditional art. Between the mid-1950s and late 1970s, Samsung extended its business to insurance, mass communication, oceanic equipment, and chemical industries.

In 1969, the famous Samsung Electronics came into establishment. Later, in the late 1980s, Kun-Hee Lee (the son of Byung-Chull Lee) inherited the business from his father. He became the head of Samsung Electronics. Since his takeover, the business underwent a significant revolution in the world of electronics. The company grew to establish various affiliate companies and universities to nurture students’ talents. During the 1990s, Samsung Electronics focused on the establishment of electronics companies in various international localities such as the United States, Germany, China, Spain, Britain, and Mexico, among other global nations.

The establishment of electronics factories led to significant globalisation of the business. With the global advancement in technology, the company featured in both local and international markets with high-tech consumer electronics. Indeed, in 1993, Samsung presented the lightest and classy mobile phone of its time (Samsung Electronics Annual Report 2013).

Today, the Samsung Group is the largest company in South Korea and the second-largest consumer electronics corporation internationally. Samsung Electronics’ commodities range from semiconductor chips and LCD panels to television and mobile phone technology. Many companies in the Southern Korean region depend on Samsung Group for electronics, components, and materials (Samsung Electronics Annual Report 2013). This dependency has enabled the company to gain enormous control over the electronics industry to the extent of leading to the closure of some smaller-sized electronics stores due to the agonising competition.

The Effect of Globalisation on Growth and Performance

Zhou, Wu, and Barnes (2012) reveal that globalisation significantly influences the growth and performance of an organisation. Correspondingly, globalisation is a crucial factor that has shaped the business landscape of Samsung Electronics. South Korea houses various giant companies that generate pioneering technology. Samsung Electronics is such a giant electronics technology conglomeration that has taken advantage of globalisation and the dynamic advancement of technology to expand its business internationally.

According to Chang (2012), globalisation is not an emerging spectacle in the twenty-first century. Nevertheless, technology and global trade have changed many aspects of conducting business in areas such as production, delivery, monitoring, market trends, and communication, among others. The integration of global economies, communities, and their philosophies through the ever-growing global trade, communication, and immigration has led to the witnessed change in business trends.

As a result, businesses have had to re-evaluate the effects of embracing globalisation on their growth. In the context of globalisation, Samsung Electronics has remained on the forefront to differentiate its products in an attempt to meet the demands of global markets. Samsung Electronics is driven by its three messages of inventing new technology, delivering state-of-the-art products, and offering innovative solutions to its consumers around the world (Uchitelle 2005).

Shifting of Samsung Electronics to Facilities outside Korea

The pursuit of technology and globalisation has influenced various business decisions in Samsung Electronics. Globalisation has tremendously increased competition for Samsung Electronics and other major players in the electronics industry (Freund, Trahan, & Vasudevan 2007). Globalisation has led to the shifting of Samsung Electronics facilities out of Korea to lower production costs. Asia has undergone dramatic shifts in terms of production. This situation has led to a reduction in the company’s operational costs.

As a result, many multinational conglomerates, including Samsung Electronics, have moved their facilities to Southeast Asia in an attempt to maximise profits (Thoumrungroje 2004). Employee compensation rates and production costs have moved up the value chain in Korea, Japan, and China, among other initial localities of its electronics plants (Kim 1998). To cut down costs, Samsung Electronics has opted to move its electronics plants to other Asian countries such as Indonesia, Vietnam, Cambodia, and the Philippines among other nations.

The availability of cheap labour in these countries, especially in the undeveloped districts, has also favoured Samsung Electronics’ business. In addition, the impending establishment of the Asian Economic Community (EAC) as a common regional market trade strategy and the anticipated elimination of trade barricades and tariffs in Asian countries have also compelled Samsung Electronics to establish production plants and its associated businesses in Asia (Anwar 2007).

Increase in Sales and Market Share in Europe

Samsung Electronics has maintained a significant competitive gap with reference to other players in the electronics industry such as Apple Inc., Sony Electronics, Nokia, and LG Electronics among other companies (Sherr & Ramstad 2013). The diversification of Samsung Electronics’ products has resulted in increased sales and market share in the European markets in the past three to five years.

The emergence of its Samsung Galaxy products that are driven by the power of the recently invented Android Operating System has been a great achievement for the business (Lawson 2014). Samsung Electronics has also remained in the lead in terms of proliferation of Liquid Crystal Display (LCD) technology in the local and global markets. Lee and Folkmanis (2013) reveal that Samsung Electronics has gained 50-per cent of the electronics market in Europe. Indeed, the company leads the European Smartphone market.

Sustaining Samsung Electronics’ High-End Strategy in the International Arena

According to the Samsung Electronics Sustainability Report (2014), globalisation has significantly altered the face of Samsung Electronics business. The company has strived to improve its brand by diversifying and differentiating its electronics products to stay at par with international competitiveness that is prevailing in the electronics industry. Globalisation has led to the entrance of many competitors in the electronics industry.

This situation is a challenge to Samsung Electronics since more companies have introduced quality products at comparatively lower prices. In this context, globalisation has increased competition, especially in the mobile phone market. Nevertheless, Samsung Electronics has achieved significant competitive advantage, owing to its state of technology leadership, brand superiority, and economies of scale (Verma & Singh 2010). The company has also maintained its high-end strategy by standardising and modularising its products in an effort to deliver first-class products to consumers.

In conclusion, globalisation has had a significant influence on the growth and performance of Samsung Electronics. However, other electronics giants such as Sony and LG are also keeping up with technological shifts and globalisation pace. This situation is reducing the competition gap, especially in the mobile phone market. The consumer electronics market has become saturated. It is diversifying in a reasonably swift pace, owing to the sudden emergence of new technologies in the electronics industry. Consequently, there is an emerging need for Samsung Electronics to fasten its product development to redefine its business in terms of innovation.

Anwar, R 2007, Globalisation Lesson from Samsung, Web.

Chang, S 2012, ‘Study on human resource management in Korea’s chaebol enterprise: a case study of Samsung Electronics’, International Journal of Human Resource Management, vol. 23 no. 7, pp. 1436-61.

Freund, S, Trahan, E & Vasudevan, G 2007,‘Effects of Global and Industrial Diversification on Firm Value and Operating Performance’, Financial Management (Wiley-Blackwell), vol. 36 no. 4, pp.143-61.

Kim, Y 1998, ‘Technological capabilities and Samsung Electronics’ international production network in East Asia’, Management Decision , vol. 36 no. 7/8, p. 517.

Lawson, S 2014, ‘The Samsung Galaxy’, Fast Company, vol. 1 no. 184, p. 48.

Lee, J & Folkmanis, J 2013, Samsung Shifts Plants From China to Protect Margins , Web.

Samsung Electronics Sustainability Report 2014, Samsung Electronics: Global Harmony with People, Society, and Environment, Sage, London.

Samsung Electronics Annual Report 2013, Samsung Electronics Co. Ltd, Sage, London.

Sherr, I & Ramstad, E 2013, Has Apple Lost Its Cool to Samsung? Web.

Thoumrungroje, A 2014, The Effects of Globalisation on Marketing Strategy and Performance , Web.

Uchitelle, L 2005, ‘Globalisation: It’s Not Just Wages’, New York Times, p. 4.

Verma, S & Singh, P 2010, Organising and Managing in the Era of Globalisation , Response Books, New Delhi, India.

Zhou, L, Wu, A & Barnes, B 2012, ‘The Effects of Early Internationalisation on Performance Outcomes in Young International Ventures: The Mediating Role of Marketing Capabilities’, Journal of International Marketing, vol. 20 no. 4, pp. 25-45.

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IvyPanda. (2023, October 31). Samsung: Globalization Effects on Growth and Performance. https://ivypanda.com/essays/samsung-company-globalisation-effects-on-growth-and-performance/

"Samsung: Globalization Effects on Growth and Performance." IvyPanda , 31 Oct. 2023, ivypanda.com/essays/samsung-company-globalisation-effects-on-growth-and-performance/.

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IvyPanda . 2023. "Samsung: Globalization Effects on Growth and Performance." October 31, 2023. https://ivypanda.com/essays/samsung-company-globalisation-effects-on-growth-and-performance/.

1. IvyPanda . "Samsung: Globalization Effects on Growth and Performance." October 31, 2023. https://ivypanda.com/essays/samsung-company-globalisation-effects-on-growth-and-performance/.

Bibliography

IvyPanda . "Samsung: Globalization Effects on Growth and Performance." October 31, 2023. https://ivypanda.com/essays/samsung-company-globalisation-effects-on-growth-and-performance/.

• Benefits of Globalisation
• Samsung Company's Extent of Globalization
• Impact of Globalisation on Labour
• Samsung Company's Background, Mission and Vision
• Economic Inequality as a Result of Globalisation
• Why Is Samsung Considered a Design Inspiration?
• Apple Lawsuit Against Samsung
• Samsung Company Decision-Making, Strategy and Performance
• South Korea political economy
• SWOT Analysis for Samsung
• Globalization: Trends, Challenges and Opportunities
• India and Globalisation Barriers
• The Two Faces of World Globalization
• Globalization's Impact on China and the USA
• Neo-Liberal Globalisation in Australia

• Open access
• Published: 09 April 2024

A monetary model of global peace and health

• Iman Bastanifar   ORCID: orcid.org/0000-0003-0854-0485 1  

Globalization and Health volume  20 , Article number:  28 ( 2024 ) Cite this article

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This study aims to expand on the concept of peace and health by drawing from Keynes' theory of the economic consequences of peace, in light of the global pandemic experienced in 2020 due to COVID_19.

In this paper, I will elaborate on the concept of ‘security’, as an indicator of peace in the time of biological shocks, in order to expand the definition of Keynesian precautionary motivation. This puts forth a new monetary policy model developed to make contributions to achieving global peace. In so doing, I will calculate the optimal growth rate of discount rate through utilizing the Global Peace Index (GPI), adjusted by the Case Fatality Risk (CFR) of COVID-19 in a dynamic shopping time monetary model. This analysis is comprised of the top 15 GDP countries as well as the 10 most and least peaceful countries in 2020.

The results indicate that households in more peaceful and healthy countries tend to hold less money compared to those in less peaceful and healthy countries. Besides, the discount rate needs to be reduced due to the outbreak of COVID-19 and the decrease in the level of peace in the economy.

Insofar as the imposition of fines through international legal circles on countries with an insignificant health and peace policy will increase the cost of liquidity, other alternative methods of financing will be affor dable for the countries.

Introduction

Keynes criticized the financial impositions on Germany by the Treaty of Versailles. In his work The Economic Consequences of the Peace , Keynes [ 1 ] argued that the exertion of financial pressures on German would lead to its economic demolitions as well as that of Europe and the rest of the world. Keynes's expectations became true when the treaty failed, leading to the Locarno Treaties. These treaties enhanced relations between Germany and the other European powers. Therefore, political treaties must consider the economic aspect of peace.

If COVID-19 impacts countries as a global enemy and disrupts international security, peace, and economic stability, a decision must be made to compensate for the resulting losses. This decision-making process in an uncertain situation within the framework of monetary policy should involve determining the underlying variables in monetary economics, such as the discount rate. As Keynes argued in 1920, Insofar as imposing excessive penalties on Germany would be negatively consequential to the economy of the world, opting for a non-optimal discount rate can also lead to negative consequences like inflation. According to Keynes, inflation is the best way to overturn a society based on a capitalist system [ 2 ], 79). Therefore drawing on Keynes's idea of "The Economic Consequences of the Peace", a model can be designed to determine the optimal discount rate in the context of COVID-19, therby enhancing economic resilience.

Peace should not be deemed as an out-dated issue which has been solely discussed in economics by Keynes in 1920. This notion, however, has been widely discussed nowadays as one of the Sustainable Development Goals for countries by the United Nations in 2023. According to the United Nations' Sustainable Development report in 2023, progress and modern rough clashes around the world are wrecking the worldwide way to peace [ 3 ]. Alarmingly, the year 2022 saw a more than 50 per cent increment in conflict-related civilian passings generally due to the war in Ukraine. At the end of 2022, 108.4 million individuals were coercively uprooted around the globe, with an increment of 19 million compared with the conclusion of 2021 and two and a half times the number of a decadeprior. In 2021, the world experienced the most noteworthy number of deliberate manslaughters within the past two decades. Structural shameful acts, imbalances and developing human rights challenges are putting serene and comprehensive social orders encourage out of reach. To meet the United Nations' Sustainable Development Goals (SDGs) 16 (Peace, Justice, and Strong Institutions) by 2030, taking effective actionsare required to reestablish belief, reinforce the capacity of securing equity for all, and encourage tranquil moves to maintainable advancement.

The concept of peace, within the historical context following the World War I, has largely been examined from myriad of angels in the literature on economics. In this connection, terms such as “defense economics”, “military economics”, “conflict economics”, and “security economics”, have been widely employed to refer to specific aspects of peace, but, more importantly, thus far, the conceptualizations as such have apparently failed to provide an exhaustive explication of how peace-oriented policies at international arenas can lead to peace economics. To add more details to it, peace economics encompasses the designation of political-economic-cultural institutions, and their interrelations and policies are aimed at preventing, mitigating, or resolving any form of latent or actual destructive conflict within and between societies [ 4 ], p. 5–6).

The importance of such conflicts in economics stems from the fact that they bring about a sort of uncertainty in economy and escalates the inability of economic agents and policy makers in making precise future forecasts. To mentioning some facts pertaining to the time period between the years 2020 and 2023 can be adantageous. In the advent of COVID-19, in 2020, the monetary policy response was immediate, with a significant expansionary policy. Monetary policy injected liquidity into the system to compensate for the consequences of COVID-19 in some countries such as the US and the Euro area. However, at the end of COVID-19, in 2022, inflation rose and fell in the most countries around the world. This could be attributed to the consequences of COVID-19 and the Russian attack on Ukraine, which led to an increase in consumer prices in 2022 [ 5 ]. According to the International Monetary Fund report (data from the World Economic Outlook, April 2023), consumer prices in 2022 increased by more than 8% in the US and Europe. In contrast, China experienced an increase of 1.9%, Japan, 2.5%, Taiwan, 2.9%, Malaysia, 3.4%, Indonesia, 4.2%, and South Korea 5.1. Other emerging countries experienced even higher price increases with India 6.7%, South Africa at 6.9% in, Morocco at 6.6, Egypt at 8.8, Mexico at 7.9 and Brazil at 9.1. For some countries with deeper and longer-term economic crises, Inflation was higher. For example, Turkey experienced a consumer price growth 72.3%, Argentine,72.4%, and Iran 49% in 2022. These economic instabilities are due to a lack of accurate knowledge and quantitative measurable models among economic policymakers, particularly, monetary economists. The risks of the spread of COVID-19 and political tensions worldwide contribute to this situation. Therefore, measuring peace is a way to demonstrate the level of uncertainty in a country and make salient contributions to economic agents and policy makers in making influential economic decisions. Nevertheless, measuring peace is the Achilles heel of the peace economics, especially in the time of globe-wide crises such as the outbreak of COVID-19. Yet, this problem has been partly accounted for by Institute for Economics and Peace (IEP) wherein since 2007, the Global Peace Index (GPI) has been the leading measure of global peacefulness. This index measures 23 indicators across three domains: ‘social safety and security’ ‘ongoing domestic and international conflicts’, and ‘militarization’. Detailed indicators can be shown in Fig.  1 .

Peace and COVID-19 Pandemic Impacts on the Time of Shopping [Reference author]

It is important to note that an increase in the GPI indicates a decrease in the level of peace. Therefore, according to the reports issued by the IEP [ 6 ], COVID-19 pandemic has had a negative impact on most of the indicators of the Global Peace Index. Therefore, the level of peace has been influenced by considering the effects of the COVID-19 pandemic (see IEP,  [ 6 ]).

The story does not end there. Another challenge en route the concept of peace is the discretionary monetary policy making in light of the COVID-19 pandemic. With the outbreak of COVID-19, mounting uncertainty surrounded the economy [ 7 ]. As for instance, the implementation of mandatory lockdown policies by health authorities led to the hoarding of essential commodities (e.g., food, medicines) and money [ 8 ]. Therefore, to mitigate the economic impact of these lockdown measures, monetary authorities employed extensive debt policies. However, short-run interventions as such, however effective or not, may lack enough resilience in economic terrains. In that, the economic system would be capable of recovering after a shock. Hence, resilience should not be taken as an equivalent for resistance since it pertains to the ability of the system in preventing the occurrence of shocks [ 4 ], p.9). In addition to the monetary and economic repercussions, significant social and economic impacts were imposed on households due to the mandatory lockdowns. As a corollary, these policies prevent the realization of stable peace sustainable development in societies. This is because the concept of sustainable development is founded on the belief that there exists a long-term understanding. Therefore, it is in conflict with the nature and function of these policies. These lockdown policies along with short-run monetary policies are akin to injustice and unstable Hidden Treaty Peace or a new Carthaginian Peace, where COVID-19 emerges as the victor and the people of the world are the losers. Hence, it is now imperative for monetary authorities worldwide to devise a monetary rule that incorporates a new peace index accounting for biological shocks or wars. This will help establish a fair and stable global environment for the entire world.

Given all these, in this paper, my aim is to elaborate on the characteristics of an optimal monetary policy by considering the impact of peace on long-run equilibrium. Additionally, I will take into account the existence of the COVID-19 pandemic within a dynamic shopping time model. Furthermore, I will measure the rule for the selected countries.

The structure of the paper is as follows: in the second section, I will provide an overview of the literature on the relationship between uncertainty and money as well as the role of COVID-19 in economic uncertainty. In the third section, I will outline the theoretical-analytical model recruited in this study. In the fourth section, I will calculate the optimal discount rate for the top fifteen GDP countries as well as the ten most and least peaceful countries in 2020 and then present the results. In section five, I will discucss the results, and finally, I will conclude at the end.

Literature review

Uncertainty and money relationship.

In his book The General Theory of Employment, Interest and Money , Keynes [ 9 ] believes that one of the reasons for holding money in the liquidity-preference theory is the precautionary-motive. He defines the precautionary motive as "the desire for security as to the future cash equivalent of a certain proportion of total resources". Footnote 1 [ 9 ], p.70).

Fielding and Shortland [ 10 ] used an econometric model to analyze a period from.

1983–1996 in Egypt. Their findings indicate that financial liberalization and financial stability have resulted in reduction in excess liquidity. However, they also observed that violent political incidents tend to increase in excessive liquidity.

Christopher et al. [ 11 ] demonstrated that macroeconomic volatility impacts the cash holding behavior of non–financial firms. They employed the ARCH model and recruited a database spanning from 1957 to 2000. The findings reveal that firms' responses to cash holding behavior were consistent during times of heightened uncertainty. Likewise, Chen et al. [ 12 ] have shown that COVID-19 sharply increased the amount of cash in circulation in Canada during March and April 2020. Such a significant increase in demand for cash is triggered by payment systems and precautionary motives for holding money. Thus, it can be argued that variables that affect uncertainty, such as COVID-19, can increase the demand for money by enhancing the precautionary motive to hold money.

Measuring Footnote 2 EPC and peaceful index induced by COVID-19

Baker et al. [ 13 ] introduce a new index for measuring EPU in the USA. This index utilizes information gathered from newspaper readers. The authors demonstrate that policy uncertainty leads to an increase in divestment and employment reduction in sectors such as defense, health care, finance, and infrastructure construction. Build upon previous research, [ 14 ] examines the effect of disasters on economic policy uncertainty. This study measures uncertainty using three indicators, namely: stock market volatility, newspaper-based economic uncertainty, and subjective uncertainty in business expectation surveys. Besides, in a follow-up study, Baker et al., [ 15 ], they explore the impact of COVID-19 on economic uncertainty. Their findings reveal that 60 percent of the projected decline in output in the USA can be attributed to the uncertainty of COVID-19.

In the same vein, Al-Thaqeb et al. [ 16 ] conducted the research that examined the impact of EPU on the economy. They point out the detrimental effects of governments uncertainty imposes some detrimental effects upon and renders’ decision-making and policies,making it quite difficult for economic authorities. The authors found that high levels of EPU have consequences for all aspects of economic system. They argue that EPU should be taken in to account as a risk management factor in government decision-making. Furthermore, they highlighted that the COVID-19 pandemic has further increased EPU and uncertainty surrounding monetary policy.

In IEP [ 17 ], Global Peace Index (GPI), is applied to measure the levels of peacefulness in countries from 2007 to the present. This index consists of three domains such as social safety and security", "ongoing domestic and international conflict" and "militarization". Each domain includes several indicators. The indicators for the "social safety and security" domain include “number and duration of internal conflicts", "number of deaths from external organized conflict", "number of deaths from internal organized conflict", "number, duration and role in external conflicts", "intensity of organized internal conflict", and "relations with neighboring countries."

The second domain is the "ongoing domestic andinternational conflict" whose indicators are comprised of the "level of perceived criminality in society", "number of refugees and internally displaced people as a percentage of the population", "political instability ", "political terror scale", "impact of terrorism", "number of homicides per 100,000 people", "level of violent crime", "likelihood of violent demonstrations", "number of jailed population per 100,000 people", and "number of internal security officers and police per 100,000 people." According to these indicators, "social safety and security" and "ongoing domestic and international conflict" focus on both internal and external conflicts, the effects of conflicts, and the channels and structures that create them.

The third domain is "Militarization." The indicators for this domain include "military expenditure as a percentage of GDP", "number of armed services personnel per 100,000 people," "volume of transfers of major conventional weapons as recipient (imports) per 100,000 people," "volume of transfers of major conventional weapons as a supplier (exports) per 100,000 people", "financial contribution to UN peacekeeping missions", "nuclear and heavy weapons capabilities", and "ease of access to small arms and light weapons.” In this domain, what is considered to be important is the human resources involved in military affairs and related equipment. However, there have been no indicators introduced for biological or cyber warfare or structures associated with these type of warfare.

In this section, firstly, the conceptual model recruited in this study will be introduced. Secondly, the new shopping time model will be discussed in details.

The conceptual model

In this section, I will embark on analyzing the effect ofthe GPI introduced on shopping time and the opportunity cost of holding money in both environments. This is will be proceeded with-andwithout considering the the COVID-19 pandemic factors.

How does the GPI affect shopping time in the absence of the COVID-19 pandemic?

Example (1): Imagine a household spends two hours per week shopping at a hypermarket A. If, for some reasons, they are unable to reach the hypermarket A due to some obstacles such as gangsters, the household then decides to go to the hypermarket B. The change in the direction can increase the time spent for shopping. It is also assumed that this household does not make purchases online. If these gang groups are formed as a result of racist or factional policies within a country or if they are influenced by terrorist groups, the disruption of security increases the cost of exchange opportunities. In this example, it means an increase in shopping time.

Example (2): Imagine a household living in country C which is currently under imposed trade sanctions. Previously, the country C was not sanctioned for receiving goods X and could import the required goods without any trouble from country A. However, the country C has recently been sanctioned and now has to find alternative ways to purchase good X. For instance, they could ask country B as a mediator to buy from country A and deliver it to country C. It goes without saying that this mediation will increase the time for the sanctioned country to purchase the required goods. Besides, other types of sanctions, such as financial sanctions or Swift sanctions can further prolong the trading process. Therefore, foreign conflicts such as sanctions will add to the cost of exchange opportunities, as demonstrated in this example by the increased shopping time.

Examples 1 and 2 demonstrate that the rise of the GPI indicators that mark a dip in peace, leads to prolonged shopping time. Consequently, given the theory of shopping time, the increased shopping time brings about certain constriction on people's leisure time. As an outcome, extra money has to be spent for the ordinary household provisions. This result is consistent with Keynes's precautionary motive to keep money, which increases the demand for money in uncertain conditions.

How does GPI affect shopping time during the COVID-19 pandemic?

Mandatory lockdown policies against COVID-19 outbreak, such as social distancing measures and restrictions on internal movements, imposed negative impacts on shopping time. To abide by the social distancing guidelines, households who were unable or unwilling to shop online had to spend much more time waiting in shopping queues. Furthermore, those who rely on public transportation to shop had to wait longer hours due to reduced capacity requirements for social distancing.

Restrictions on internal movement and stay-at-home orders force households to limit or postpone their shopping time; therefor, they need to think of alternative ways to handle these situations. By utilizing new payment methods such as E-commerce, households can remarkably contract the amount of time spent for shopping processes. Besides, some may choose to disregard health awes and hold onto their financial capacity and pay any penalties incurred as a result of exceeding limits or postponing their shopping time.

Lockdown policies have been shown to increase feelings of aggression [ 18 ] and also have been linked to a rise in domestic violence [ 19 ]. These effects may contribute to an upturn in criminal behavior, thereby giving raise to the GPI. The enforcement of lockdown policies often  requires the involvement of both policy and military forces. [ 20 ]. This militarized response to the COVID-19 pandemic could lead to an escalation in military expenses and could potentially impact the Peace Index.

The spread of COVID-19 has prompted internal conflicts in many countries. For example, Farzanegan and Gholipour [ 21 ] investigated over 100 countries worldwide during the pandemic years of 2020 and 2021 and found a positive relationship between COVID-19 mortality rates and internal conflict. Countries whose governments had less support in the fight against the virus are more likely to experience internal tensions. There has been concrete evidence in some countries. For example, in the USA, heavily armed protestors gathered at the Michigan State Capitol building in arrange to to voice their opposition to the governor's lockdown order [ 22 ]. In South Africa, police forcefully dispersed anti-lockdown protesters outside [ 23 ]. In Israel, protests against a second national lockdown led to violent clashes between pro-government and anti-government demonstrators [ 24 ]. Therefore, CFR can have an effect on the indicator of "Number and duration of internal conflicts" as shown in Fig.  1 .

Therefore, in a country with stricter health policies, trade restrictions are higher, which in turn has a greater impact on peace. Although the impact of COVID-19 has not been specifically categorized as a domin or indicator of peace variable, according to IEP [ 6 ], the COVID-19 pandemic has had negative effects on the indicators of GPI. Lastly, the influence of GPI and COVID-19 on shopping time and the opportunity cost of holding money can be depicted in Fig.  1 .

These being said, given the recent developments regarding the concept of "peace" in the Keynesian era, it is worth noting that the term "security" in Keynes' definition of precautionary motives should encompass a wide range of dimensions. The conventional definition of the precautionary motive is defined as "the desire for security regarding the future cash equivalent of a certain proportion of total resources" [ 9 ], p.70). I will attempt to expend a new definition of the precautionary motive as a desire for peace regarding the future cash equivalent of a certain proportion of total resources.

The new shopping time model

Modeling money, allows us to determine the proportion of money circulating in the economy. Considering transaction costs, the shopping time model assumes that the less time we spend shopping, the lower the cost we incur [ 25 ].

Equation ( 1 ) shows the direct effect of money on the utility function and the indirect impact of money on a shopping time utility function.

In a shopping time model, money ( \({{\text{m}}}_{t})\) decreases the shopping time, g( \({c}_{t}\) , \({{\text{m}}}_{t}\) ) and increases the leisure time ( \({l}_{t}\) ). [ 26 ]. Leisure is equal to l = 1-n- \({n}^{s}\) ,where n is the time spent in market employment and \({n}^{s}=\) g( \({c}_{t}\) , \({{\text{m}}}_{t}\) ) is the time spent for shopping. U and V represent direct and indirect utility of the representative household. The shopping time function, g( \({c}_{t}\) , \({{\text{m}}}_{t}\) ), is an increasing function of consumption and decreasing function to real money balances: \({g}_{c}\) >0 and \({g}_{m}\le 0\) .

No research has yet been conducted to investigate the extended shopping time during the COVID-19 pandemic, featured with accounting for peace considerations. Building upon the Fig.  1 , I am to develop a new shopping time function that incorporates the impact of both peace and COVID-19 simultaneously.

So Eq. ( 2 ) can be written as follows:

The shopping time function is represented by \({n}^{{p}_{s}}\) . The variable \({p}_{s}\) , represents the level of peace. Any decrease in the peace variable or increase in the GPI index will result in an increase in shopping time. I have taken into consideration the impact of COVID-19 which influences the implementation of lockdown polices. This indicator is known as Case Fatality Risk (CFR), which is the proportion of individuals who die from a specific disease among all those diagnosed with the disease over a certain period of time [ 27 ]. Any increase in \(CFR\) leads to stricter health lockdown policies, which in turn increases shopping time. I demonstrate this effect using the Eq. ( 3 ).

Now, by replacing the Eq. ( 3 ) for the Eq. ( 2 ), the new leisure time is specified as follows:

By substituting Eq. ( 4 ) for leisure time in the utility function, we obtain the new utility function which includes COVID-19 pandemic and peace as follows:

Equation ( 6 ) represents the combined impact of both peace and COVID-19 in a shopping time model.

According to Eq. ( 6 ), COVID-19 and peace both have a specific impact on the a shopping time and real balance. I can define a new definition of the precautionary motive rather than the definition of Keynes: "The desire for peace regarding the future cash equivalent of a certain proportion of total resources."

Now, I introduce a representative household's intertemporal utility function.

where \(\beta\) is a discount factor that presents the time preference of a household, and \({c}_{t}\) is the per capita consumption at time t. The household's constraint is presented by Eq. ( 8 ).

S ubject to:

\({A}_{{\text{t}}}\) is a non-human wealth. \({\uptau }_{{\text{t}}}\) is transfer payment. B is the total debt of a government. \({{\text{i}}}_{{\text{t}}-1}^{g}\) is the government bond yield and \({{\text{i}}}_{{\text{t}}-1}^{{\text{m}}}\) is the interest on money. \({{\text{P}}}_{{\text{t}}}\) is the price index. \({M}_{{\text{t}}-1}\) is the stock of money.

\({Y}_{{\text{t}}}\) is the aggregate production function. \({Y}_{{\text{t}}}=F({{\text{K}}}_{{\text{t}}-1},{{\text{N}}}_{{\text{t}}},{\theta }_{t})\) , where \({{\text{K}}}_{{\text{t}}-1}\) represents the aggregate stock of capital at the end of period t-1, \({{\text{N}}}_{{\text{t}}}\) is the population, and \({\theta }_{t}\) represents technology. \({\uptau }_{{\text{t}}}{{\text{N}}}_{{\text{t}}}\) is the aggregate real value of any lump-sum transfers or taxes and, \(\updelta\) is the rate of depreciation of physical capital. \({{\text{P}}}_{{\text{t}}}\) =(1+ \({\pi }_{t})\) \({{\text{P}}}_{{\text{t}}-1}\) and \({{\text{N}}}_{{\text{t}}}\) =(1+ \(n)\) \({{\text{N}}}_{{\text{t}}-1}\) , where \({\pi }_{t}\) and n are the inflation rate and net growth rate of the population.

Dividing both sides of the budget constraint (8) and (9) by the population ( \({{\text{N}}}_{{\text{t}}}\) ),

Now, the per capita budget constraint becomes:

Now, \({Z(a}_{{\text{t}}},{{\text{k}}}_{{\text{t}}-1})\) is the value function.

If I advance \({a}_{{\text{t}}}\) one period from Eq. ( 11 ), and replace the equivalent variables in Eq. ( 13 ) and also replace equivalent variables of the \({{\text{k}}}_{{\text{t}}}\) from Eq. ( 12 ), the necessary first-order conditions for labor, consumption, real money holdings, and real bond holdings should be derived as follows:

Removing \(\frac{{\partial Z(a}_{{\text{t}}+1},{{\text{k}}}_{{\text{t}}})}{{\partial a}_{{\text{t}}+1}}\) in Eq. ( 16 ) by Eq. ( 17 ), then Eq. ( 18 ) is obtained:

According to Eq. ( 14 ), \(\upbeta {{\text{E}}}_{{\text{t}}}\frac{{\partial Z(a}_{{\text{t}}+1},{{\text{k}}}_{{\text{t}}})}{\partial {k}_{t}}=\frac{{v}_{l}}{{f}_{n}}\) . By removing \(\frac{{\partial Z(a}_{{\text{t}}+1},{{\text{k}}}_{{\text{t}}})}{\partial {k}_{t}}\) from Eq. ( 18 ),

replacing it with \(\frac{{v}_{l}}{{f}_{n}}\) , and omitting \({v}_{l}\) from both side of Eq. ( 18 ), finally, Eq. ( 19 ) is extracted.

The left side represents the value of transaction time saved by holding additional money or the opportunity cost of holding money and can bee shown with \({V}_{m}\) .

This indicates that as the level of peace increases, the value of transaction time saved by additional holding money increases and makes the household to hold less money. This means that a household living in a higher peaceful country holds less money than a one who lives in a less peaceful country. Unlike this, if CFR increases, then the value of transaction time saved by holding additional money will drop significantly. This persuades the household to hold more money. Therefore, households with higher CFR tend to hold more money compared to those in countries with lower CFR.

We know that in (19) \({g}_{m}<0\) then we define \(-{g}_{m}{f}_{n}={V}_{m}\) \(\ge 0\)

According to the theory of loanable funds, discount rate affects both the interest on money and the bond yield. There is a positive relationship between the discount rate and the interest on money, but an inverse relationship between the discount rate and the price of government bonds and their yield [ 28 ], 3).

I simplify this relationship using Eq. ( 20 ):

\(\varphi\) is a parameter and R, is the discount rate. Now, I can rewrite Eq. ( 19 ):

\({V}_{m}=\frac{\varphi }{{R}_{t}}\) . \({e}^{({\varvec{P}}{\varvec{e}}-CFR{)}_{t}}\) And if I subtract "Ln" from both side:

With differentiation from both sides and in a Footnote 3 steady state, where only \(({p}_{e}{)}_{t}\) varies:

Therefore, optimal monetary policy is a policy in which growth rate of discount rate ( \(\dot{R}\) ) equals with the aggregation of changing in the level of paece and case fatality risk.

To measure the peace, Global Peace Index is used. We know that \({\varvec{d}}Pe=-d(GPI)\) .Therefore, we rewrite Eq. ( 22 ) as follows:

According to Eq.  23 , an increase in peace, (negative change in \(I\) , \(d{(GPI)}_{t}<0\) ) would lead to an increase in the growth rate of discount rate. Conversely, a decrease in peace (positive change in \(PI\) , \(d{(GPI)}_{t}>0\) ) would lead to a decrease in the growth rate of discount rate. Similarly, an increase in CFR would lead to a decrease in \(\dot{R}\) , while a decrease in CFR would lead to an increase in the \(\dot{R}\) . Therefore, we have:

This equation shows an optimal monetary policy condition or an optimal growth rate of discount rate with the inclusion of the new peace index during the COVID-19 pandemic. The article presents a monetary model that is innovative because no study has been found that focuses on changes in the CFR and peace index when determining the discount rate during biological and political impulses.

To calculate the optimal growth discount rate based on the Eq. ( 24 ), three groups of countries have been selected. Thanks to the Keynes' book "The Economic Consequences of the Peace," the rationale behind the selected countries is based on the economic and peace Indexes. In terms of the economy, the top 15 GDP countries in 2020 were selected as the first group, as shown in Table ( 1 ). These countries including the United States, China, Japan, Germany, United Kingdom, India, France, Italy, Canada, South Korea, Russia, Brazil, Australia, Spain, and Indonesia. They altogether account for 76% of the world's nominal GDP ( https://globalpeoservices.com ). Moreover, these countries represent approximately 55% of the world's population ( https://www.worldometers.info/world-population ).

When it comes to peace, the 10 most peaceful countries, as shown in Table ( 2 ) are chosen as the second group. The third group includes the 10 least peaceful countries along with the Islamic Republic of Iran (IRI) which is displayed in Table ( 3 ). Although the Islamic Republic of Iran was not initially among the 10 least peaceful countries, it has been included and reviewed by international circles due to the Joint Comprehensive Plan of Action as a world peace treaty.

When it comes to tables, the last column represents the optimal growth rate of the discount rate based on the Eq. ( 23 ), according to which the column dedicated to optimal discount rate presents the aggregation of column of D(GPI) and CFR. D(GPI) indicates the difference between the level of peace between 2019 and Footnote 4 2020. Cases and deaths for COVID-19 are extracted in December 2020 to Footnote 5 calculate Footnote 6 CFR.

These tables show that the monetary authority must simultaneously consider changes in CFR and GPI in order to adjust the optimal growth rate discount rate.

According to Table ( 2 ), the 10 most peaceful countries could increase the growth rate of discount rate since the absolute value of the d(GPI) is greater than the CFR.

According to Table ( 3 ), albeit the GPI decreased in Syria, Libya, the Democratic Republic of the Congo, and the Central African Republic, the growth rate of discount rate should be reduced because its absolute value is lower than the CFR. It is important to note that in some countries, such as the Iran, the monetary authority has not adjusted the discount rate based on the findings presented in Table ( 3 ).

Since the effect of COVID-19 on the GPI can be seen through the lockdown policies, which are considered as the proxy of CFR in this research in Fig.  1 , the higher the CFR, the more severe the lockdown policy against COVID-19. Mathematically, the findings based on Eq.  23 show that the CFR should be added to the GPI for any optimal monetary decision making. The reason for this is that the tightening of lockdown policies and the increased need for drugs and medical equipment to deal with COVID-19 may raise the indicator "number and duration of internal and external conflicts" ultimately worsening the domain of "Society Safety and Security." Keeping people in quarantine can cause violent social behavior or the possibility of demonstrations against a lockdown policy. This can have an impact on the indicators of " Level of violent crime" and "Likelihood of violent demonstrations". Finally, the implementation of lockdown policies may require an increase in military spending which would affect the indicator of " Military expenditure as a percentage of GDP". Therefore, the new peace index should be adjusted by health indicators such as CFR.

It is crystal clear that all tables convey the message that not only the top 15 GDP countries of 2020 had to decrease the growth rate of discount rate but the 10 most peaceful countries as well as the 10 least peaceful countries plus Iran had to decrease it through the specific rule. The obtained results are comparable to an objective events in some countries. For example, in the USA, If the FOMC in the USA wanted to choose the discount rate in December of 2020 by Eq.  23 , it should have used the \(\frac{\left({r}_{2020}-{r}_{2019}\right)}{{r}_{2019}}\) =-0.01734. \({r}_{2019}\) and \({r}_{2020}\) are the discount rates in December of 2019 and 2020 respectively. \({r}_{2019}\) was 2.25 percent. Therefore, the discount rate would have been 2.21 percent in December 2020. However, according to the information from the Federal Reserve Economic Data,(FRED) website ( https://fred.stlouisfed.org/series/INTDSRUSM193N ) , which presents all data on discount rates for many countries, the discount rate in the USA was actually 0.25 percent in the last month of 2020. But, what the FOMC did was reducing the growth rate by 88%, which was not optimal, contrary to the results of this research. This mistake by the FOMC was due to the fact that the decision regarding the discount rate did not take into account the global dimensions of peace and health. According to the International Monetary Fund in 2022, the USA experienced high inflation after COVID-19, [ 30 ].The consequence of this mistake can be observed in the inaccurate estimation of the discount rate due to the advent of COVID-19. This has resulted in the failure of the inflation targeting policy and an increase in core inflation within the US economy. Therefore, monetary authorities around the world such as the FOMC should account for the findings of this paper. The study proposes a new monetary rule based on the level of peace and health. Through so doing, the findings will helpt to manage economic instability by controlling excessive liquidity. During an epidemic like Covid-19, incorrect and excessive changes in monetary variables such as the discount rate can actually exacerbate economic instability and inflation. This can lead to social unrest, tensions, security issues, and accelerate the spread of infectious diseases worldwide. Instead, optimal changes in monetary variables can improve the health and peace conditions in a society by maintaining economic stabilit.

Excessivly lowering the discount rate during the time of COVID-19 can lead to increased debt and liquidity problem. This may further prolong the economy's return to a stable state. Therefore, to improve economic resilience of countries, case fatality risk should be considered to establish a new optimal criterion for monetary authorities to determine the appropriate discount rate. Such a criterion will help enhanceenhance economic resilience when dealing with a biological shock and enable the implantation of the United Nations' Sustainable Development Goals (SDGs) 16 (Peace, Justice, and Strong Institutions) and SDG 3 (Good Health and Well-Being) with minimal volatility.

To reach the goals set by the United Nations, it is recommended that the organization cooperates with the International Monetary Fund and the World Health Organization to create a document called the Optimal Currency Areas for Sustainable Peace and Health (OCASPAHA). This document will establish clear and coordinated monetary policy rules for countries grouped by their levels of Peace and CFR indexes. Countries that violate the protocols outlined in the document by implementing extreme monetary policies will be subject to fines through international legal channels. In addition, the author suggests making changes to the international monetary implementation rules related to bank management, such as Basel. In addition, the author suggests making changes to the international monetary implementation rules related to bank management, such as Basel. The author also recommends modifying monetary policy rules that assist monetary authorities in planning economies, such as Taylor [ 31 ] and Ball [ 32 ]. These adjustments and modifications should be based on peace and CFR indexes to prevent the excessive ease in financing due to on quantitative easing in the economy, and to provide a new opportunity for alternative non-inflationary and resistant alternative.

Conclusions

By expanding Keynes' definition of the term "security" to include peace, the theoretical foundations of the relationship between uncertainty and the precautionary motive for holding money are updated and supplemented. The GPI can be used in monetary policies to measure economic risk and interest rates alongside the CFR during a biological shock such as COVID-19 pandemic. The results indicate that a decrease in peace and the outbreak of COVID-19 compelled monetary authorities to reduce the cost of holding money (discount rate) and decrease the cost of keeping money. This will increase global liquidity and may lead to inflation in coming years. Therefore , countries that contribute to a decline in global peace and health should be penalized by bearing the cost of imbalances caused by changes in the cost of holding money. This penalty increases the cost of holding money and opens up an opportunity for alternative financing. Additionally, the penalty should be based on a specific rule and logic outlined in the international peace treaty, as emphasized by Keynes at the conference of Versailles.

Availability of data and materials

Publicly available data are used in the study. All data relevant to the study are provided with the sources in the article.

According to IEP, GPI, as an index for measuring the peace," Security is one of the domains of the Global Peace Index. Therefore, now, security is a part of the Peace Index.

Economic Policy Uncertainty

This condition is inspired by the study of Reis [ 29 ], who believes that in a steady-state, it is not necessary for money or interest rates to remain unchanged ([ 29 ], 132).

Data are used from https://www.visionofhumanity.org/wp-content/uploads/2020/10/GPI_2020_web.pdf

Data are used from the world bank in 2020 for case and dead of all tables.:// www.worldometers.info/coronavirus

Since at the end of 2019, the recorded statistics were not from COVID-19, for most of the World, CFR in 2019 is considered zero, so CFR in 2020 also indicates changes in it. On the other hand, d(CFR) = CFR at the end of 2020.

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Bastanifar, I. A monetary model of global peace and health. Global Health 20 , 28 (2024). https://doi.org/10.1186/s12992-024-01029-9

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Case Study Questions Class 10 Social Science Economics Chapter 4 Globalization and The Indian Economy

CBSE Class 10 Case Study Questions Social Science Economics Globalization and The Indian Economy. Important Case Study Questions for Class 10 Board Exam Students. Here we have arranged some Important Case Base Questions for students who are searching for Paragraph Based Questions Globalization and The Indian Economy.

At Case Study Questions there will given a Paragraph. In where some Important Questions will made on that respective Case Based Study. There will various types of marks will given 1 marks, 2 marks, 3 marks, 4 marks.

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Republic of India represents a small portion of India’s extensive history, specifically the past half century since 1950. Despite this relatively short time frame, India’s economic regime has undergone two significant transformations. The first occurred with the establishment of the Planning Commission in March 1950, which initiated a distinctive experiment in state-led “growth with social justice” within the framework of parliamentary democracy. However, this policy framework faced considerable challenges in the 1980s, ultimately leading to an unprecedented balance of payments crisis in 1990-91. In response, the Indian government implemented a comprehensive policy regime known as “Liberalisation, Privatisation, and Globalisation” (LPG). These three economic concepts have necessitated a series of ongoing policy reforms by both the Union and State governments. Since June 1991, India has been a member of a select group of 24 countries known as “globalisers” (Dollar 2001). As a collective, these countries experienced a notable acceleration in average growth rates, increasing from 1.4 percent per annum in the 1960s to 2.9 percent per annum in the 1970s, 3.5 percent in the 1980s, and 5 percent in the 1990s.

Q1) How globalization had impacted Indian economy? Mark 2

Answer Globalization has significantly impacted the Indian economy. It has led to increased foreign investment, greater export opportunities, and technological advancements. While it has stimulated economic growth and created jobs, it has also brought challenges like income inequality and vulnerability to global market fluctuations, necessitating adaptive economic policies.

Q2) What do you understand by the term multi national companies? Mark 1

Answer Multinational companies (MNCs) are large corporations that operate in multiple countries, conducting business activities, production, and trade across international borders

Q3) What do you understand by the term foreign investment? Mark 1

Answer Foreign investment refers to capital, assets, or resources from one country invested in another, typically for business expansion, ownership, or profit.

Case Study 2:

India has implemented restrictions on Chinese goods and components by imposing import duties, as the influx of products from China had previously posed a threat to domestic manufacturers. Chinese toys were particularly prevalent in the Indian market not too long ago.

However, as part of the government’s Atmanirbhar Bharat policy, which emphasizes the promotion of local products, the import of toys, games, and sports equipment from China is gradually decreasing.

According to the Ministry of Commerce, the import of these Chinese products has decreased from $451.71 million in 2018-19 to $206.11 million in 2021 (between April 2021 and January 2022).

To regulate the import of cheap and low-quality toys, the Directorate General of Foreign Trade (DGFT) issued a notification on December 2, 2019, making it mandatory to conduct sample testing for each shipment.

According to this notification, no permission for sale will be granted unless the quality testing is successful. In the event of a failure, the shipment will either be returned or destroyed at the expense of the importer.

Q1) Write about the negative impact created by foreign trade on Indian manufacturers? Mark 2

Answer Foreign trade can negatively impact Indian manufacturers through increased competition from cheaper foreign goods. Domestic industries may struggle to compete, leading to plant closures and job losses. Dumping of subsidized foreign products can also harm local markets. Furthermore, trade imbalances can affect the country’s economic stability, undermining the development of domestic industries and causing economic disruptions

Q2) What are the various steps by government of India to decrease import of goods. Mark 2

Answer  The Indian government has taken measures to decrease imports, including raising import duties on certain products, promoting “Make in India” initiatives to boost domestic manufacturing, and implementing trade restrictions. Additionally, export promotion schemes and tariff barriers are used to reduce the trade deficit and encourage self-reliance in various sectors.

Case Study 3:

Despite the growth of the economy following the implementation of liberalization policies, it can be argued that this was merely a coincidence and that the growth was actually a delayed effect of previous industrial policies. Furthermore, it could be contended that economic growth would have occurred even without any policy changes. In order to determine whether the improvements in the Indian economy were indeed a result of liberalization reforms, we have employed the synthetic-control method. This is a statistical technique in which researchers compare a unit that received a treatment with a combination of units that did not receive the treatment. In this case, the unit is a country and the treatment is liberalization policies. We compare the treated unit to countries that did not implement liberalization policies. The synthetic control creates an imaginary country that never received the treatment, allowing us to consider how certain variables would have developed in the absence of the treatment. We have utilized GDP per capita as the indicator of economic growth. If the GDP per capita of the synthetic India behaves in the same manner as that of the real India, we cannot conclusively attribute the exceptional growth of the 1990s to liberalization policies

Q1) What do you understand by the term “liberalization of economic policy”. 2

Answer “Liberalization of economic policy” refers to the relaxation or removal of government regulations, trade barriers, and restrictions in order to promote economic freedom and encourage free-market principles. It often involves reducing tariffs, deregulating industries, privatizing state-owned enterprises, and fostering competition to enhance economic growth and international trade.

Q2) What are the pros and cons of liberalization of economy? Mark 2

Case Study 4:

The World Trade Organization (WTO) gained prominence as a trading organization in 1995. Prior to this, the General Agreement on Tariffs and Trade (GATT) was established in 1997 by several nations with the aim of facilitating smooth trade among the agreed countries worldwide. Extensive negotiations took place under the GATT, involving both developed and developing nations. The WTO is headquartered in Geneva, Switzerland, and serves as a global economic policy-making body. It also acts as a watchdog and enforcer of international trade agreements (Todaro & Smith, 2015). According to Yunus (2008), global trade can be likened to a vast highway with numerous lanes spanning the globe. Without proper regulations such as traffic lights, speed limits, size restrictions, or lane markers, this highway would be dominated by the powerful economies’ giant trucks. Therefore, it is crucial to establish appropriate policies and agreements to prevent potential issues.

Q1) How has competition benefited people in India? Mark 2

Answer Competition has benefited people in India in several ways:

Lower Prices: Competition among businesses often leads to lower prices for goods and services, benefiting consumers.

Quality Improvement: To stay competitive, companies strive to improve the quality of their products and services.

Innovation: Competition fosters innovation, resulting in new and better products.

Increased Choices: Consumers have more choices and options due to a competitive market.

Job Opportunities: Growing businesses create employment opportunities for the workforce.

Q2) Why do governments try to attract more foreign investment? Mark 2

Answer Governments aim to attract foreign investment to boost economic growth, create jobs, and stimulate development. Foreign investment brings capital, technology, and expertise, contributing to industrial growth and infrastructure development. It also strengthens international relations and trade, enhancing a country’s economic competitiveness in the global market.

Case Study 5:

Although the concepts of fair trade and free trade have little to do with one another, in the context of public procurement, the two come into conflict. Advocates of free trade argue that governments should act as private market actors when making purchases, while others believe that governments have a duty to promote justice and equality through procurement “linkages” to social policies like fair trade. The growing recognition of the importance of sustainability has reopened the debate on whether governments should align their spending with social concerns. In Europe, a sustainable approach to public procurement is common, and the enthusiasm for this approach has spread to the World Trade Organization (WTO). A Revised Government Procurement Agreement (GPA) aims to encourage broader acceptance of the agreement by allowing exceptions for environmental and social policy linkages. These exceptions include a general exception in cases where derogation is necessary to protect human, animal, or plant life or health, exclusion of public procurement in international development assistance from the scope of the agreement, and explicit permission for governments to apply technical specifications for environmental protection. A recent case in the Netherlands involving sustainable public procurement demonstrates the flexibility given to European countries in selecting and implementing their own procurement practices. There is significant variation among countries in their government procurement practices.

Q1) What are the challenges to the fair globalization? Mark 2

Answer Challenges to fair globalization include income inequality, exploitation of labor, environmental degradation, loss of cultural diversity, and unequal access to technology. Uneven benefits and social disparities in a globalized world raise concerns about fairness and the need for international cooperation to address these issues equitably.

Q2) What are the ways to which fair globalization can be achieved? Mark 2

Answer  Fair globalization can be achieved by implementing policies that promote income equality, protecting workers’ rights, addressing environmental concerns, preserving cultural diversity, and ensuring equal access to technology. International cooperation, regulations, and ethical business practices are essential in creating a more equitable and just globalized world.

Also See: Money and Credit Chapter Case Study Questions

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