OPINION Vol.1, No.1 June 2013 - National Defence University

Foreign Indirect Investment. This is also called portfolio investment. This occurs where
money is used to purchase financial assets in another country, comprising foreign stocks, bonds
and currency. 17
Foreign Direct Investment (FDI). This is the second form of capital movement and occurs
when a firm establishes, acquires, or increases production facilities in a foreign country. FDI
usually takes place in poor countries to exploit natural resources such as oil or other minerals, to
take advantage of cheap labour or, sometimes, to penetrate a market. MNCs are responsible for
FDI. The companies like ExxonMobil, BP, Shell, and Total, and others such as Vodafone, and
Procter and Gamble, all generate more than 50% of their turnover from foreign sales. 18
Migration. The economic boom of the late 1950s and the 1960s caused countries like Germany, France,
and UK to run short of labour. Initially, they looked to other European countries like Italy, Portugal, and
Spain. However migration later took place from South Asia and Africa. For instance the US population
includes 38 million people born abroad and almost one of every 10 persons living in the more developed
regions is a migrant. In contrast, only one of every 70 persons in developing countries is a migrant. 19
Tourism is another dimension of globalization which itself incites trade and cash flow. In 2011, there
were over 983 million international tourist arrivals worldwide, with tourism receipts of US$1.03
trillion. 20
Globalization and the Changing World Order
Post-Cold War Era and the Emerging World Order. Significant conclusions from analysis of
contemporary geo-politics and emerging world order are as follow:-
Political capacities and responsibilities are displaced from the national and regional levels
to genuinely global level, through the development of global governance. 21
Politics and economics are inseparable within social relations; economic centrality is the
core issue which defines inter-state relations. 22
Association among the nation states in post-cold war era has been on the basis of
cooperation and collaboration with major powers. 23
Uni-polarity has sustained over decades; however, economic multi-polarity is causing
dilution in US dominance.
Geo-economics and geo-politics are not exclusive from each other rather go hand in
gloves; however, economic interests drive political relations.
Global issues like nuclear proliferation, climate change, have transcended the borders of
nation-states, requiring global realization and collaborated response. 24
The character of war has significantly shifted from geo-political dominance to grasp for
natural resources. The emerging world order will witness severe competition among the
major world powers over the energy resources.
Unfair trade practices and monopolistic policies of IFIs and MNCs have generally
restricted space for equitable economic growth.
Threat driven by ethnicity, religious extremism and terrorism hold no boundaries and has
global influence and implications. 25
Effects of Globalization. The phenomenon of Globalization cuts both ways; it houses both welfare
enhancing prospects as well as detrimental and negative consequences.
Benefits
Globalization: A Welfare-Enhancing Munificent Force. Economic globalization has
influenced developing economies to achieve “income convergence”. 26 Growing integrated
economies are giving rise to productivity of “resource and input utilization”. 27 Different countries
and regions have started exploiting their comparative advantages at their “lowest opportunity
costs”. 28
OPINION Vol.1 No.1 68 June 2013