[MUSIC] It is impossible to watch the news or read the business press and not hear the term globalization bandied about. So what exactly is globalization? What does it mean? Why is it important? These are good questions. In this video, we'll define globalization, describe its components, and provide examples for each. In following videos, we'll dive into the importance of globalization and its implications for international business. First, what is globalization? Globalization is defined as establishing new connections that are across the world, resulting in expansion of international, social, intercultural, political, and economic activities. In other words, it's all about the growing interdependence of the world's economies, cultures, and populations. It'll be helpful to divide our discussions of globalization into four categories. These are Social globalization, Cultural globalization, Political globalization, Economic globalization and let's look at the details of each. First is Social globalization, which is about the ease of sharing and adopting ideas and information between different countries and regions. Here are some examples that indicate degrees of globalization : telephone and internet access or easier information, news, and opinion exchange. To what degree do people have contact with other cultures and nations are different from their own. Educational exchanges. These exchanges provide an excellent way for young people and older hosts to be exposed to foreign cultures and perspectives. Travel: How easily can a people leave their home country to explore other countries and or to do business there? Or are they isolated? Another is freedom of the press. To what degree are people isolated from current events in the world and do they have a broad perspective on global affairs? Or again, are they isolated? Cultural globalization is about the exchange and adoption of trends, values, and artistic expression among and between national and regional cultures. Here's some example. Shown here is the Middle Eastern girl band A- WA who re-invented traditional Yemen night folk music with electronic tunes, reggae, and hip hop. Interesting combination. A-WA has become very popular in the Middle East, Europe, and beyond. Another cultural globalization for its arts is cinema. Movies have long served to disseminate cultural norms and memes. Shown here is a scene from an Indian Bollywood movie. If you've never seen them Bollywood movies are known for their enthusiastic ensemble singing and dancing. By the way, Hollywood makes more movies in a year than does Hollywood in the US. Its productions are increasingly popular in other nations far beyond India. Another common means that culture spreads internationally is with literature in books. Shown here are the Harry Potter books series written by English author J. K Rowling. Rowling's books have now been translated into over a 76 languages, including the dead languages of Latin and ancient Greek, go figure. Art in art forms often accelerate globalization. This collage shows examples of Japanese anime illustration style. Anime video productions are widely exported and enjoyed around the world. Performance tours and cultural exchanges serve to promote international understanding and acceptance of foreign cultures. Here we see a performance of the Ghana Dance Ensemble, which for years has toured the world with performances and exchanges that spread the music and dance heritage of the African country, Ghana. Of course, international retailer chains help to promote the products and services of international businesses in foreign markets and to influence culture with consumer goods. For example, the French Carrefour chain is one of the world's largest international retailers with more than 12,000 stores in 30 countries. Shown here is a Carrefour store located in Kenya. Restaurants: Foreign restaurants and fast food franchises introduced domestic populations to do food items and to do menus. For example, McDonald's restaurants from the US are globally ubiquitous with 36,000 stores in a 119 countries. Over many decades, McDonald's has introduced American burgers and fries to the world. The globalization of a nation is further promoted when it participates in international political institutions that help to manage and supervise inter-country and inter-regional affairs. Examples of political factors that promote national globalization include embassies. For instance, how many foreign embassies and consulates does a nation support? Treaties, is the nation engaged in trade and other treaties of other nations to promote common interests? Organizations, how engaged does a nation in supporting international organizations that promote global interest and objectives? International NGOs, does a nation work with non-government organizations on important environmental, economic, and human rights initiatives? Humanitarian aid activities, does a nation cooperate with global organizations, provide humanitarian aid, and sucker to in need populations around the world? Economic globalization concerns the spread and adoption of diverse economic processes, opportunities, and challenges between countries and regions of the world. Economic globalization is what we who are studying international business have the greatest interest. Examples of economic globalization include services, how much is bought and sold between countries, what goods and services are traded, and what are important trends? Trade agreements. We want to know what agreements and treaties exists between nations to facilitate trade? What tariffs and duties and other economic impediments exist that hinder trade? Foreign direct investment, how much are countries investing in one another? The greater these investments, the greater is the economic integration in consequent globalization for a particular country. So far, we've defined what we mean by globalization, identified four categories of globalization, and provide it anecdotal explanations for each. Is there a more formal data-driven means of measuring and tracking globalization? Aptly, the answer is yes. The KOF Swiss Economics Institute in Zurich is developed a globalization index using historical data starting in 1970. This index is calculated using statistical data that divides into four categories. KOF uses social interaction statistics to come up with a social globalization index, cultural statistics to come up with the cultural globalization index, political statistics to come up with their political globalization index, trade and financial statistics to come up with an economic globalization index, and a composite of the above, which they cause us the overall globalization index. Let's look at this. This graph shows the growth of globalization in each of four categories since 1979. We see that growth in all four has been dramatic with social globalization growing the fastest and cultural globalization leads quickly. However, it's important to note that the growth rate of all four has been slowing and flattening in recent years. You can see that here. This suggests that the extent of globalization may be reaching its natural limits. This next graph breaks down overall globalization by geographic region. Note that the red line in the middle tracks globalization for the entire world. The graph shows that all regions of the world have globalized significantly since 1970. At the top of the list are Europe and North America. In the middle are Middle East, North Africa, Latin America, and East Asia. At the bottom, globalizing quickly are Sub-Saharan Africa and South Asia. Again, we note that globalization has slowing at all regions around the world. These next two maps visually illustrate the location and dispersion of globalization over the past 47 years. The first map shows the degree of globalization by country. The darker the blue, the greater is the globalization. Jumping ahead 47 years to 2017, we see much more dark blue than in the 1970 map, particularly in Asia. Almost without exception, every country is darker blue in 2017 than in 1970. This suggests that the world has experienced widespread increases in globalization over the past 47 years. Summarizing, globalization measures between country interactions and dependency. It has four components: social, cultural, political, and economic. All four of these categories have grown rapidly for 60 years, but all began to plateau in recent years. This flattening of globalization may have important implications for international businesses in the years ahead. In the next video, we'll examine a number of important outcomes of globalization. We'll see you there.