Globalisation: Major Shifts in World Economy and Impact on New Zealand

This essay explores the concept of globalization, defining it as the integration of the world economy through the free flow of goods and services. It highlights significant shifts in globalization over the last four decades, including China's shift towards domestic consumption and the rise of cross-border data flows. The essay discusses the implications of these trade shifts, noting improvements in the global economy, investment, and labor markets. It also addresses uncertainties and risks, such as protectionism and financial instability. Focusing on New Zealand, the essay examines how globalization impacts its economy, emphasizing the need for specialization and addressing challenges related to its geographical isolation. It also considers the country's openness to trade and investment, along with the role of institutions in managing the effects of globalization.

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RUNNING HEAD: INTERNATIONAL TRADE
International Trade
Student Name
3/19/2019

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Contents
Introduction................................................................................................................................2
Globalisation..............................................................................................................................2
Significant shifts in globalisation...............................................................................................3
The implication of trade shifts in the world economy...............................................................4
New Zealand..............................................................................................................................6
Conclusion..................................................................................................................................8
References..................................................................................................................................9

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Introduction
Globalisation is a process of integrating the economy globally. It allows the free flow
of goods and services without any barriers. Globalisation helps a country economy to grow
by introducing it to global markets. It improves the exports and imports of the country. With
the help of globalisation, we can reduce the cost of the product by outsourcing the product
and services from the economy, like major manufacturing units are located in China which
helps in reducing the product cost. Globalisation also helps in the advancement of technology
since now the knowledge is shared and improvised globally (Hopkins, 2011). Since
globalisation is complicated and there is no narrative available to understand its impact, there
are several organisation and regulation guiding the global trade activity such as WTO, GATT
and IMF.
The report provides a deeper understanding of the globalisation, and how it has
benefited our economy. It also discusses the major shift in the international market and how it
has impacted the world trade. The report discusses the challenges and impact of globalisation
in New Zealand.
Globalisation
Globalisation is the movement of goods and services across the boundaries without
any barriers. Globalisation can be understood as a mechanism of integration between the
countries and region across the world involving goods and services. It involves promoting
global capital transfer including expansion in Foreign Direct Investment and impacts the
sovereign wealth funds. The process of globalisation is an attempt to connect the economy of
the countries globally (Steger, 2010). Globalisation has also resulted in an increase in the
number of labour not only within the country but also across the world. Globalisation has
promoted outsourcing of product and services, such as apple software was enhanced in India,
designed in the USA and assembled this help the companies to minimise the production cost.
Globalisation provides a regulation and manages international trade such as GATT, WTO
and the World exposure to all type of industries existing across the globe.
The process of Globalisation integrates the trade financial market, trade and
technological advancement across the globe. It influences trade policies, political
philosophies, economy, culture and values of the country. The world economy is guided by

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the various trend of the globalisation. There are various impacts of globalisation on the
international business in various sectors such as Trade, Finance, Communication and
Transport (Monkman & Stromquist, 2014)
Significant shifts in globalisation
A year ago observed the greatest breakdown in the estimation of products exchanged
far and wide since 2009 — when the effect of the worldwide money related emergency was
even under the least favourable conditions. Real ports, for example, Hamburg and Singapore
have likewise announced abating development and notwithstanding declining volumes.
Notwithstanding an astounding turnround in the worldwide economy, the trashy execution is
probably going to be rehashed in 2016, making it the fifth straight year of dreary
development in worldwide exchange, an example unheard of since the doldrums of the 1970s
(Times, 2019).
A developing number of market analysts contend that the stoppage isn't only
repetitive, yet a sign that the powers that have driven globalization for quite a long time are
starting to move. The primary enormous change is China's endeavour to rebalance from
assembling and fare drove the economy towards one concentrated on household utilization.
What's more, a few financial specialists note that the level in overall exchange products and
capital has matched with a flood in information streams — a pointer, they state, that the
advanced economy of the 21st century is beginning to topple the old request (Fernando,
2012).
Indeed, even as streams of fund, products and enterprises have moderated — tumbling
from a pinnacle of 53 percent of worldwide yield in 2007 to 39 percent in 2014 — the world
has seen a flood in cross-fringe information. The stream of computerized data around the
globe dramatically increased somewhere in the range of 2013 and 2015 alone, to an expected
290 terabytes for each second. That figure will develop by a third again this year, implying
that before the finish of 2016 organizations and people far and wide will send multiple times
a bigger number of information crosswise over fringes than they did in 2008 (Future Centre,
2019).
As indicated by the World Economic Situation and Prospects (WESP) 2018, propelled
on 11 December 2017, the world economy has reinforced, as emergency related fragilities
and the unfavourable impacts of late stuns die down. Venture conditions have improved in

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numerous nations. This may empower the bounce back in capital spending expected to
resuscitate worldwide efficiency development and to quicken advance towards the
Sustainable Development Goals (Baker, 2013).
Fig
ure: 1 Growth of World Trade and World Gross Product
Source: (WESP, 2018)
The implication of trade shifts in the world economy
We can conclude form the World Economic Situation and Prospects (WESP) 2018,
released in December 2017 that the investment circumstance and situations have improved in
many countries and have resulted in strengthening the economy.
Strengthened Global economy
A large trade improvement has been observed globally especially form the East Asian
Countries. Developed economies contribute largely in accelerating the growth globally for
the year 2017. Various large developing economies such as Brazil, Russia, and Argentina
also experience a rise in growth after the end of the recession. An improvement was also
observed in the labour market (Escudero, 2018).

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At 3 per cent per annum, global economic growth is at its highest rate since 2011 and
reflects a significant acceleration compared to growth of just 2.4 per cent in 2016. Roughly
two-thirds of the world’s countries saw stronger growth in 2017 than in 2016 (Tharawat,
2019). Labour market indicators continue to improve in many countries, and world trade has
rebounded. The improvement in world trade has been largely driven by rising demand from
East Asia. In fact, East and South Asia remain the world’s most dynamic regions,
contributing nearly half of global growth.
The acceleration in global growth in 2017 stems largely from firmer growth in
developed economies. In addition, the end of recessions in several large developing
economies—including Argentina, Brazil, Nigeria and the Russian Federation—explains
roughly one-third of the rise in growth (Tharawat, 2019).
Improvement in Investment
Over the previous year, worldwide interest synthesis has moved more towards
venture. Net fixed capital arrangement liable for roughly 60 percent of the spurt in world
development for the year 2017. This improvement, be that as it may, is with respect to a low
beginning stage, as it pursues a time of feeble worldwide speculation action.
The piece of worldwide interest has moved more towards speculation throughout the
most recent year. Net fixed capital arrangement represented around 60 percent of the
quickening in world development in 2017. Be that as it may, this improvement is with respect
to an exceptionally low beginning stage, as it pursues a time of feeble worldwide speculation
action. Moreover, in 2016, venture contracted in numerous extensive economies, including
Brazil, Canada, the Russian Federation, South Africa and the United States of America
(UNCTAD, 2019).
Regardless, venture conditions have commonly improved, in the midst of stable
budgetary markets, solid credit development and a progressively strong macroeconomic
standpoint. Financing costs stay low and spread have limited in developing markets, while
capital has begun streaming back to creating economies. Be that as it may, raised approach
vulnerability may keep the bounce back from achieving the dimensions of speculation
development expected to gain fast ground towards the SDGs (Baker, 2013).

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Distribution of stronger economic activity
Over the previous year, worldwide interest synthesis has moved more towards
venture. The piece of worldwide interest has moved more towards speculation throughout the
most recent year. Net fixed capital arrangement represented around 60 percent of the
quickening in world development liable for roughly the spurt in world development for the
year 2017. This improvement, be that as it may, is with respect to a low beginning stage, as it
pursues a time of feeble worldwide speculation action (WESP, 2018).
Be that as it may, this improvement is with respect to an exceptionally low beginning
stage, as it pursues a time of feeble worldwide speculation action. Moreover, in 2016, venture
contracted in numerous extensive economies, including Brazil, Canada, the Russian
Federation, South Africa and the United States of America.
Regardless, venture conditions have commonly improved, in the midst of stable
budgetary markets, solid credit development and a progressively strong macroeconomic
standpoint. Financing costs stay low and spread have limited in developing markets, while
capital has begun streaming back to creating economies. Be that as it may, raised approach
vulnerability may keep the bounce back from achieving the dimensions of speculation
development expected to gain fast ground towards the SDGs (Buch, 2018).
Uncertainties and risks
The key dangers featured in the WESP 2018 incorporate changes in exchange
arrangement and an ascent in protectionism, an abrupt disintegration in worldwide money
related conditions, and rising geopolitical pressures. A crumbling in worldwide money
related conditions could be activated by a few variables, including the change of national
bank monetary records in created economies. National banks in created economies are right
now working into a great extent unfamiliar region, with a high danger of strategy stumbles.
This could trigger a spike in hazard avoidance or an unexpected capital withdrawal from
creating nations (Krugman, 2017).

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New Zealand
It is common for any economy to face the problem as there only limited resource to
fulfil unlimited demands. The public policies are designed keeping in mind that the resource
provides the highest valued uses.
It is necessary to specialise the areas so that they provide a comparative advantage, it
essential to specialise since New Zealand has a small economy. The specialisation of the
economic model helps to overcome challenges related to size and helps to take advantage by
accessing to the global market. Due to the oceans, surrounding New Zealand was considered
as one of the isolated countries. The problem of isolation has been overcome by technological
advancement; it has integrated the whole economy by lowering the time and distance barriers
(Newzealandnow, 2019). To facilitate the flow of information, people and technology there is
now various sources available such as computer networking, jet aircraft and cellular
connection.
The openness of an economy can be described by the ease in investment and trade. If
a country has huge trade tariffs and other non-tariff trade barriers, which make it difficult to
conduct trade activities than it is considered a closed economy and vice versa. However, New
Zealand is considered a relatively open economy. Even though New Zealand has relatively
low trade tariff, there are certain non-tariff trade barriers focusing on biosecurity for a
reasonable reason. The country also lacks in attracting foreign direct exchange for itself.
When measured on the country’s ability to attract FDI on UNCTAD’s Measure New Zealand
ranked 71st. When introduced to globalisation it leaves the economy of the country vulnerable
regarding the impact of change that it will bring and since there is no proper narrative
available that assist the community to understand the modification (Newzealandnow, 2019).
To avail the full benefits of any change it is necessary to have properly designed
frameworks and rules. Rules and regulation help to maintain stability and control the
country’s social, human, physical capital and financial capital. To introduce to a change in
the economy especially in a small country like New Zealand, strong institution plays an
important role together with connectedness and openness. Even there are global institutions
such as WTO and IMF to monitor and establish a stable and safe environment and also to
assist small economy and level the playing field for them. General Agreement on Tariffs and
Trade (GATT) in 1994 which was initiated to liberalise agricultural trade activities, New

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Zealand was one of the key beneficiaries of the policy. Even one of the founding members of
the Asian Infrastructure Investment Bank (AIIB) was New Zealand (Treasury, 2019).
It is essential for smaller countries such as New Zealand to have an open economy in
order to avoid becoming a poorer economy. The country should embrace its international
connectivity and focus on developing international relations.

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Conclusion
From the word globalisation, we can understand that it means the integration of the
economy globally. Globalization can be described as the mixture of business segments across
the global economy, inciting the national economies extended inter-connection. The liberal
trade policies expose the local markets of the countries on international level thus increasing
the competition introducing to the new technologies. Since globalisation is complicated and
there is no narrative available to understand its impact, there are several organisation and
regulation guiding the global trade activity such as WTO, GATT and IMF.
There are various impacts of globalisation on the international business in various
sectors such as Trade, Finance, Communication and Transport. We can conclude from the
report above about how shifts in the international market due have impacted. The report
discusses the challenges and impact of globalisation in New Zealand.

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References
Baker, A. (2013). The new political economy of the macro prudential ideational shift. New
Political Economy, 112-139.
Buch, H. H. (2018). The prerequisites for a growth paradigm shift: Insights from critical
political economy. Ecological Economics, 157-163.
Escudero, V. (2018). Are active labour market policies effective in activating and integrating
low-skilled individuals? An international comparison. Journal of labor, 123-148.
Fernando, R. (2012). Sustainable globalization and implications for strategic corporate and
national sustainability. Corporate Governance: The international journal of business
in society, 579-589.
Future Centre. (2019, March 13). Geopolitical shifts. Retrieved from Future Centre:
https://thefuturescentre.org/trend-card/geopolitical-shifts
Hopkins, A. G. (2011). Globalization in world history. New York: Random House.
Krugman, P. (2017). Crises: The price of globalization? UK: Routledge.
Monkman, K., & Stromquist, N. P. (2014). Defining globalization and assessing its
implications for knowledge and education. Globalization and education, 1-21.
Newzealandnow. (2019, March 13). Economic Overview. Retrieved from Newzealandnow:
https://www.newzealandnow.govt.nz/investing-in-nz/economic-overview
Steger, M. B. (2010). Globalization. London: Sterling Publishing.
Tharawat, M. (2019, March 13). Implications of Global Economic Power Shifting to
Developing Countries. Retrieved from Tharawat Magazine: https://www.tharawat-
magazine.com/family-business-internationalization/economic-power-developing-
countries/#gs.1j1y7l
Times, F. (2019, March 13). Global Trade: Structural Shift. Retrieved from Financial Times:
https://www.ft.com/content/0e0e6960-da17-11e5-98fd-06d75973fe09