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Europe's Response to Globalisation: Challenges and Opportunities

Explore Europe's role in the global economy, proactive and reactive responses to globalisation, impact on economic performance, trade dynamics, FDI trends, and corporate changes in the context of globalisation. Understand the drivers, impacts, and challenges Europe faces in a rapidly globalizing world.

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Europe's Response to Globalisation: Challenges and Opportunities

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  1. Chapter Three Europe and Globalisation

  2. Globalisation and Europe • Europe prominent player in the Global economy • Europe’s response is both: -proactive (seek new markets, etc) -reactive (face increase competition)

  3. Globalisation • the IMF defined globalisation as: ` the growing interdependence of countries world-wide through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology.’

  4. Globalisation Drivers • The Changing Economic Paradigm • The Spread of International Governance and Regulation • Finance and Capital Spread

  5. Globalisation Drivers • The spread of ICTs • Social and Cultural Convergence

  6. Globalisation’s Impact • Varies according to: • Scope (i.e. reach across states) • Intensity (i.e. depth and embeddedness) • Sensitivity (i.e. transmission effects)

  7. Impact on Europe • Major impact is on relative economic performance. • Drives competitiveness issue • This varies across states • Large economies - poor performance • Nordic states - best performers

  8. Two Major Areas of Interest • Trade • FDI

  9. Trade • EU is a pivotal global trading entity • Over 18 % of global trade • Biggest single trader • Major partners for imports and exports

  10. Imports (2005)

  11. Exports (2005)

  12. Declining Share

  13. FDI • Largest source of funds for inward and outward FDI • 29 per cent of global flows • US is biggest recipient of EU funds but also biggest investor

  14. China, 0.1 Japan, 5.8 Rest of World, 45.4 USA, 43.9 Canada, 4.8 EU FDI Inflows (2001-2003) per cent

  15. . China, 1.6 Japan, 0.3 USA, 34.1 Rest of the World, 62.1 Canada, 2 EU FDI Outflow 2001-2003 (per cent)

  16. European MNCs • About 70 000 MNCs globally • Of the largest 500 - 159 from Europe • Most based in Northern Europe • French businesses have the widest spread • EU firms prominent in global economy

  17. Corporate Change • Policy driven change reached an impasse • Business driven change more evident • Driven by international capital

  18. Economic Nationalism • Reaction to globalisation • Seek to protect strategic assets from foreign ownership/control • Internationalisation promotes consolidation which this stance is a reaction. • Does this highlight limits to globalisation?

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