Bruno G. Rüttimann - Modeling Economic Globalization


Why is economy globalizing? Does an intrinsic reason exist, a sort of divine systemic force which controls this evolution, or is it just the lunatic actions of some managers to let their companies operate on a global level to increase profits? What are the causes of globalization? What structural changes does it produce in the competitive system? On which theoretical concepts is it based? How does this phenomenon evolve and which final scenarios are crystallizing?
Many publications have already appeared on globalization trying to explain this far reaching phenomenon. This book goes far beyond the belletristic level of books already published, entering into the intrinsic nature of economic globalization. The reader will see that globalization happens because it has to happen and it will happen whether we want it or not. A new thesis is developed providing a comprehensive model on economic globalization.
Starting from the dynamics and the reasons behind the occurring changes, this book analyzes product characteristics, market structures, as well as operating configurations, derives different business typologies, and defines three basic globalization types. This approach was the sparking momentum of a new thesis on economic globalization. The driving rationale for each globalization type is developed, e.g. introducing the latent value of a resource, or modeling the propensity to export, as well as enlarging the approach of comparative cost advantage by the competitive advantage for similar but differentiated products defining the competitiveness factor. It overcomes the aggregated equilibrium modeling in neoclassical theory applying a rather transaction oriented market logic approach. The thesis is further developed introducing concepts derived from thermodynamics entropy and enthalpy to explain the evolution of economic systems finally leading to globalization. With an entropy based risk concept founded on inequality of a system, the globalization of the economic system can be modeled and measured, leading to the Central Theorem of Globalization. This new metric allows for conducing comparative analysis on trade flows to measure the globalization status of different economies or industries, as well as the risk level of the product composition of a political economy. The profit maximizing logic is integrated with the minimizing risk behavior of an economic actor. The result is the governing rationale of maximizing risk deducted value creation. The normative concepts of a new post-neoclassic thesis on economic globalization presented earlier are summarized with five postulates.
This opus addresses mainly economists, and by linking theory to practice, also students of business administration as well as experienced managers and politicians. Through clear and structured chapters, the reader is introduced to this phenomenon making economic globalization transparent to everybody.

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© Bruno G. Rüttimann, 2009