International economics: essay on the advantages and disadvantages of globalisation

Résumé du document

‘We are living a transformation which is going to reconstruct population and economy for the coming century. There will be no more national products and technologies, no more national firms, no more national industries, no more national economies. Only individuals, which constitute nations, will be kept within the country's boundaries'. (Reich 1993: 13).
After World War II, countries, in order to maintain peace, decided to organize trade agreements. Free trade became a priority in order to reconstruct countries as well as to prosper. This agreement, GATT (General Agreements on Tariffs and Trade), was created in 1948 in order to reduce trade barriers. Its main objectives were to make exchanges free by lowering custom fees and by restraining quantitative and qualitative restrictions. The GATT also applied a non-discriminative principle which had to impede discrimination between foreign exporters and national producers.
The last round of negotiation, the Uruguay Round (1994), resulted in the creation of the WTO (World Trade Organisation).
Globalization is the process by which the world composed of different countries, cultures, language etc is moving to be more like one country. Globalization refers to the increase of countries' interdependence.
This theory is in accordance with the definition given by Fletcher and Brown (2005: 396). Their definition regarding the globalization of markets explains that the globalization of markets is the convergence of firm structures, products, prices etc in order to attack the world as one market.

What are the forces of globalization and what do they expect? What impact does globalization have on international business and trade?

We will start off with an overview of the pros and cons of globalization. Then, we shall identify the actors of the globalization and how they are influenced by globalization and conversely, how they influence globalization.

Extraits

[...] There are economic, social and ecologic impacts. Effectively, it can be seen that globalization increases standard of living, literacy and health and thus facilitates the development of the country. Sharing ideas, lifestyles and experiences permits the development of new products not previously available in the country. In addition, multinational companies bring foreign currency to local economies and allow economies to become richer. Thus, thanks to globalization, trade barriers have decreased and permitted promotion of free trade. It means reduction of costs and decrease in tariffs with creation of free trade zones. [...]

[...] Some developing countries that have embarked on the road toward global integration, such as China, India, Malaysia, Brazil, Mexico, South Korea, and Thailand, now no longer export only raw materials, but also finished products and services. In India, for example, IT exports alone account for nearly 40 percent of export earnings. Thus, globalization permits not only the increase in the GDP of a country but also the improvement of living conditions of the country. Positive effects on international business and trade Globalization has impacted world economies with different positive effects. [...]

[...] In fact, as a consequence of the liberalization during the 1980s, the competencies between banks and other financial institutions have really improved. In Europe, approximately of the market is still financed by banks, which take advantage of the financial market development and of the globalization. Another consequence of globalization is that banks wish to enter foreign markets in order to facilitate access to its financial market. As part of this objective, banks buy companies specializing in the stock market and there are numerous mergers and acquisitions, notably in the developing countries. [...]

[...] There are glaring disparities between the amount of profit generated and the general well being. Another trend which is gradually developing is regionalization. Globalization may be outrun by local trade development. How will the international trade will evolve and what place will regionalization have? Bibliography Dowling, Peter J. et al. (1999) International Human Resource Management: Managing People in a Multinational Context. 3rd ed. Mason: South Western College Publishing. Fletcher, Richard and Brown, Linden (2005) International Marketing: an Asia- Pacific perspective. [...]

[...] Jean Ziegler, UN Special Reporter, on the right to food, notes that ‘millions of farmers are losing their livelihoods in the developing countries, but small farmers in the northern countries are also suffering' and concludes that current inequities of the global trading system are being perpetuated rather than resolved under the WTO, given the unequal balance of power between member countries'. Negative effects on international business and trade As mentioned before, the current trend of international business and trade clearly profits only a section of the populace. The whole process of production, which creates funds, is distributed on an unequal basis. In response, many defenders of small producers created fair trade companies. We can take the example of the Max Havelaar label, which promotes the small producers in disadvantaged regions, along with some organizations like AlterEco and Altro Mercato. [...]