StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

An Introduction to the Globalization Debate - Essay Example

Cite this document
Summary
The following paper highlights that national, regional and global economies are in a constant state of flux as states attempt to dynamically respond to the challenges posed by globalization. Many have attempted to do so, and render their markets either more attractive for international business…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER96.2% of users find it useful
An Introduction to the Globalization Debate
Read Text Preview

Extract of sample "An Introduction to the Globalization Debate"

National, regional and global economies are in a constant of flux as s attempt to dynamically respond to the challenges posed by globalisation. Many have attempted to do so, and thereby render their markets either more attractive for international business or more competitive, through entry into economic integration agreements. It is important to clarify, however, that economic integration agreements possess both advantages and disadvantages, and the nature of either is immediately related to the level and type of economic integration in question. Following a brief overview of the different types of economic integration and their implications for business, this essay will focus on economic integration in the European Union and how it impacts upon business and market activities therein. There are four different types and levels of economic integration. One of the most popular in the post-globalisation era and generally perceived of as a first step towards eventual regionalisation or the formation of a regional economic bloc is free trade agreements (Held and McGrew, 2003). As Hill (2007) clarifies, within the context of free trade agreements, all types of internal barriers to trade, or the movement of goods and services between member countries, is removed. While in FTAs member country set their own trade and economic policies with non-members, policies towards members are determined by the agreement in question. As far as the impact upon business and market relations is concerned, it is important to clarify that the said level of integration has tremendous benefits for member states and businesses within as it effectively expands the market. At the same time, competition over markets is intensified and, needless to say, if the member states in question are unequal, this can be a disadvantage. In simpler terms, within the context of NAFTA, Mexican businesses have to compete with U.S. ones over both the regional and the domestic markets without the protection they were once afforded (within the home market) by tariffs, quotas and subsidies. Custom Unions are a second type and level of integration. Custom union agreements replicate all of the characteristics of FTA's but take integration one step further through the adoption of common policies towards non-member states. The European Union has its genesis in this type of integration. Taking the concept of economic integration characteristic of custom unions one step further, Common Markets allow the free movement of both labour and capital across national borders. Post-1992 EU is an example of this type of economic integration. Economic Unions, as in post-2002 European Union, constitutes a deep form of economic integration and benefits for member states are quite substantial. Economic Unions possess all the features of Common Markets but are further characterized by economic policy harmonisation, including the adoption of a single monetary unit and common taxation, monetary and fiscal policies (Hill, 2007). While the advantages of this type of union, as will be illustrated through reference to the EU, are tremendous, the formation of such unions is a lengthy and often problematic process. As Held and McGrew (2003) explain, they are problematic because they require the complete redefinition of the role of the state, not just in the market but in the domestic economy. As the harmonisation of all economic and market policies is the key here, not to mention the adoption of common market and economic policies towards non-member states, some of the powers customarily assigned to the nation state is transferred to the union itself. As this brings the question of national sovereignty to the fore, the negotiation process is an extremely thorny one (Held and McGrew, 2003). As may have been deduced from the foregoing, Economic Unions, as with all other types of integration, have their disadvantages. One of this is trade creation versus trade diversification. Within the context of the former, high cost domestic producers are replaced by low cost producers within the union, or free trade area. Businesses, therefore, are required to be much more competitive and, indeed, to maintain quality while cutting down on production costs. Within the context of the latter, however, the benefits to internal producers are quite substantial. Through the imposition of tariffs, quotas and custom duties on imports from without the union, low-cost foreign producers are effectively replaced by high cost ones. In essence, this means that the union market is assured for domestic producers. The advantages, as earlier noted, are tremendous and serve as the primary impetus for the formation of economic unions. Economic unions allow countries to focus upon their existent comparative advantages, or to create comparative advantages through the specialization in the production and export of goods which they are ideally suited for, whether in terms of knowledge, skill, resources and experience. Furthermore, the flow of foreign direct investment across borders implies the movement and transfer of technology and knowledge among member stated. A third important advantage, as outline by Hill (2007) lies in the movement of labour across borders. This means that workers can go where productivity is highest, with this implying an expansion of the work opportunities enjoyed by workers in member states. Proceeding from the above stated, it is evident that economic integration is an inherently market-based phenomenon. It is within the context of the stated that the European Union embarked on the process of the creation of a single economic market as early as the mid 1980s through the adoption of the Single Europe Act. The Single European Act [SEA] which entered into force in 1987, had two fundamental goals. According to Pinder (2001) the first was the establishment of a single European market. The creation of a single economic market was dependent on the adoption of common market policies and a single regulatory environment, thereby ensuring that all businesses functioning within the EU, or entering it, adhered to the same guidelines, whether regarding labour and employment or commercial activities. In fulfilling this first goal SEA effectively obliterated artificial and national boundaries to the movement of goods, labour and services, across and between EU member states (Pinder, 2001). It establishes the legal basis for the unrestricted movement of capitals goods and services between member states, effectively declaring the legal obliteration of intra-EU national boundaries and the replacement of the aforementioned with a single EU regional/supra-national boundary. The first goal of the SEA, as articulated in the above was not just the establishment of a single EU market but the solidification of the region's singularity of market. The creation, and subsequent fortification, of the envisioned EU market was deemed impossible were the economic aspect of the integrative process not accompanied by the establishment of legal and political institutions and policies as would facilitate and legitimize the latter. Within the contextual framework of the aforementioned, the second goal of the SEA was articulated as the reformation of existent EU political institutions for the explicit purpose of maximising efficiency of EU business and market activities across the member states (Pinder, 2001). The implications of the above explained level of economic integration for international businesses are quite significant. Held and McGrew explain that the harmonisation of the market environment across the EU facilitated the growth and expansion of European-based businesses, as it expanded their market from the domestic to the regional. Added to that, it significantly increased the attraction of the EU as a business investment market as entry effectively meant access to an entire region. In other words, integration, as described, facilitated international business activities and removed some if the constraints which confronted European-based businesses in their bid for expansion and eventual internationalisation. While, as indicated in the preceding paragraph, the advantages of integration are tremendous, regionalisation also posed as a serious challenge to business because of the stringent nature of the competition laws in the EU. As noted by Niels and ten Kate (2004) the passage of the SEA expanded the potentialities for the emergence of cross-EU monopolies through vertical mergers. Accordingly, and for the purpose of fortifying the competition regime across the EU and within the framework of the SEA, EU competition policy began to assume a "legalistic approach," wherein European Court [EC] case law began to establish the foundational principles of competition (Niels and ten Kate, 2004). For example, in the Virgin/British airways case, where the latter accused the former of exploiting its position of dominance to wrest away the former's share of the intra-EU holiday market, the EC, and as per Article 81, ruled that British Airways had indeed attempted the stated through the exploitation of loyalty schemes, and that the use of loyalty schemes for the establishment of dominance constituted illegal and unfair competition (Niels and ten Kate, 2004). For international businesses operating within the EU, the implications are quite serious because it means that the said entities must enter the region with a comprehensive understanding of the regulatory framework operating within and must stringently adhere to it. To an extent, this means that apart from acculturation into the region's business culture, acculturation into its legal environment is imperative. In conclusion to this overview on economic integration and its implication for international businesses, two things are apparent. The first is that integration has facilitated the expansion and growth of European-based businesses, at least from the domestic/national to the regional/international levels. The second is that the advantages are, of course, balanced out by disadvantages with the most obvious being the stringent nature of the regulatory environment. Within the context of the stated, one can conclude that economic integration promises unique opportunities for international businesses but insists on strict adherence to regulations. Bibliography Held, D. and McGrew, A (2003) The Global Transformations Reader: An Introduction to the Globalization Debate. London: Polity Press. Niels, G. and ten Kate, A. (2004). Introduction: Antitrust in the US and the EU - Converging or diverging paths Anti-Trust Bulletin. Pinder, John (2001) A Short Guide to the European Union, Oxford: Oxford University Press. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“International Business Essay Example | Topics and Well Written Essays - 1500 words”, n.d.)
International Business Essay Example | Topics and Well Written Essays - 1500 words. Retrieved from https://studentshare.org/business/1533437-international-business-essay
(International Business Essay Example | Topics and Well Written Essays - 1500 Words)
International Business Essay Example | Topics and Well Written Essays - 1500 Words. https://studentshare.org/business/1533437-international-business-essay.
“International Business Essay Example | Topics and Well Written Essays - 1500 Words”, n.d. https://studentshare.org/business/1533437-international-business-essay.
  • Cited: 0 times

CHECK THESE SAMPLES OF An Introduction to the Globalization Debate

Social Media and Community Development

introduction The utilization of social media and social networking has turned out to be a noteworthy force in social interactions, political organization and economic development.... Research proposal on Social media and community development 1 Research proposal 1.... hellip; In the recent past, the growth of social media as vehicle for political action, marketing tool, democracy promotion, as well as for public relations has attracted interest from politicians, business people and scholars alike....
13 Pages (3250 words) Essay

Is Globalization an Opportunity or a Threat to International Business

globalization: An Opportunity or a Threat to International Business?... Author's Details: Institutional Affiliation: globalization: An Opportunity or a Threat to International Business?... Introduction A pervasive phenomenon whose effects can be felt right at the comfort of every individual the world over yet with very limited unanimity in meaning, globalization has had a history that can precisely be termed as controversial.... hellip; From the limited technology used by trade merchants to access markets across seas and oceans to the Islamic crusades and the missionary activities that preceded colonialism and the subsequent entrenchment of the imperialistic ideals on people of distant lands [hereafter as the third world], scholars and/or readers seem to be in agreement that all bear the marks of globalization....
9 Pages (2250 words) Essay

Can Processes of Globalization Help Alleviate Poverty

The word "globalization" has attained significant affecting strength.... Others consider it with antagonism, even terror, thinking that it enhances disparity in and between states, intimidates service and living principles and prevents societal advancement in other words, one of the ways by which the rich get richer (and the poor are made poorer) is through increased globalization.... hellip; globalization has been defined as the collapse of time and space, but more detailed explanations distinguish between "interdependence of markets and production in different countries;" "(perception of) living and working in a world-wide context;" and a "process that affects every aspect in the life of a person, community or nation....
11 Pages (2750 words) Essay

Renewable Energy in UK

The author concludes that renewable energy presents an outright advantage to the well being of the environment however most companies shy off due to the belief that it comes with a higher cost.... However, the idea of RO in the UK or German EEG presents a wonderful chance of controlling the costs....
14 Pages (3500 words) Term Paper

Globalization and Social inequality

One of the driving forces of the struggle is globalization.... The writer of the essay "globalization and Social inequality" discusses the connection between globalization and social inequality.... This essay also analyzes the possibilities offered by globalization to diminish the social inequalities.... One of the driving forces of the struggle is globalization.... Horst Köhler, Managing Director of The International Monetary Fund defines globalization as “a process of increasing international division of labor and the accompanying integration of national economies through trade in goods and services, cross-border corporate investments and financial flows....
10 Pages (2500 words) Essay

Benefits and Costs of Globalization

sp) Professor Richard Haines who is South What he means is that if globalization flourishes it will ameliorate us with larger markets for manufacturers and improved alternatives for users and if it does not then it will devour us all.... The fact of globalization has interested many economists in the past and continues to do so in the present as well.... globalization has many proportions like political, cultural, and economic.... Of all the dimensions of globalization economic globalization has attracted many economists, researchers and scholars....
12 Pages (3000 words) Essay

Can Processes of Globalization Help Alleviate Poverty

In the paper “Can Processes of globalization Help Alleviate Poverty” the author analyzes the collapse of time and space, and interdependence of markets and production in different countries.... There are also sources that use "modernization" as a synonym for globalization.... hellip; The author states that opponents of globalization see it "as of benefit to the upper groups in society, to the multinational companies and the affluent world; and as detrimental to the satisfaction of public needs," and as a "force for the perpetuation and accentuation of inequalities within and between groups of countries....
11 Pages (2750 words) Assignment

The Gold Standard and Financial Globalization: Global Economy Case

The global transformations reader: An Introduction to the Globalization Debate.... The limits of economic globalization According to Hirst and Thompson, “the globalization of economic activity and the governance issues it raises are often thought to have appeared only after World War II, particularly during 1960s” (Hirst & Thompson 342).... the globalization Paradox: Democracy and the Future of the World Economy.... It therefore means that capital markets compete to allocate international savings to equalize returns on capital (Thompson and Hirst). The global transformations leader This book gives an analysis on the vigorous public debate about the global economy....
3 Pages (750 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us