UNFOLDING GLOBALIZATION AND US
TARIQ AHMED SAEEDI (email@example.com)
May 26 - June 01, 2008
The world of organization and commerce is expanding and contracting; expanding into new boundaries with exploring new market opportunities and contracting because of supersonic communication. At present, however unfortunately no country can prevent the exploitation of indigenous expertise in foreign hands following the arrival of unfair free trade regime.
This development implies for a business operation to be highly compatible with transnational ambience. Multi National corporations (having operations in more than one country) such as Ford, Nestle, Unilever, Pepsi have their business operations in Mexico, Canada, Latin America, in fact some MNCs depend on the international market for well over 25% of their total revenue, Nestle for example generates 98% of its sales outside Switzerland.
Do not go far away, just recall the events in the earlier twentieth century-hall mark of economic disharmony, and split between communism and capitalism. Leaderships of both economic systems, on one side America, Western Europe and on the other side eastern-European countries were struggling hard to activate their formula of economic growth. This gap was further widened with reincarnation of closed-economy where nation's immediate goal was to protect its border against not only foreign troops' intrusion but also products' inundation.
Naturally, aftermaths put a halt on smooth flow of goods and services across borders. That might be proved a favorable situation-long before secluded Chinese dynasty had been able to prosper without contacting to outside world-if interdependency clause had not been added to the economic growth agenda of nations.
The landscape was changing at a fast pace day by day colonial rules were dieing off, being abdicated to novice nations and these newly born countries were in dire need of foreign assistance for maintaining trade balance and infrastructure development in order to perform well in power game. To control over as well as to guide in economic policy making general agreement on trade and tariff was signed and this embarked on a new era of fair-trade practices without illegal imposition of taxes & tariffs. GATT was replaced by the name of WTO (World Trade Organization) in 1994, now having signed by most nations around globe. In fact, this is in operation to constitute the writ of world business community according to which all economies (developed and developing) are induced with free trade doctrine, nonetheless absolute freedom in trade is gifted selectively.
Why interdependency and why not self-sufficiency is a must-asked question here in this pauses. Or why shouldn't a company's (nation's) objective be limited to cater merely the needs and wants of local market?
Promotion of free access is the primary motto of WTO or say world. This means no hindrance, no restriction, and no barriers for flow of goods and services customer demands or investor desires. "Customer is the king" is the well-known and the central point of all businesses world over, and benefits accruing from this adage would automatically be delivered to them once agenda WTO would fully be in action. As long as customers feel to purchase something, they would have innumerable choices in front and select amongst what would be satisfying their needs and befit their expectations that pursue competitive price, quality product and sometimes psychological relief.
Try not to put all eggs in a single basket. This simple phrase explains that firms involve in international trade headache because to enhance sales growth; to refrain from local competition; to tap the global market, to gain competitiveness; and last but not least to get advantage of wage arbitrage that is to get work done in salary less than being paid to workers in one's own country, for instance it is cost effective measure on the part of General Tyres to manufacture tyres in Malaysia because of both inexpensive availability of rubbers as well as cheaper labors. Similarly it may be proved a plausible decision for one with holding extra savings to invest in new emerging stock markets. There is normally in business a term is mostly used that is known as opportunity cost: to make investment decision at right time and on right place to get profit.
In its world employment report, the International Labor office comments on trade and investment flows: "a key aspect of globalization has been the rapid growth in world trade. Since 1984 the volume of world trade has grown faster than world output. The growth of exports, especially of manufactured goods, from developing countries has been particularly rapid.
Flows of foreign direct investment have also increased sharply, especially to developing countries. The average annual flows have increased more than three-fold since the early 1980s for the world as a whole, while for developing countries it had increased five-fold by yester-century. It is of course technology which makes globalization feasible. As Peter F. Druker (Management guru) described three new markets that will be attraction for international investors. One, he believed, closely links to ecology and environmental technology such as wind, solar energy. Second would relate to reconstruction industry particularly infrastructure development. He in 1995 linked the ever rising privatization practices with these material developments. According to him, these new facilities would serve both producers and consumers. Pakistan in recent years has witnessed physical evidences of astute projections. Not only in Pakistan rather have infrastructure developments changed the outlook of as many developing nations. These developments signified the urbanization and improving numbers in midlevel income group.
But, globalization is doubtfully bringing improvement in the standard of living of masses. Profit seeking capitalists go hand in hand with the venture that only guarantees unlimited percentage returns. Profit matters more than any thing else! Cost curtailment even at the cost of labour attrition is the specialty of globalization. And, this is its gruesome facet.