Globalization An Argument
The issue that is currently at hand is that, economic growth may be achievable in the short run but, is it sustainable The paper will basically look into how countries can achieve sustainable economic through the reduction of state regulations and how governments should protects their corporations and other stakeholders in the business. In addition, the paper will focus on how countries can achieve sustainable economic growth by promoting cultural and social integration (Jameson, Miyoshi, 1998). In simple terms, the paper will look into how governments can make the business climate favorable and make use of it, as a means to achieving global economic stability.
The first step towards achieving global economic stability is by ensuring that countries unite and get rid of the neo-liberal economies. The world today is continuously changing due too rapid global communication and the advancement in technology thus there is need to alter the way that people relate with each other if at all economic growth is to be sustained. This can be properly understood by using the comparative advantage theory which states that countries should be allowed to produce the good and services that they can rely benefit from. The theory further states that the global economies should be allowed to invest in the sectors that they can mutually benefit from (Nash, 2001). In light of this, it is now worth discussing how government can reduce trade regulations within the borders by making use of the comparative advantage theory. Most of the economies across the globe do regulate and control the activities of the financial institutions within their jurisdiction. This does limit international capital flows. In this globalization era, it is important that such jurisdictions conduct a cost benefit analysis which will definitely turn to be beneficial to operate in a deregulated environment.
Though it may result in a financial crisis, operating in a less regulated market allows for the high risk taking which further translates into high returns. Operating in a less regulated market gives room for better allocation of capital. A research conducted to evaluate this showed that in the developing economies financial liberalization is not all that beneficial since it leads to financial fragility and often results to a crisis (Ted, 2002). However, the research prompted for a more intensive study in more than 52 economies which showed that financial liberalization leads to GDP growth and boom bust cycles which lay the foundation for economic sustainability.
Most of the countries which are involved in the international trade have regulations about how they conduct business with their partners. A large percentage has laid the restrictions in a way that they can benefit more than their trading partners. For instance, the countries may impose tariffs and quotas on imports thus regulating the amount of goods from a particular country. If economic sustainability is anything to be achieved in the short run, then structural reforms will have to be instituted for us to fit in the dynamic environment. For instance, proper monetary policies between the trading partners should be put in place. Also, trading partners should not focus much on the balance of payments as long as there is mutual benefit between global economies.
Certain jurisdictions have some many bureaucratic procedures especially when one may wish to work as an expatriate in another country or one may chose to invest in another country. This has been a major drawback to economic sustainability. To solve this problem which has for long held the global economies down, such restrictions and procedures should be scrapped and this will go a long way in encouraging the potential investors who will further contribute to the financial sustainability of the global economies (Hedley, 2002). The global economies should also seek to ensure that they preserve the integrity of the banking system and the forex bureau. Taxes imposed on such institutions should be customized to fit into the budgets of the investors who would wish to do their business across the borders.
Recent surveys have shown that the cost of doing business in a numbers of jurisdictions is too high due to the number of legal formalities that one has to undergo through. However, this trend is slowly fading away since countries have realized that there is need to promote a favorable business climate. To achieve a favorable business climate which can attract both foreign and domestic investors, governments should consider giving tax concessions and holidays and lowering the corporate tax rate.
Similarly, companies have a role to play in ensuring global economic sustainability. In that, they can also consider minimizing their tax obligation by transferring their profits to low tax countries. By so doing, the global economies will be left with no option other than to ensure that they favor the potential investors. This paper should serve as a wake up call for the jurisdictions which still have the bureaucratic procedures in their operations. In the underdeveloped and the developing countries, there is this notion that promoting globalization does interfere with the national sovereignty of a country. However, this is not the case since surrendering some of the sovereignty and submitting to what globalization has to offer does promote both economic growth and sustainability (Wenar, 2003). This was evident in 1997 when most of the countries gave up the political sovereignty and they were able to gain from what the IMF and international donors had to offer.
In the same line, balancing sovereignty with globalization will ensure that there is economic growth since there is guaranteed flow of information across the borders without having to go through a number of complex procedures. Also, the balance between sovereignty and globalization will strengthen the capital base of the financial institutions and this will be a basis of availing capital to the potential investors who may be having the will but lacking the ability to engage in a particular business. Freeing up of the money across the borders would also go a long way in ensuring that the theoretical promise of the benefits from globalization becomes a reality. In support of this, report from the IMF indicate that the capital inflows to the developing countries with little regard for their sovereignty have so far tripled and this has laid the foundation for the economic growth and sustainability that is noticeable in a number of developing countries (Keighrm, Lwery, 1998). Giving up the national autonomy will also ensure that there is market liberalization. In this context, governments will have promoted competitiveness in the market. In that, governments will have stopped protecting the business community who normally enjoy subsidies and tariffs but they do not transfer the same to consumer.
However, researchers from the IMF have also shown that liberalization of the capital accounts is not all about the economic stability and growth. They cited that liberalization does increase countries vulnerability to crisis which may not themselves be part of. In simple terms, the researchers state that market liberalization brings with it a risk of contagion.
Governments should also reduce the restrictions that are normally present especially after tertiary education. It is often difficult to secure employment in a country different from your birth country. This is normally due to the fact that there is no international recognition of some of the courses which are offered in some jurisdictions. This essay should serve to inform the employers that they could be locking out considerable amount of labor force which may prove to be of much value to their organizations and countries at large. Also, there is the problem with the bureaucratic procedures involved when one wants to traverse from one country entry point to another (Tabb, 2004). The border points have so many procedures which often discourage potential investors. Thus, I find it necessary that countries should have a keen but flexible control over the flow of capital across the borders.
That not withstanding, dual citizenship is also an issue that needs to be addressed if economic sustainability is to be achieved in the long run. This is mostly a problem with the developing countries that have the restriction. They ensure that if one has shown the intention to reside in a different country other than the country of origin, then one is required to denounce the citizenship of his or her country since dual citizenship is not recognized.
The full benefits of globalization can also be achieved by ensuring that there are flexible environmental regulations. In line with this, companies are finding it hard to conduct business in global economies because they find it costly to adhere to the strict regulations from the environmental groups. For instance, there is the regulation that the polluter is supposed to meet the cost of environmental cleansing (Dowlah, 2000). By re-adjusting such regulations, potential investors will not find it to be expensive to conduct their business in their preferred region. However, despite the fact that countries are achieving economic sustainability through the promotion of industrialization, the costs associated with it should not outweigh the benefits that the entire country will reap from the same.
Some countries have this idea that has so far been overtaken by events that embracing information technology is not beneficial to the economy. This is mostly in the developing and the underdeveloped countries who feel that IT might contribute to brain drain and the proliferation of the wrong information. However, this is not the case since ICT is a general purpose technology which is so far indispensable in whatever industry that one may be in. The ICT sector has become an important global market since it is solely in charge of the distribution of hardware and software (Jan, 2004). The industry is also in charge of provision of internet services which is so far driving most of the economies and promoting to the sustainability of the same.
Through de-regularization of the ICT, any global economy is guaranteed of increased labor productivity. In that, automation and networking of global services will ensure that there is increased labor productivity since production will be at a faster and a more accurate rate. However, the benefits that arise from the automation of the entire global production service have not been realized in some dev eloping and underdeveloped countries. This is due to the fact that the countries have to rely on imports and even after importing the goods, they often lack sufficient human capital which will match the ICT revolution.
Economic sustainability can also be achieved by restoring and upgrading the market confidence of investors. Governments should seek to ensure that there is transparency and integrity in the business environment which should be subject to some flexible regulations. Dissemination of information regarding the global market policies should be made more flexible in a manner that even the foreign investors can easily understand the kind of environment that they are operating in. Of importance in the developing and the underdeveloped countries is how one can establish rules and policies that can assist industries and companies (Guillen, 2001). This is mainly achieved by ensuring that there is state protection especially to the infant industries.
Economic growth and sustainability in a country can be achieved by ensuring that the corporations or the infant industries within the jurisdiction in question are protected from unfair competition. This has even attracted attention from the UN circles who also share the same opinion. They cite that, though it could be a misguided old model blanket protection, legitimizing protection for the developing industries would be a way of ensuring that the developing countries are in a capacity to nurture the development of the industrial sector. Protection of the small companies is warranted since they lack the capacity to go head to head with companies which have been in the industry for long and have mastered the art of trade. It is worth understanding that, the infant industries that are common in developing countries offer dynamic learning effects which are normal external or beyond the company or industry. On the other hand, the foreign industry is normally mature and has enjoyed the economies of scale in the past (Brysk, 2002). The foreign industries do provide substitutes to what can be produced within the borders. Due to this, there is need to come up with policies that will protect such industries from such competition. This can only be achieved by ensuring that the subsidies, tariffs and quotas are in place.
However, it is not always guaranteed that economic growth and sustainability can be achieved by ensuring that the infant industries are protected. This is normally the case because the so called infant industries do not seem to grow or learn from the operations of their foreign counterparts. In that, the industries may chose to remain at their infancy stage even after they have developed the capacity to compete with the foreign industries. In light of this, it is always necessary that planners of such policies evaluate the compatibility of both the domestic and foreign investors.
Some economies are known to use quantity restriction as a way of giving protection to the infant industries. However, researchers have shown that this is one method that does not in any way contribute to the economic sustainability. Instead of this, the market analysts do recommend the use of tariffs and quotas to protect the infant industries. They further advise that imposing quotas on the foreign investors is more beneficial in protecting the infant industries since it nets out any loss of revenue that the government in question might have incurred while administering the quota system (Smith, 2005). The question that now arises is on how to determine that an industry or a corporation is at its infancy stage and should enjoy state protection. This can be measured against the amount of assets that a corporation may be having in its custody, its profitability over the years and the number of years that the corporation has been operational.
Another area that must go hand in hand with global economic growth and sustainability is the issue of culture. Through globalization, there is the possibility that in the near future most of us will have faded memories about our cultures since the cultures that we once held dear are being outdone by the emergence of a global culture. Internet, fax machines and the use of satellites are sweeping the regional and cultural barriers that existed in the past. The African societies are against the emergence of the global culture since they feel that it is dominated by norms and values that promote the western ideas of capitalism (Compton, 2000). Even the local dialect have been overtaken by the global culture since almost everyone is speaking in the global language (English) which may in the long run overtake all other languages.
Lifestyle have not been spared since we have witnessed a transition in the eating habits and the dressing codes. This has been an issue with the developing countries who now have to bear with the their youth will have to spend a large percentage of their time glued to the TV screen and have to watch the soaps which are a source of information about the Western way of living. Actually, it is not out of the norm to witness some of the African societies trying to emulate the western world way of living. By saying this, I should not be understood as to having anything against the western cultures. Actually, I am for the Western culture because during this globalization era it is either you respond to the change that is happening around you, otherwise the change will definitely work against you.
Thinking within this line, governments should look into ways in which they can organize trade fares which will involve the participation of different countries. This will facilitate the learning of new ideas about how to invest and manage finances. It will also open up different cultures to one and other and this will definitely give room for future inter-country marriages. As a result of this, there will be mutual economic growth for either country and that will contribute to the economic growth and economic sustainability (Beck, Winter, 2003).
At this point, it is important to conclude that economic growth and sustainability can be achieved by reduction of the regulations that are normally present in many jurisdictions. From the essay, it has deduced that we can reduce the regulations within our jurisdictions by ensuring that we reduce the corporate taxes being charged on the companies and compromising on our state sovereignty. It has also been shown that promoting market liberalization and strengthening the capacity of our financial and capital market does help in promoting economic growth and sustainability (Tabb, 2004). Also, it is worth notable that if the restrictions by the environmental groups are reduced then this will definitely promote industrialization which will translate to both economic growth and sustainability.
Moreover we have shown that embracing the global culture will go a long way in ensuring that there is economic growth and sustainability. Elimination of the bureaucratic procedures and ensuring that the monetary policies are able to accommodate the foreign investors also assist in ensuring that economic growth is sustainable in the short run. Also, economic sustainability can be achieved by ensuring that corporations are protected from foreign unfair competition. From the essay, we have deduced that the ways to protect such corporations is by ensuring that they enjoy quotas, tariffs, subsidies and quantity restrictions. Finally, the essay has shown that by flexing the regulations which are often imposed on the ICT industry, and then this will go a long way in ensuring that economic growth is sustainable.
Categories:
0 comments:
Post a Comment