Components in US factories Essay Example for Free

Components in US factories Essay These criticisms of globalisation seem to undermine the possibility of any advantages arising out of the process. But there are indeed counter arguments that reveal the benefits to be derive from world trade. One benefit as H. Katrak suggests is that A country may overcome some of the difficulties of increasing investment from undemocratic resources by participating in international trade. Globalisation and openness make market access easier. Small firms which have been previously unable to export because of restricted access to foreign markets, or because of the high cost of overcoming administrative or technical barriers, can now sell their products and services abroad. The enlargement of their markets will enable them to produce more and benefit from scale economies, making them even more competitive. The resulting competition increases product quality, widens the range of available goods and keeps prices low. Globalisation is creating jobs and bringing more prosperity to developing countries which have joined the process. While labour standards in these countries are still lower than in industrialised nations, they are rising. There is considerable evidence that multinationals investing outside their home country or region pay higher wages than local firms, create new jobs at a faster rate, and spend much more on research and development (RD). While wage differentials will continue between rich and poor countries, they reflect factors like the level of qualification of workers and their relative productivity. Moreover, in answer to the critique of poor working conditions, workers who produce foreign products are grateful for their employment. Some multinational corporations do contribute to rural and urban development in their host countries. Shell Petroleum, the largest oil producing company in Nigeria has since the 1950s awarded scholarships to students in the oil-producing areas. Chevron spent $27,196,649 in 2000 on charitable contributions worldwide and in 2000 BP Amoco spent a total $81. 6 million on social investment in countries where it operates. Social investment: beneficiaries of Shells scholarships in Nigeria Technology and skill transfer is another benefit which globalisation brings along with it. Information technologies have opened up a huge potential for improving economic efficiency through e-commerce, the internet and the instantaneous delivery of information anywhere in the world, at any time. IT and telecoms are revolutionising business practices, both within corporations and in their relations with suppliers and customers. The introduction of overseas staff in modern plants in developing countries provides the basis for training a future workforce. Fedders, a room air-conditioners manufacturer that produces for the US market entered into a joint venture with a Chinese company in order to penetrate into the Chinese market. The Chinese company gets an injection of funds for investment and access to new technologies, while Fedders gets local expertise for its operations in China Globalisation also allows the expansion of businesses which have come to be seen as very vital to some national economies, and to citizens. Growth markets were embraced with glee in the twentieth century by businesses such as McDonalds and Coca-Cola. They are able to expand and remain competitive by offering franchises to interested businesses. The same advantage offers Fedders the chance to sell in the vast Chinese market and to export to other Asian countries, as well as to foster new relationships with Chinese component suppliers who may be able to meet demand for lower-cost components in US factories. Nevertheless, some groups feel that these multinational presences in their countries conflict cultural norms, as demonstrations by protesters in Russia and India against McDonalds shows. Conclusion Globalisation cannot be seen as a one-size-fits-all cure for poverty. But it is part of a broader mix of solutions for poverty eradication involving the international community and the self-help potential of the poor countries themselves. The alternative of complete poverty is far worse than their current situation and is inconceivable to most people from developed countries. The table below shows how due to globalisation countries have benefited. They have adopted domestic policies and institutions that have enabled people to take advantage of global markets and have thus sharply increased the share of trade in their GDP.