Implications of Money Transfer Companies on the Global Economy - Essay Example

 Implications of money transfer companies on the global economy 1.0. Introduction The present day world is concerned with raising the income of individuals and reducing poverty that has claimed the success of various economies in the globe (Rubio & Rawlings, 2005). In this case, there has been a dire need for the economies to come up with ways of strengthening the future of their economies by creating mechanisms of supporting their future. With this in mind, it is recommended that the millions of persons in the world be provided with mechanisms of accessing funds and investing the same in an easier way. It is in line to this argument that there has been need to increase the access to international markets, all with the aim of ensuring that the business environments have been strengthened; thus, an increase in the access to international markets through an improvement in the access to funds. This has in turn opened up trade and investment in various areas in the globe (Geiersbach, 2010). This has been boosted by the developing international money transfer services that play a huge role in the present day business market. It is through these services that a lot of individuals have managed to send money faster and with a lot of ease despite their distance. With this in mind, it is evident that the money transfer business has contributed greatly to the global economy. This essay will attempt to assess the implications of the money transfer business on the economy of the globe in general. The essay shall focus on aspects such as Globalization, post-colonial theory, European Union, protectionism, corporate social responsibility and cross cultural management in an attempt to understand the underlying issues on the same theme. 2.0. Money transfer companies and the global economy 2.1. Growth of developing countries' economies and money transfer companies As Dicken (2003) argues, the world has become a global village where one country is seemingly a neighbour to the other. It is in this context that there has been a dismal need to include the third world countries on the global village in an attempt to include them in the rush towards development. The Department for International Development & HM Treasury (2013) argue that development can be noted in an event where there is economic growth. Economic growth, on the other hand, can only be attested with an increase in the income of individuals, which alternatively helps in a reduction of the poverty levels in a country. In the developing countries, there is clear evidence that these countries can barely support their economies; thus, stagnant economic growth (Department for International Development & HM Treasury, 2013). Good examples of the challenges in these countries include the absence of institutions that support economic growth, poor infrastructure, lack of access to financial services amongst others (Department for International Development & HM Treasury, 2013). In such a scenario, individuals are less likely to borrow funds as well as invest. The Department for International Development & HM Treasury (2013) therefore recommends that the governments in these developing countries strengthen their business ties by enabling their members join the international markets; thus, access to financial services by its members. Opening up its trade links would alternatively ensure that such countries have access to international money transfer programs that sustain their trade links with other economic opportunities. International money transfers are more convenient and allow people to send money throughout the world in a faster way. These services enjoy an enrolment of numerous agents in the globe that require their services, including the third world countries that are able to access the funds they need to survive in the tough economic times (Fafchamps, 2001). With the enrolment of these countries increasing with the day, it is clear that the economy of these countries also grow, as they are able to get funds throughout the world that allows them open up their economies to lots of entrepreneurs who invest a lot in the growth of these once referred to as “weak economies”. 2.2. Increased competition in the global economy Studies indicate that the numbers of persons using the money transfer services is rising by the day. In the work of Wild, Wild & Han (2008), it is evident that this kind of rise in the consumers will evidently create a rise in the charges to the services provided by the international money transfer companies. The clients on the other hand have no option but to work with the charges provided by the service providers. In this case, the number of service providers has also increased, what has led to the global economy enjoying the rising competition from these companies. A lot of companies are finding their way into the international money transfer business that has led to an increase in the taxation of these companies; thus, revenue generation. This competition has also led to innovation by the service providers as well as creating a pool of informed consumers who are well informed on what decisions to make regarding the money service providers. 2.3. Protectionism impact and global money transfer services In the work Evans-Pritchard (2013), global money transfers have a huge impact on the global economy. In fact, the European Union is wary of the fact that the uncontrolled protectionism is bound to affect the economy in a tremendous way. There has been a rise in the emerging economies such as China, India, and Indonesia amongst others that are actually threatening the recuperation of the global economy. In this case, it is arguable that the global growth is under threat as there has been an increase in the reduction of trade tariffs; thus, an increase in trade partners that enjoy free trade. Trade abuses, as Evans-Pritchard (2013), puts it; have been on the increase, what has been a striking phenomenon in the economy. Evans-Pritchard (2013) says that in this case, the slow growth that has been picking in the economy has drastically reduced. Pressure has been built on the governments to ensure that free trade prevails. In relation to global money transfers one would argue that a lot of companies find their way into the global market despite the competition in the world market. This also means the natural way of conducting business has been disrupted greatly as a lot of companies have been given the leeway to venture into the markets as they please. The uncontrolled protectionism, therefore, leads to a decline in the global market growth due to a flooding of the international market. 2.4. Post colonial theory impact and global money transfer services In relation to the Post-Colonial theory, it is clear that neo-colonialism has taken toll of the globe as well as the economy. Bhagwati (2004) relates to the post colonial theory to the fact that despite countries attaining their independence, they still rely on their colonial masters in relation to its social, economic and cultural ideologies. It is in this light that the colonial masters have continued to apply their international ideologies on their former colonies; thus, maintenance of the authority of the colonial masters (Bhagwati, 2004).   It is in this context that the multi-national corporations have continually forced the third world countries to join them. The concerned countries are forced to embrace a capitalist ideology so as to meet the demands of their colonial masters. It is even worse as the colonial masters are continually depleting the resources of their former colonies in terms of both physical and intellectual property (Bhagwati, 2004). The economies especially of the developing countries are continually being opened up to the multinational corporations automatically. Said (1978) says that the western world has its own way of understanding the culture of the East. He argues that Orientalism has led to the Western world defining the Eastern world based on their history and conditions they have undergone in their history and times (Said, 1978). This relates to the fact that the Western world has for long termed itself as the superior world and it is their responsibility to rule the Blacks. This explains the colonialism and the racist culture in the world, specifically in the economic sector where the West has continually dominated the business ventures and is slowly forcing the East to embrace their cultures and ways of doing business. This explains why the third world countries are slowly developing despite their attaining self rule decades ago. Focusing on the global money transfer services, the developing countries have no option, but to maintain the strong connections with the colonialist states in terms of advancing its money transfer services. This means that the colonizers still manage the affairs of theses countries despite their being termed as independent countries. With globalization becoming the order of the economic days, the less developing countries (LCDs) are getting prepared for the global trade by the day (Bhagwati, 2004). However, this can be looked at as an arrangement where the LCDs get poorer with the bilateral and multilateral arrangements as the developing countries work through the comparative advantage rule (World Savvy Monitor, 2008). The developed countries are said to provide grants to the developing countries to keep the charges of transferring money through international money transfers extremely low especially between Africa and the European Union (World Savvy Monitor, 2008). On a more devastating note, the opening up of the LCDs to the outside world has led to an increase in the exports service delivery at low prices (World Savvy Monitor, 2008). Though this might seem relieving to such underdeveloped economies, the fact remains that the ability of the LCDs to come up with their own way of boosting their economies through their own developments does not work. This is because money transfer has been made cheap by the international service providers as opposed to the domestic service providers. This also brings to the fact that the in as much the LCDs would want to export their technology, the international market bans them through a denial of the patent protection rights (World Savvy Monitor, 2008). This creates an unjust economic world that favours the development and growth of the international markets and decline of the struggling LCD economic markets. 2.5. Cross cultural management and global money transfer services Firoz, Maghrabi & Kim (2002) say that the cultural system is made up of persons with the same culture. Businesses are then run depending on these cultures. With the world going global, the manner in which business is being carried out varies. Focus has been shifted from the consumers to the local market place that has alternatively led to an increase in capital mobility and skills that seen a reduction in the gaps between various countries. Markets have also developed; product and service production has been on the increase (Firoz, Maghrabi & Kim, 2002). In this case, the managers have to embrace the cultures of different persons so as survive in their business worlds (Geiersbach, 2010). This, Fairclough refers to as acculturation that has led to adaptation of different cultures both locally and abroad, with language being a key indicator of the culture embraced y the international markets (Fairclough, 2006) . In terms of international business, Firoz, Maghrabi & Kim (2002) say that the business has changed whereby the international actors have slowly adapted to the interdependence of business transactions throughout the world. The international actors have also been forced to adjust to the demands of the local managers all in an attempt to understand the global market functionalities and systems. In relation to global money transfer, it is evident that the international managers have incorporated the local nationals into the international business in an attempt to equalize the opportunities for both the countries to the profits of the business. For instance Firoz, Maghrabi & Kim (2002) give an example of executives who are quickly embraced to the global market with a mere experience in global market experience. This is a clear indication that the global marketers are fully aware of the fact that culture is a mere construction and programming of the mind that can easily be manipulated. This explains the rising number of persons embracing the money transfers ways of transacting with their family and friends throughout the globe. 2.6. Corporate Social Responsibility and global money transfer services Keeler (2010) refers Corporate Social Responsibility (CSR) as a concept that defines companies’ bid to engage in responsible activities that are for the good of the consumers of the services or goods produced. However, the author argues that CSR differs from one company to another depending on the nature of their jobs (Keeler, 2010). It is argued that CSR is no longer an option for companies especially ones that have the ambition of developing to further heights. The author gives a good example of organizations that have moved to ensure that the local markets flourish by helping them start businesses that boost the lives of the locals (Keeler, 2010). In relation to CSR and money transfer companies, it is evident that these companies have endeavoured to ensure that they create employment throughout the globe by coming up with local branches of the international companies throughout the globe. A lot of locals have acquired employment in such local companies, a great contribution not only to the local economy, but also to the global economy. 3.0. Conclusion Conclusively, this essay has focused on globalization, post-colonial theory, protectionism, corporate social responsibility and cross cultural management issues that influence the money transfer companies and their move to fit in the global economy. It is evident that money transfer companies have numerous implications on the global economy. From the discussion, it is clear that money transfer has been merged throughout the globe with globalization being a characteristic of today’s world. Numerous countries have been indicated to take part in international business that is clearly being conducted locally. The physical presence of these individuals is not required in the international world. This trans-nationalization of transfer of money transfer has led to a global shift in the banking sector. This pattern of change has created both solutions and disasters to the third world countries that are struggling to emancipate themselves from the chains of the international world that was once their colonial masters. On the other hand, the developed countries are also at a loss as the market has been opened up to traders who venture into it as soon as they get the chance. Good examples include China and India that have invested heavily in the banking industry. This is to mean that the competition is stiff to the once monopolisers of the global market. However, it is also important to credit globalization as unifier of the globe. Consumers have an array of services to select from in relation to money transfers. The issue of protectionism can then e assessed in an attempt to equalize the chances of benefit acquisition on both the third world countries and the developed world. References Bhagwati, J., 2004. In Defense of Globalization. Oxford: Oxford University press. Department for International Development & HM Treasury, 2013. International Aid and Development. London: Open Government Licence v2.0. Retrieved from: https://www.gov.uk/government/policies/helping-developing-countries-economies-to-grow Dicken, P., 2003. Global Shift: Reshaping the Global Economic Map in the 21st Century. 4th edn. London: Sage and New York: Guildford. Evans-Pritchard, A., 2013. “Europe fears ‘uncontrolled protectionism’ as emerging markets turn against free trade”. The Telegraph, 02 Sep 2013. Fafchamps, M., 2001. Networks, communities, and markets in sub-Saharan Africa: Implications for Firm Growth and Investment. Journal of African Economies, 10(1): 109-142. Fairclough, N., 2006. Language and Globalisation. London: Routledge. Firoz, N., Maghrabi, A., & Kim, K., 2002. “Think globally manage culturally”. International Journal of Commerce & Management. Indiana, 12(3/4):1- 19. Geiersbach, N., 2010. The Impact of International Business On The Global Economy. Business Intelligence Journal 3(2): 119-129. Keeler, D., 2010. Corporate Social Responsibility. Global Finance, June 2010. Rubio, G., & Rawlings, L., 2005. “Evaluating the Impact of Conditional Cash Transfer Programs”. World Bank Res Obs, 20 (1): 29-5. Said, E., 1978. Orientalism. Harmondsworth: Penguin. Wild, J., Wild, K., & Han, J., 2008. International Business: The Challenges of Globalization. Upper Saddle River, NJ: Pearson Prentice Hall. World Savvy Monitor, 2008. International Trade Policy. Global Poverty and International Development. Issue 5. Read More