Globalization of Financial Markets SLP - Essay Example

Globalization of Financial Markets SLP and Number of the of the Submitted Globalizationof Financial Markets SLPIntroduction The world is fast developing into a global village. The emergence of the Internet and other means of communication such as the mobile phone and teleconferencing have helped transcend the limits of time and space and we comfortably watch news happening on the other side of the globe millions of miles away as it unfolds live before our very eyes on our television sets. Truly the pace of transport and communication as well as information and communications have improved a hundredfold.

Today, very few of the earth’s frontiers remain unexplored. Since the end of the Second World War, organizations such as the International Monetary Fund, the International Bank for Reconstruction and Development and the GATT has spearheaded efforts for trade and development the world over (Caruana, 2007). Thus the goal of globalization is fast becoming a reality. DiscussionThe GATT gave way to the WTO or World Trade Organization on January 1, 1995. The WTO is a better representative of world trade with a membership of more than 150 countries of all sizes from various parts of the globe.

However, globalization has been regarded as a two edged sword by some developing nations. They state that opening their borders to the more developed nations result in a gain to the developed economies while putting themselves at a loss. This is because the international franchises fast take over the new territories. People are attracted to them and spend a lot of money there, resulting in capital outflows to the developed world. There is a strong case for protecting the home industries from being ruined by opening the doors to globalization.

Also the membership of the WTO requires adherence to the principles of non-discrimination, reciprocity, binding and enforceable commitments and transparency, the larger and more stable economies generally get more favorable status. Standards of quality control demanded by developed nations like the ISO certification may be hard to achieve by less technologically developed nations (Berniker et al., 2001). Let us take the case of Brazil. Brazil is one of the world’s leading economies and has the fastest growth in Latin America.

It imports machinery, oil, electrical and transport equipment, chemicals, electronic goods and auto parts (CIA World Factbook, 2011). It exports steel, paper, iron ore, soybeans and coffee. China, the USA and Argentina rank among its best trading partners in terms of volume of trade conducted with them. Exposure to world markets has undoubtedly affected the price of coffee and soybeans both at home and abroad. But with exports estimated at $201 billion in 2010 against imports of $181 billion, it is adding to its GDP growth every year.

Around 67 percent of Brazil’s economy is based on service industries, with 6 percent devoted to agriculture and 27 percent to manufacturing. Even so, its unemployment stands around 5 percent and inflation at 6.5 percent as of December 2011. Around 15.5 percent of its population are still considered living below the poverty line. It has been ranked as the 126th nation for ease of doing business in, compared to others. Cattle and cellulose also account for sizeable export revenues. ConclusionWith conditions favoring Brazil at the moment, I do not think that joining the WTO will be too detrimental, although it does not augur well for the agricultural sector, which might see their prices fall in the light of worldwide competition.

It is also likely to affect the textile and footwear industry. A well developed banking and communications sector is likely to facilitate trade efforts.References Berniker, M., Johnson, M., & Okin, H.(2001). Shifting to one world, one exchange? Global Finance, New York, N.Y. Retrieved on 19 Jan 2012 from http://web.ebscohost.com/bsi/detail?vid=3&hid=8&sid=d206dccd-ea1d-46e1-89f8-20ea3ee62fd1%40sessionmgr10&bdata=JnNpdGU9YnNpLWxpdmU%3d#db=bth&AN=4129758Caruana, J. (2007). Global financial market risk - who is responsible for what?

International Monetary Fund. Retrieved on 19 Jan 2012 from http://www.imf.org/external/np/speeches/2007/053007.htmCIA World Factbook (2011). Facts About Brazil. Retrieved on 19 Jan 2012 from https://www.cia.gov/library/publications/the-world-factbook/geos/br.html