Challenges of Globalisation to National Governments - Assignment Example

Globalisation Abstract Globalisation is a process and a means to attain goals of globalism. It is one of the most influential sources in determination of the future the path of the world. Globalisation has many dimensions including political, social, cultural, security and environmental among others. This paper focuses on the meaning of the concept of “globalisation” as viewed from all these dimensions. Different individuals, groups and organisations have different perspectives regarding the meaning of this concept. As a result, there are different interpretations and reactions to “globalisation”. Some view this concept as being beneficial and helping in advancement of economy while others view it as being costly to the different segments of the world society. Thus, this paper will evaluate the benefits and costs stemming from globalisation. In my own view, globalisation is advantageous to for countries. I have highlighted some of the reasons behind my argument in this paper. Globalisation poses a lot of challenges to national governments. This paper highlights some of these challenges while still focusing on the different dimensions of this concept. Also, it will be prudent to mention some of the strategic approaches employed by different governments to cope and deal with such challenges. This paper goes a step further to evaluate the impact of globalisation on Toyota Motor Corporation It highlights some of the weaknesses and strengths of this organisation brought about by the unstoppable process of globalisation. Finally, the paper looks at some of the opportunities created by the globalisation process and the potential threats it has to the company. Table of contents Globalisation Globalisation is a process that allows greater interaction among countries, persons and businesses around the world, leading to development of the global economy. It is manifested by political, social, cultural and technological integration of individuals, societies and economies all over the world (Boudreaux, 2008, p. 1). To a large extent, globalisation results into the harmonisation of international laws and policies. For example, each country formulates its own trade policies regarding taxation and tariffs. With the influence of globalisation, different countries are able to work to have identical policies in order to trade efficiently with each other. According to Institute on Globalisation and Food Systems, (2005, p. 67), the process of globalization is brought about by the linearization of international trade paving way for corporations to pursue larger markets. In addition, globalisation has been brought about by the huge advances in infrastructure, communication and transportation. It means that all actors around the world are able to participate in global relations under common rules. Several agreements including the World Trade Organization (WTO) agreements provide the rules for trade, labour relations, environmental care, sanitary and food safety compliance among others. When a government signs them, it is ruled by the agreements. In many cases, this leads to revision of already existing national policies so as to conform to the agreements (Sapru, 2008, p. 503). One indicator of the extent of globalisation is volume of international transactions occurring per day. Currently, there is a flow of $ 1.2 trillion flowing through the New York currency markets every day. At the same time, the volume of international stock market transactions per day exceeds that amount. Benefits of globalisation According to the Institute on Globalization and Food Systems, (2005, p 67), the globalisation process has numerous benefits. Some of these benefits are listed below: Globalisation greatly helps to increase communication among people around the world on a more permanent basis and at much lower costs. Presence of internet services recently has led to stronger corporate and personal relations. It helps them to advertise products and service, to acquire knowledge and obtain entertainment among other benefits. Through development of new technology, financial transactions are made more quickly at much less charges. This facilitates business since it enables international flow of funds, which supports the international economy. Globalisation has enabled the tourism business to grow significantly. This is due to the fact that tourists are able to find more information about sites and new opportunities more easily since it is readily available. Through advancement in technology, firms of any size and from any location are able to practice agro-tourism and ecotourism. Globalisation has increased mobility of technological innovation including those for agriculture and agro-forestry. It is now possible to purchase materials, tools, equipment, seeds, vegetative tissues, and embryos by internet or mail and pay for them by electronic cards or card transfers. The advent of new technology which has been a factor in globalisation has led to increased foreign direct investment. This has resulted into higher competition by businesses globally and has enabled international business to thrive. With the support of sound economic policies and technological advancements, many countries have been able to realize high growth rates in their economies. For example, India has had a continued economic growth rate of 8% and more or above per year recently (WTO, July 2008). There has been an increase in the international flow of goods and services caused by the relaxation of trade barriers and compliance with common rules. Countries that have adopted liberalized economic policies have seen a reduction in the levels of poverty due to the associated wider market for local goods and services. Newer technologies in research, IT and production lead to a reduction in the costs of production and increase in levels of sales. In addition, this leads to an increase in the level of skills possessed by the labour force (WTO, July 2008). Due to the increase in flow of goods across borders, consumers are able to get better products at lower costs. This helps to mitigate the effects of inflation to a nation. Costs of globalisation Apart from benefits, globalisation is also associated with various costs as described below. Faster financial flows and increase in interdependence on global basis lead to more international transfer of financial instability. Examples are the exchange rate and financial crises in Asia in 1998 starting from Thailand to South Korea (Institute on Globalisation and Food Systems 2005, p 67). Globalisation is associated with environmental and health problems such as global warming and pandemics. This is due to reduction in integrity regarding the environment by corporations that take advantage of the weak regulations in developing nations. Due to globalisation, conflicts can escalate beyond particular boundaries or raise the stakes of conflict. For example, globalisation may enhance the transfer and use of weapons of mass destruction (Arnold, 2008, p. 448). Globalisation has led to an increase in the possibility of civil war within nations and also war between countries as they fight for resources. There is high possibility of transmission of diseases between nations unintentionally. There is an increased likelihood that economic difficulties affecting one nation may affect many other nations. Globalisation has led to increased flow of labour from developing to developed nations to seek for employment. In my view, globalisation is largely advantageous for countries. To a large extent, globalisation increases the rate and speed of international movement of goods and people around the world. At the same time, it helps to increase connection among all people around the world through the mass media. For example, it is possible to communicate with many people throughout the world using mobile phones or internet services at much lower costs. In addition, globalisation has led to increased interdependence among nations internationally. This has helped to increase economic prosperity in the developing countries. Environmental protection is enhanced across the economies of the developed world. Throughout the world, globalisation has helped to improve the living standards of people due to increased level of food security and improved technology and skills. This is evident as statistics indicate that from 1981 to 2001, the number of people surviving on less than $1 dollar per day decreased from 1.5 billion to 1.1 billion. The reduction was more significant in the developing countries (WTO, July 2008). Challenges of globalisation to national governments National governments experience many challenges stemming from globalisation. Some of these challenges are examined in this section. According to Wijen et al (2005, p. 274), the unequal distribution of benefits and costs poses a great challenge to development of the low and medium income countries. These export primary products that are of much low value than when processed. This has often led to worsened levels of economic uncertainty, increased poverty and vulnerability. Globalisation enhances increased participation of the private sector in international trade. Such actors require rules of operation, unrestricted access to imports, efficient social and economic infrastructure, and stable macroeconomic environment, all which are to be provided by national governments (Mrak, 2000, p. 18). There seems to be a shift in control of nations’ economies from the governments of sovereign states to other entities such as nation states, multinational organisations and international organizations. As a result, national sovereignty seems to be undermined in the process. Globalization has reduced the power possessed by national governments since they have no power over technological flows and national currencies. Due to globalisation, many nation states have lost monopoly power that they ought to enjoy within their borders. This is due to increased participation of private enterprises in global finance, industry and trade without the cooperative decisions of national governments (Pfaller & Lerch, 2005, p. 93). Strategies by governments to mitigate the challenges Many governments are formulating policies in reaction to the increasing challenges posed by globalisation and also with a view to exploit opportunities arising due to globalisation for future economic growth. Some of these strategies are: Adoption of gradual and selective financial approach to financial (as in China’s case), integration so as to avoid risks of banking and currency crises. Attraction of high value investments by global high value industries as has been done by Irish governments (National Research Council (U.S.) Committee on Globalization of Materials Research, p 24). Support of development of high quality products and services through educational support, training, maintenance of competitive tax and macroeconomic environments among other ways. Ireland is a good example that has succeeded in this area. Most governments have increasingly invested in science and technology in areas of research, innovation and technological development. Improvement of market access for processed agricultural products from their countries by low income countries. They have proposed to reduce tariffs on exportation of such goods and provide subsidies to their production. This will enhance the benefits from the processed products than when exporting the primary products (World Bank, 2007 p. 8). The impact of globalisation on Toyota Motor Corporation Toyota is one the leading manufacturers of motor vehicles in the modern world. In fact it has taken the leadership over other similar companies in its field over the last several decades. Recently, this company which is based in Japan has become one of the most influential actors in the world market (Toyota Motor Corporation, 2004, p. 1). The company owes its international market expansion to the process of globalisation. The relaxation of trade barriers across national borders has greatly supported the company just as many other large companies in the world. Consequently, it has entered into new markets especially in the developing countries. It has been able to open factories to manufacture and assemble cars in all continents and in different countries. Toyota has established some of its branches in countries such as France, Poland, America, Venezuela, Philippines, Pakistan, India, Malaysia, Thailand, Argentina and Mexico among others. Due to reduction of financial barriers, Toyota is able to supply its products to the local markets in those countries (Toyota Motor Corporation, 2004, p. 1). Due to the minimal financial barriers, Toyota has been able to develop a production chain within different countries, making it possible to reduce the costs that could be associated with transportation of its products across borders. As a result, the company has been able to significantly reduce overall costs of availing its products to the customers (Toyota Motor Corporation, 2004, p. 1). This has enabled it to reduce the prices charged to its products. Hence, the company has attained a competitive edge with new opportunities. For example, due to globalisation, Toyota was able to develop and find ample market for Toyota Corolla and Toyota Yaris in Europe and Africa. In the United States, the company marketed SUV models which got significant demand. According to Toyota Motor Corporation (2004, p. 3), the integration of Toyota in the global economic trade has led to development of ethical problems. This is caused by the fact that the Toyota corporate culture is defined by the Japanese culture. This culture is sometimes not accepted by employees working in other countries especially the western states. At the same time, Toyota faces a threat to its traditional image (Toyota Motor Corporation, 2004, p. 3). As the company expands internationally, it builds of plant and employs personnel especially in the third-world countries. This threatens the traditional view of Toyota as a reliable company manufacturing vehicles of high quality. To avoid this, this company needs to set up an effective system of management throughout its chain of production. Conclusion To conclude, globalisation, as it has been seen from its definition is not an economic phenomenon only. Rather, it is a wider concept manifested by political, social, cultural and technological integration of individuals, societies and economies all over the world. Globalisation enhances connectivity, interdependence and integration of the world society in the global age. Though they sounding more theoretical than practical, there are many benefits of globalisation as disclosed in this discussion. The challenge is thus left to individuals, corporate organisations and national governments to make this process a reality. However, as they do so, they need to bear in mind the costs associated with this phenomenon. Evidently, the less developed countries are the affected in this case as they try to catch up with the developed nations. Though it poses challenges to national governments, it is seen that globalisation is a process that will continue unabated. Therefore, governments should continue to play their role in shaping the future of globalisation by formulating enlightened policies and strategies. However, to cope with the challenges of globalisation, concerted effort is required to assist governments. Individuals and firms need to play their part as it has been seen with the Toyota Motor Corporation. Therefore, with more collaboration, globalisation can be more beneficial than costly in the long-run to any segment of the world society. References Arnold, R. A., 2008, Microeconomics, Cengage Learning, New York. Boudreaux D. J. 2008, Globalization: Yesterday and Today ABC-CLIO, Greenwood, New York. Institute on Globalization and Food Systems 2004, The Meaning of Globalization, IICA Publishers, Bonn Germany. Mrak, M. 2000, “Globalisation: Trends, challenges and opportunities for countries in transition,” United Nations Industrial Development Organisation, Vienna 2000, Available from http://www.unido.org/fileadmin/import/userfiles/puffk/mrak.pdf (15 March 2011). National Research Council 2005, Globalization of Materials R&D: Time for a National Strategy, National Academies Press, Washington DC. Pfaller, A & Lerch, M. 2005, Challenges of Globalization: New Trends in International Politics and Society, Transaction Publishers, New Jersey. Sapru R. K. 2008, Administrative Theories and Management Thought (2nd edition), PHI Learning Pvt. Ltd, New Delhi, India Toyota Motor Corporation 2004, “Toyota globalization strategies,” Available from http://www.icmrindia.org/casestudies/catalogue/Business%20Strategy2/BSTR094.htm (15 March 2011). Wijen, F., Zoeteman, B. C. J, & Pieters, J. 2005, The impacts of globalization, Edward Elgar Publishing, Massachusetts. World Bank 2007, “World development indicators,” UNCTAD World Investment Report, OECD Development Assistance Committee, Available from http://www.wto.org/english/res_e/booksp_e/anrep_e/wtr08-2b_e.pdf (15 March 2011). World Trade Organization (WTO) July 2008, The WTO launches World Trade Report 2008: Trade in a Globalizing World, Press, 534, OECD, Geneva, Switzerland, Available from, http://www.wto.org/english/news_e/pres08_e/pr534_e.htm (15 March 2011). Read More