The Globalization of Markets and Production - Essay Example

? Globalisation presents numerous opportunities in a way that enables individuals, corporations and nation s to reach around the world further, faster, deeper, and cheaper than ever before (Griffin and Pustay, 2010). Evaluate the factors responsible for the globalisation of markets and production. Table of contents 1. Introduction 3 2. Factors responsible for the globalisation of markets and production 3 2.1 Globalization of markets and production – characteristics 3 2.2 Which factors most contributing in the globalization of markets and production? 4 2.2.1 Presentation of the factors 4 2.2.2 Analysis of the factors 5 3. Conclusion 6 4. Recommendations 7 References 9 Bibliography 9 1. Introduction Globalization is considered as one of the most critical aspects of modern society. The historical development of globalization has been often related to the advances of technology. In practice, it seems that several factors have led to the globalization of markets and production worldwide. These factors are explored in this study. Emphasis is given on the key characteristics of these factors but also on their potential relationship. In addition, the different performance of these factors in regard to the promotion of globalization in different countries is discussed. It has been proved that there are certain factors that are closely related to the globalization of markets and production but their contribution in the enhancement of the globalization is not similar in countries internationally. The different cultural, political and economic characteristics of states seem to be responsible for the above phenomenon. 2. Factors responsible for the globalisation of markets and production 2.1 Globalization of markets and production – characteristics When referring to globalization of markets reference is made to a series of activities, such as the development of free trade, the travelling with no restrictions, the potential of establishment in a foreign state for business purposes and so on (Bozyk 2012). The high expansion of brands internationally is also considered as a phenomenon of markets’ globalization; indeed, in each industry there are brands that are highly popular, being their industry’s leaders (Bozyk 2012). The globalization of markets has, necessarily, led to other forms of globalization, such as the globalization of production. The latter form of globalization reflects the development of production standards, such as the ISO quality standards, that are respected internationally but also the potential of firms to establish their production units in foreign countries without facing resistance by the host country (Sobel 2009). 2.2 Which factors most contributing in the globalization of markets and production? 2.2.1 Presentation of the factors In the literature different factors have been found to be involved in the development of globalization, both for markets and for the production process. In regard to the globalization of markets emphasis is given on the following factors: the level of unemployment, the restrictions set for the establishment of foreigners, the economic support provided to businesses, the level of tax and the performance of the economy (Prempeh, Mensah and Adjibolosoo 2004). The educational perspectives and the chances for personal and professional development are also factors that can influence the decision of people to move to another country, an activity that is regarded as part of the globalization of markets (Blossfeld 2008). The globalization of markets is also affected by another fact: the number of buyers/ sellers within each market (Prempeh, Mensah and Adjibolosoo 2004). According to Vaidya (2006) the development of markets is affected by certain factors, such as the macroeconomic policies promoted by the government, the legal framework regulating business projects, the level at which a market participates in other financial markets globally and the level at which technology is promoted. As for the globalization of production, reference should be made to the following factors: the advances of technology, especially in regard to the production-related processes, the local laws regulating the establishment of foreign business units, the potentials for developing local networks of cooperation/ allies and the quality of transportation (Bozyk 2012). The appropriateness of infrastructure and the availability of specialized staff are also factors that can highly influence the globalization of production (World Bank 2007). In addition, the globalization of production cannot be secured unless the standards of quality that have been established by international organizations are respected (World Bank 2007). 2.2.2 Analysis of the factors In each country, the level of unemployment is vital in order to decide the potential of the country’s market to promote the rules of globalization. In countries where the rates of unemployment are quite high, globalization would set in risk the national welfare, a fact that should be taken into consideration by the policy holders. On the other hand, countries with quite low unemployment rates and low taxes are expected to attract foreigners, both individuals and businesses (Prempeh, Mensah and Adjibolosoo 2004). Also, countries that are quite strong, in terms of their economy, are more able to support highly globalized markets, i.e. markets that are attractive as business destinations and markets that can affect the performance of other markets globally (Prempeh, Mensah and Adjibolosoo 2004). In practice, the effectiveness of a market in terms of globalization is usually measured by referring to two critical rates: a) the rate of professionals that the market attracts and b) the rate of foreign investment that the market is able to retrieve for supporting its activities and its financial products (Blossfeld 2008). It should be noted that the performance of a market in regard to the above two characteristics: i.e. popularity as a work destination and as an investment destination does not denote, at least not fully, the market’s strength. For example: the US market is believed to be highly globalized, if based on the above two characteristics. Still, the specific market needs to be reorganized for securing its stability, which, for now, is in risk. When described the factors contributing in the globalization of markets, see section 2.2.1 above, emphasis has been given on a country’s macroeconomic policies: these are the policies that aim to secure a country’s economic stability at the long term, i.e. not just for a specific period of time. These policies are depended not only on the political framework of each country but also on the local culture and the structure and the ethics of the society (Blossfeld 2008). If these policies are able to be fully aligned with the country’s cultural and social rules, then their success is guaranteed. However, such alignment would be opposed to the rules and the aims of globalization: the elimination of differences in terms of economic practices used in countries worldwide, a target that it is quite difficult to be achieved (Vaidya 2006). For this reason, the actual value of globalization for the development of countries’ economic performance is often doubted; moreover, efforts are made for identifying additional criteria on which the promotion of globalization will be based. At this point, certain issues should be highlighted in regard to the globalization of production: highly globalized markets, in terms of production, may threat the stability of other markets (Sobel 2009). For example, the high popularity of China and Vietnam as host countries for production units has led to the radical reduction of production units established in Western countries (Sobel 2009). Also, the control over the alignment of production rules with the international quality standard is often quite difficult, mostly due to the lack of effective cooperation between authorities that hold the responsibility of such initiatives (Bozyk 2012). 3. Conclusion The globalization of markets and production has been highly expanded the last decades due to a series of factors. Economic, geopolitical and personal interests have been set as the basis for governments for support globalization, even if its effects on states are not always positive, as for example in the case of limitation of competitiveness of local firms towards foreign firms (Prempeh, Mensah and Adjibolosoo 2004). One of the most important findings of this study seems to be the following: in the context of international community the promotion of globalization is not standardized, both for markets and for production. The reason is that the perception of individuals on globalization is differentiated worldwide, under the influence of local culture/ ethics but also of the personal experiences and background. Therefore, there are markets that are highly globalized and others that are still under-developed in regard to the globalization-related processes. Under these terms, the following problem appears: should the globalization of markets and production be depended only on certain factors or it should be rather decided by employing additional criteria, such as the needs of local people and the country’s available resources? Potential recommendations for facing the above problem are provided in section 4 below. 4. Recommendations When having to evaluate a market’s potential to follow the rules that govern the global market, i.e. the rules of globalization, it is necessary to review carefully all the potential effects of these rules not only on local economy but also on society. If such practice is avoided, then the potential negative effects of globalization at local level would be quite difficult to be controlled. For this reason, the promotion of globalization of markets and production within each country should be based on the following rules: a) the level at which the country’s resources would be adequate for supporting activities based on the rules of globalization should be checked in advance, b) the past experiences of the country in regard to the promotion of globalization across the country’s industries should be reviewed; if failures in aligning local activities with the rules of globalization are reported then the relevant policy should be alternated so that national interests are not threatened, c) the costs and the effects involved should be compared to expected benefits; if the latter are more than the former then the involvement of the country in the promotion of globalization should be limited, as possible and d) the needs of local people should be checked and evaluated; if globalization could help to improve the conditions of life of locals then its rules would be welcomed, otherwise a different approach towards globalization could be preferred; for example, the exchange of knowledge with foreign firms/ institutions should be used instead of the establishment of units of foreign firms. References Blossfeld, H., 2008. Young Workers, Globalization and the Labor Market: Comparing Early Working Life in Eleven Countries. Cheltenham: Edward Elgar Publishing. Bozyk, P., 2012. Globalization and the Transformation of Foreign Economic Policy. Aldershot: Ashgate Publishing, Ltd. Prempeh, O., Mensah, J. and Adjibolosoo, S., 2004. Globalization and the Human Factor: Critical Insights. Aldershot: Ashgate Publishing, Ltd. Sobel, A., 2009. Challenges of Globalization: Immigration, Social Welfare, Global Governance. London: Routledge. Vaidya, A., 2006. Globalization: Encyclopedia of Trade, Labor, and Politics. Santa Barbara: ABC-CLIO. World Bank, 2007. Global Economic Prospects 2007: Managing the Next Wave of Globalization. Washington: World Bank Publications. Bibliography Goldin, I. and Reinert, K., 2006. Globalization for Development: Trade, Finance, Aid, Migration, and Policy. Washington: World Bank Publications. Heidhues, E. and Patel, C., 2012. Globalization and Contextual Factors in Accounting: The Case of Germany. Cheltenham: Emerald Group Publishing. Logan, J., 2011. The New Chinese City: Globalization and Market Reform. Hoboken: John Wiley & Sons. Read More