Multinational Enterprises and the Global Economy - Essay Example

For instance, foreign direct investment is one such activity, which has influenced the overall relationship among various governments and international companies trying to enter the host nations. FDI will be studied as an extended example along with its pros and cons in various nations as well as host organizations. According to Peters and Pierre (2006), “globalization refers to the worldwide phenomenon of technological, economic, political, and cultural exchanges among nations, organizations and private individuals.

” As a direct result of these exchanges, nations are more dependent on each other than ever. This has also resulted in interconnectedness and innumerable opportunities, in terms of modern technology, larger markets, superior and modern goods and services as well as minimum barriers to capital and trade flows. This has also changed overall wants, tastes, demands and needs of consumers, who are increasingly converging towards being called as global customers. Apart from opportunities, globalization is also filled with numerous challenges.

These challenges include fierce competition, decline in the number of local job opportunities, close-down of various local organizations and even some retail formats, market liberalization, economic volatility, new and more complicated security issues as well as increased non-tariff trade barriers. So, it can be said that globalization has brought both positive and negative influences on the overall world economy as well as relationship between the host government and MNEs. The overall influence of globalization can be described in terms of two critical developments.

Firstly, the re-occurrence of regional and economic proximity that contributes to enhanced investigation about innovation. The second development is the growing inter-relationship between innovation and technology. It has been observed that majority of innovations, occurring across sectors, are direct or indirect results of advancements in