Экономические науки / 16.
Макроэкономика
Chompunick Sitthirawiphong1
Irina Onyusheva1
1Graduate School, Faculty of Business and Technology,
Stamford International University, Thailand, Bangkok
Global Trends and Effects of Globalization on Corporations
Key Words: Globalization, international business, effect, corporations.
Many
economists believed that if current economic growth spreads, a common interest
for all multinational companies could be consumers from non-developed
markets. It
is forecasted that from today to many years afterwards, the increasing of
wealth has leaded to increase consumption of goods and services in developing
countries. Local
companies have an advantage of producing products that meet the minimum
requirements of the locals, while developed corporations are unwilling to their
reputations and may need other strategies to tap into low-end
consumer markets.
Theoretical Background. Globalization is a movement of economic,
financial, trade, culture, and communication around the world which can lead to
cause more interaction and integration among the people, ideas, goods and
services from different nations. Globalization implies the opening of local and non-local perspectives to a broader outlook of an
interconnected and interdependent world.
In fact,
the word “globalization” can be classified into at least five sets of
definitions (Najam, Runnalls, & Halle, 2007) as follows:
1.
As internationalization;
The “global”
in globalization is viewed “as
simply another adjective to describe cross-border
relations between countries”.
It describes the growth in international exchange and interdependence.
2.
As liberalization;
The globalization is a situation for
removing government imposed restrictions on movements between countries.
3.
As universalization;
The globalization is a process of
spreading ideas and experiences to people at all corners of the world, so that
aspirations and experiences become harmonized.
4.
As modernization;
The globalization is an activity that
the social structures of modernity (capitalism,
industrialism, etc.) are
spread over the world, destroying cultures and local self-determination
in the process.
5.
As deterritorialization;
The globalization is a process of the “reconfiguration
of geography, so that social space is no longer wholly mapped in terms of
territorial places, territorial distances and territorial borders”.
Summary of Key Research Findings. Defying Five Keys Global Trends.
Trend 1: Changing balance of growth towards emerging markets. In
recent decades, globalization has transformed the world, boosting economic
growth and connecting developed and developing countries.
In a consequence of the economic crisis, the nature of globalization is
changing as emerging markets take a larger role in the global economy.
For example, the economic strength of China and
other leading emerging market countries take effects to decrease the power of
the developed countries such as the US and the UK.
These come from increasing of trade, lowering of
tariff barriers, and reducing of country intervention, along with growing
number of middle-class
consumers in those areas.
Trend 2: Need for increased productivity and consumption in developed
countries. It is the need for stimulating backwards
economies in developed countries due to their economies are shifted more and
more into new emerging countries or developing countries around the world.
From a macro-economic
perspective, trade benefited everyone: prices
for goods in developed markets fell and living standards for workers in many
developing countries rose.
For example, most of goods sold in the US or Europe shops are manufactured from
emerging markets in other regions such as China and Vietnam which are members
of Asian countries.
Trend 3: Increasing global interconnectivity. While the physical size
of the world has not decreased, the distance between two locations seems closer
than ever. Innovative
technological advancements have created a perception that the world is smaller.
The tendency of investment funds and
businesses move beyond domestic markets to other markets around the globe,
thereby increasing the global interconnectivity.
Globalization has had the effect of noticeably
increasing international trade and cultural exchange.
It is a movement of economic, financial, and communication from different
nations which can lead to cause more interaction and integration among the
people, ideas, goods and services. Hence,
the global interconnectivity can help to expand global business opportunities
and speed up developing competitions.
Trend 4: Increasing gap between demand and supply of natural resources.
The rapid acceleration in global
economic activities dramatically increases demand of global natural resources
that also tend to raise the gap between demand and supply.
It is in particular to supply developing economies
together with the push for environmental protection.
The future availability of natural resources such as food, water, energy, and
minerals is critically important because demand and supply is hard to predict
and natural resources in nature are complex.
All individuals and nations require them to sustain
current standards of living, as well as to increase economic activity.
Current and future resource availability is depended
on a political, economic, social and environmental issue.
Stakeholders across different sectors, industries,
countries and disciplines often disagree on the relative urgency to act on
different perceived resource risks, and the appropriate responses in mitigation
(Kristel &
Davis, 2014).
Trend 5: Challenge for governments to develop policies.
Global economies face governments in
almost developing countries to develop policies for economic growth and
financial stability. These
challenges include weak institutions, high unemployment, poor infrastructure, a
lack of access to financial services, and unsuitable laws and regulations.
Many governments need to remove trade and investment barriers by creating
suitable economic policies, increasing openness to international markets,
foreign investors, and global organizations, strengthening business
environments, improving infrastructures, and giving their people to approach
financial services.
Globalization of Human Capital.
One of the most significant dimensions
of the current wave in globalization is the globalization of human capital.
It is widely accepted that the present world has low cost and skilled
manufacturing workers in China, software and customer service professionals in
India, and highly skilled employees in Eastern Europe.
Many international organizations have new
challenging opportunities to perform their ability to access new pools of human
capital across the globe by using their strategies and structures.
It can be said that a human capital is among the
most important drivers of long-run
economic growth. The
trade liberalization in the globe increases skilled wage premiums in developing
countries, resulting higher benefits of skilled workers more than unskilled
workers. Macro-economic
conditions drive wages and job opportunities, leading to individuals’
decisions to invest in human capital with the aspect
to gain benefits later.
Effects of Globalization
on Corporations. Globalization
is the competition in an international market.
The growth rate of developing countries and their
corporations indicates that the developed world no longer has the upper hand.
Success in this new global market requires the
ability to accommodate the different needs of diverse consumer groups.
Companies that desire to remain competitive have to
develop themselves to sustain their positions in international markets.
They can achieve their competitive advantages through product and process
innovations and after that try to maximize profits.
For
developing markets, companies from emerging economies are following the lead of
their developed counterparts, issuing stocks and encouraging investment. Some of them grow up outperform many well-known
international companies from developed countries.
Besides that, increasing
affluence leads to increasing consumption of goods and services in developing
markets. However, developing countries' political systems
differ greatly from those in developed nations.
Many issues such as
corruption, political influence over business, and intellectual property rights
could be the main problems that need to be adjusted.
And for
developed markets, they are tapping into developing economies for their
markets, stocks, and possible mutually beneficial co-operation opportunities due to globalization makes
skills of the old become obsolete. Thus, they have not benefits from dealing longer with
the developed countries as similar as themselves anymore.
Many international companies
recognize this situation, so they try to better manage overseas operations,
especially in developing markets. Nevertheless, companies may have certain concerns when
investing in these new emerging markets.
They might also approach
government officials directly with an analysis of the country's issues and
offer solutions though their products and services in order to avoid many
possible problems such as protectionist sentiments against foreign investors
and suspicion amongst employees of different backgrounds and ethnicities.
References:
1.
Foster, P. A. (2013) Considering Five Emerging Global Trends and their impact on
organizational strategic leadership. Retrieved from
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2.
Goldberg, E. (2015). The 5 Key Trends in
Globalization That Are Changing America and the World. Retrieved from http://www.huffingtonpost.com/edward-goldberg/the-globalization-5---the_b_8733924.html
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Government Digital
Service. (2015). 2010 to 2015 government
policy: economic growth in
developing countries. Retrieved from https://www.gov.uk/government/publications/2010-to-2015-government-policy-economic-growth-in-developing-countries/2010-to-2015-government-policy-economic-growth-in-developing-countries
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