Management And World Trade Organizations In Global Environment

Impact of Global Financial Crisis on trade boarders

Discuss about the Management and World Trade Organizations in Global Environment.

Globalization is the procedure of global integration, which isincreasing from the exchange of world views, goods and services, ideas and the other aspects of customs. Mowforth and Munt (2015) opined that globalization implies the exchange of the markets in the world economy. Markets where globalization is familiar consists the financial markets and commodity markets. Financial markets include the capital markets, credit market, insurance market and the money markets. On the other hand, the commodity market includes the markets of goods and services. In the year of 2000, the international monetary fund (IMF) highlighted four basic characteristics of globalization such as trade and transactions, migration and movement of the people, changing of investment and the capital of an economy, integration of skills and knowledge (Wright 2016). Globalization has brought a large number of advantages from the global sellers as well as the domestic economies. Globalization has provided an incentive to the nations, which can be received due to the integration of comparative advantage (McCann and Acs 2015).

This study will try to highlight whether the trade boarders are really collapsing after Global financial crisis or not. A global financial crisis is a situation where economic difficulty has been experiencing by the markets and by the customers. Therefore, global financial crisis refers a difficult business atmosphere, which forces the consumers to purchase fewer amounts of goods and services. This situation has sustained until the economic position improves (Rupert and Smith 2016). As a result, global financial crisis has a greater adverse impact on the trade boarders. The global economy has experienced the utmost severe financial crisis in the year of 2008-2009. During this great recession situation, the world trade had decreased massively. This situation was started from the third quarter of 2008 to the second quarter of 2009. However, after the third quarter of 2009, the international economy was started to improve. Therefore, it can be observed that the world trade was also started to bounce back (Georgiadis and Mehl 2016).

Moreover, this study has also aimed to discuss the reasons behind the massive demonstrations against the globalization at WTO as well as G7 summit. The international trade agreement, which was proposed in the G7 summit, highlighted that an international trade fund would help the comparatively less developed countries to address the environmental changes (Obstfeld 2015). On the other hand, World trade organization has aimed to invest in the capital market of the emerging economy. In addition, international monetary fund- instituted structural adjustment programs were developed in order to boost the export. This would in turn assure the repayment of debts.

Value Creation in Globalization

It is known that globalization has developed the communication and the country’s economy with the passage of time. In this point, Mr. Pankaj Ghemawat questioned that whether the world is really is as global as it is stated. Mr. Ghemawat questioned that is it globalization or globaloney (Lingard and McGregor 2014). He added that globaloney is associated with the idea, which refers that the globe is highly connected as well as interdependent than the data highlights it to be. As per the statement of Ghemawat, this globaloney would lead to the businesses as well as the governments to neglect the opportunities for the positive changes. These practices can also address the environmental factors or can estimate the rehabilitation trouble facing by European economy.

Lindberg and Jütting (2016) opined that Pankaj Ghemawat started his presentation by highlighting the delegates at the Fifth Annual European Investment summit. He mainly questioned how the countries are globalised. What characteristics can be noticed regarding the inter-connectedness? Lastly, Ghemawat also questioned what the effects for Europe are.Today’s popular predictions are that world is shrinking day by day. Not only, Stevenson (2014) argued technology is also reducing the distance and national boundary has been rising unnecessarily. On the other hand, Ghemawat showed that apart from this technological advancement, these factors overcome the predictions of small but frictionless world (Stevenson 2014). From the analysis of his primary research regarding globalization, Ghemawat criticized that people are hardly globalised compare to the perception. In this regard, he showed that the percentage of the global telephone calling is only 2%, the percentage of the immigrant citizens in a given nation is 3%. This rate of per cent is actually very lower than the prediction. It can be mentioned that after globalization, this rate requires to be higher. In addition, Potrafke (2015) opined that the percentage of exports compare to the rate of GDP is only 30%. Ghemawat also criticized that most of the people overestimate the rate of percentage under each of these groups in terms of substantial margin. Therefore, Ghemawat stated that this exchange of thoughts and culture is “globaloney” rather than the “globalization” (Cheng, Johansen and Hu 2015.

Ghemawat also stated that people are not as attached as many predicts due to the law of distance. This will in turn implies that the disparity among several groups of people conclude the capacity and the willingness of several groups of people to interrelate with the others. According to Van Hoaand Harvie (2016), it can be stated that these disparities is based upon several components such as cultural, geographical, administrative or economic. In addition, these differences are compound as well as helpful to describe the limited characteristics of globalization.

Reasons behind Demonstrations against Globalization at WTO and G7 Summit

Pankaj Ghemawat also used maps of trade flows through the borders, where the physical size of the economy can be re-structured as per the necessities for country’s trade. Mr. Ghemawat wrote in his “Global 3.0: Global Prosperity and How to Achieve It” is that how global the people are? David Livingstone initially asked this question in the year of 1850. He also highlighted that the globe is not flat (Berden, Bergstrand and Etten 2014).

When Ghemawat was asked about the advantages of making the world highly globalised, then he replied that Doha added only 0.1 per cent in the country’s GDP. It is quite difficult to be excited for a politician. It will be easier to decouple. Nevertheless, Lauderand Brown (2015) criticised that it is necessary to understand why the benefits are larger compared to the shapes, which get pushed out. One country can be used as an example to get the entire liberalization.In order to the entire liberalization of a merchandised trade; the figures that get churned out are approximately 0.5 per cent.

In addition, Asongu and De Moor (2016) supported the words of Pankaj Ghemawat regarding the concept of value creation. Value creation can minimize the cost of production of the goods and services. This would in turn increase the potential quantity gains in globalization. This could effectively make the disparities of absolute cost.On the other hand, the changing of economies of scale cannot be described after globalization. It is one of the important sources of value creation, which tends to get overlooked. Secondly, globalization cannot change the consumer’s willingness to pay. However, Mitsilegas, Alldridge and Cheliotis (2015) argued that globalization can improve the structure of the industry.

At the conference of world trade organization, a Mexican competition commissioner came and talked about the market situation of monopoly and oligopoly in Mexico. Likely, it was not discussed regarding the absence of risk reduction at this conference. After the discussion, it can be inferred that there is no risk in general equilibrium. However, the discussion related to the knowledge creation was missing at the conference of world trade organization. Apart from this flows of products and services, there are flows of capital, flows of information and flows of people (Auer, Borio and Filardo 2017).

Therefore, Mr. Ghemawat highlights the benefits of the trade liberalization concept in the book of World 3.0. The GDP rate was increased from 2 per cent to 3 per cent. Nonetheless, as per the service liberalization concept, the rate of GDP was increased from 4 per cent to 5 per cent. As a result, it can be inferred that there are flows compared to the other products and services. People flows were in large volume. Nonetheless, it is noted that the complete liberation of immigration could be able to double the rate of GDP of the world. In this point, Zajda (2015) opined that the global GDP was increased from 3 per cent to 4 per cent.

Ghemawat also discussed about the hype of exaggerated level of integration after globalization. As per this concept, it can be mentioned that an economy can increase their benefits through additional integration. Furthermore, Ghemawat has described the usefulness of CAGE model in his book. With this model, one can identify the economical and the geographical differences of the countries. For example, using this model, it can be determined that the labour cost is lower in China (Ivanovand Webster 2013).

Anthony Giddens is the director of London School of Economics and the professor of Political Science. He stated his view regarding globalisation in the book of “Runaway World: How Globalisation is Reshaping Our Lives”, which was published in the year of 1999. As per the opinion of Anthony Giddens, it can be mentioned that there are four major dimensions of globalization (Ivanov and Webster2013). He defines that globalization is the intensification of worldwide social connections, which can relate the distant localities. Therefore, local happenings are shaped with the help of events. First dimension can be identified as the world capitalist economy. As per this dimension, Devereux and Yetman (2014) cited that the major centres of power in this world economy could be identified as the capitalist’s state. It is the main form of production. In addition, the domestic and the international economic policies would be able to highlight different forms of regulation of economic activity. This could in turn capable to highlight the wide scope of global functioning of organizational cooperation. Therefore, in this context it can be inferred that the effect of specific state within the global political order can be identified by the level of wealth (Falola 2014).

The second dimension of globalization is nation state system. With the help of this concept, sovereignty of an economy can be monitored. Sovereignty can highlight the link, which is associated with the replacement of frontiers by borders in the prior development of nation state process. In this context, it can be mentioned that autonomy within the geographical region is claimed by the condition is sanctioned as it can be identified by the recognition of the territory of different states (Kiely 2016).

World military order is the third dimension. Therefore, it can be mentioned that massive destruction power of weaponry would reflect the strength of military. This function can also be observedin the pre modern civilization period. In the opinion of Berden, Bergstrand and Etten (2014), it can be mentioned that third world countries are supposed to be military powerful. During the time of cold war, two most military growth regions such as United States and Soviet Union developed a bipolar method of military alliances of truly global scope. Therefore, it can be inferred that the nations involved in these context effectively accepts the shortcomings over the opportunities and can forget the external independent strategies (Boivinet al. 2014).

The fourth dimension was industrial development. The major reason of industrial development was to the expansion of global division of internal labour. This would in turn highlight the disparities among the more and the less industrialised areas within the world. Modern industry is depending upon the division of labour. In addition, it can be stated that development of modern industry is not only depending upon the level of job tasks but also depending upon the regional specialisation such as skill and knowledge of the employees, types of industry and also on the production of the raw materials. Moreover, Fukuzawa (2016) argued that since the Second World War, a major expansion of global interdependence had taken place under the division of labour. The major implication of industrialism is the global diffusion of technology. On the other hand, globalisation in the industrial sector influences the human communication with the material environment (Reese, Rosenmann and McGarty 2015.

On the other hand, it can be noticed that the fundamental aspect of globalisation that lies behind each of the institutional dimensions, which have discussed in the above, could be described as the cultural globalisation. Therefore, in this context it can be added that the fifth dimension of globalisation can be identified as the culture (Livermore 2016). The following figure highlights the five major dimension of globalisation in the concept of Anthony Giddens.

Globalization deals with the diffusion of thoughts, practices as well as technologies. Anthony stated that globalisation is more than universalization and internationalisation. Therefore, globalisation is not only connected with the westernization or modernisation. In addition, Eppinger and Potrafke (2015) criticised that globalisation is not also related with the liberalisation of markets. Anthony Giddens also explained globalisation as the strengthening of worldwide social relations. This relation can link the distant localities in such a manner that the local happenings can be shaped by organising global events. This will in turn involve the transformation in such a manner that the geography and regions have influenced. Nevertheless, McCann and Acs (2015) argued that globalisation also change the technological behaviour and sometimes it increases risks within the economy.          

Like Pankaj Ghemawat, Anthony Giddens argued that really people are living across the period of great political, economical or through the social change after globalisation? Globalization has become persistentin the country’s politics, however, it’s widespread utilisation can be described as a current phenomenon (Weiss 2014).

On the other hand, Anthony showed that sceptics of the conceptcriticised that the degree of the global incorporation had highly exaggerated. These were nothing fundamentally new regarding the globalisation. As a result, the global trading markets, exchange of the currency, mass migration and the global cosmopolitan culture would be affected. Moreover, other important side of globalisation was hyberglobalizers (Georgiadisand Mehl 2016). In this context, Anthony Giddens questioned that whether hyperglobalizers trumpeted a world of the dramatic transition as well as new global dynamics. Therefore, it can be inferred the corporations and the use of technologies dominate that world. Here, government had not such real power and the residents of a country did not have faith in the traditional politics (Eppinger and Potrafke 2015. In this purpose, Giddenscriticised that this argument is now associated with the trend of the past.Therefore, more specifically, it can be mentioned that this argument is now related with the consequences of globalisation, however, is not related with the reality of globalisation (Lingard and McGregor 2014).

As per the concept of today’s globalisation debate, all aspects have been transferred in a fundamental way. Presently, Anthony highlighted that the world has been experiencing cross border trade in case of the transaction of physical commodities. Therefore, it can be observed that the trade in service as well information has been increasing day by day (Janks 2014.

In the year of 2005, the G8 summit in Gleneagles, Scotland, was covered by political factors and issues.The major issue related with the end of poverty was primary attraction of the G8 summit discussion. Globalisation also focused to the mitigation of the end of poverty of the world. In this context, the macroeconomic solutions would be able to change the entire economic situation. On the other hand, the concept of degrowth was explained with the help of micro economic solutions (Cheng, Johansen and Hu 2015). These solutions are benefitted to motivate the citizens. In addition, the public officials, corporations, other educational institutions can address the core causes of poverty.

Corporate globalisation is not the ideal approach to mitigate the poverty of the world. This was the greater insight in case of the demonstration against World Trade Organisation in 1999 and also against the G8 in Genoa in the year of 2001 and Annemasse in 2003. End of poverty movement is indirectly related with the trade not aid strategy. According to Rupert and Smith (2016), trade not aid strategy is depending upon the principles, which stated that if the developing nations were capable to trade more freely with the wealthy nations, the developing nations would be capable to earn higher income (Mowforth and Munt 2015). These countries would be less dependent on the external aids in order to carry the development projects. Therefore, it can be inferred that international trade would increase incomes as well as standard of living of the poor and underdeveloped countries. They can develop their economy by selling the goods to the rich countries. As a result, it can be mentioned that this trading relationship between the developed and the underdeveloped nations can increase the economic performance of the countries (Lindberg and Jütting 2016). This will in turn mitigate the poverty of the less developed nations. This relationship can be explained with the help of the poverty reduction theory. Therefore, trade between the countries can boost up the economy and the export of the less developed countries will be improved.

On the contrary, Van Hoa and Harvie (2016) argued that most developed and wealthy nations impose higher rate of tariff on the products, which are exported by the developing and the underdeveloped nations. In this context, it can be stated that in order to sell the products in developed nations, exporters in the developing nations require to pay high tax. This will in turn make an effect on the pricing structure of the goods and services after they enter into the market. Developed nations subsidize their own sector to set the domestically produced products low, thereby; this will sustain competition from the poorer nations. From this point, it can be mentioned that tariff or quota in case of world trade increase the differentiation. As a result, the level of poverty will be increased in the developing countries. For example, it can be illustrated that Middle Eastern nations suffer from average clothing tariffs by 15 per cent on the $4.2 billion in case of export to United States in each of the year. In addition, Lauder and Brown (2015) opined that as per the constitution of progressive public policy, the Middle Eastern nation’s exports lower volume of merchandise to United States compared to France due to the higher rate of tariff. As a result, United States charged higher rate of tax on clothes compared to the manufactured products. This has created difficulties to the developing nations, where clothing is supposed to be a primary export industry.

According to Asongu and De Moor (2016), openness and trade liberalisation are the major components of national policy, which are necessary to identify the economic growth and the aggregate economic well being. Moreover, poverty is the greatest failure of contemporary global economy and it is identified as the greatest challenges of 21^st century. The procedure of trade liberalisation could have caused the poverty. If trade liberation and poverty can be estimated, then trade liberalisation can be measured as the major economic shocks.Liberalisation of type a will have the effect of type b. Moreover. Poverty impacts will base upon why people are poor to start with (Berden, Bergstrand and Etten 2014).

As per the UN Millennium projectreport, trade liberation is the poor countries undermine the poverty reduction. There is a negative relationship between the trading situation and neo liberalism. However, Mitsilegas, Alldridg and Cheliotis (2015) argued that higher rate of tariff increase the debt within the country. This will in turn make the country poorer from the previous. In addition, it can be stated that international monetary fund and world bank stop to impose the free market policies. Therefore, the profitability earning from the business will be declined and the level of poverty will be increased with respect to the other countries. The people will suffer from income inequality. Moreover, it can be stated that the GDP growth rate of the countries will be decreased.

Nevertheless, Auer, Borio and Filardo (2017) argued that there is a negative relationship between the globalisation and poverty. In this connection, Harrison wrote in his book is that developing countries are growing after globalisation within the global trading system. However, world poverty level has been falling with the passage of time. Therefore, it can be added that the poor people do not gains from trade. In addition, Ivanov and Webster (2013) cited that the abundance of unskilled labour do not get the advantage from the trade reform.Poor are willing to share in the benefits from globalisation when they get the maximum mobility.

In addition, it can be noticed that growths in country’s export and the incoming foreign investment have decreased the poverty in each of the country such as Poland, Mexico after globalisation. However, Auer, Borio and Filardo (2017) criticised that in the country like Indonesia, the rate of poverty was increased by 50 per cent after arising the situation of currency crisis in the year of 1997. The relationship between the globalisation and poverty concludes that this relationship is based not only on trade or financial globalisation but also on the connection of globalisation with the remaining economic environment. Reese, Rosenmann and McGarty (2015) added that labour legislation can protect the rights in the developing nations. These legislations are benefitted to adjust the cost structure and also reflect the labour force benefits from globalisation in the short run. Lastly, it can be mentioned that the unskilled employees of developing countries will get the opportunity from globalisation by increasing the demand for the labour intensive product (Devereux and Yetman 2014). Therefore, cross country study highlights that globalisation is accompanies by rising of inequality within the developing nations, which will in turn decrease the poverty.

Conclusion

The major concern of this study is that after globalisation, country’s economy has been growing. It introduces massive development in the capital market. The communication between the countries has increased. In addition, country’s trading situation has also improved. With the help of world trade, one country can boost up the economy. As a result, the rate of GDP has improved. The exporters get the benefit to increase their revenue earning. This implies that the standard of living of the country has increased. In a synopsis, it can be mentioned that after globalisation, the world is getting smaller in terms of greater communication, relationships and also in terms of conducting better decision making procedure. The world is becoming shrinking.However, Mr. Pankaj Ghemawat questioned that whether the people are really globalised? He argued that this changing of the world is associated with the concept of globaloney. Similarly, Anthony Giddens also criticised that after globalisation, people of the countries have been suffering from several political, economical and social factors after globalisation. Lastly, it can be inferred that after global financial crisis, trade boarders are collapsing. Therefore, world financial market has been suffering from risks. Due to higher flow of capital among the nations, the countries will suffer from unfair and immoral income distribution.

Global economic incorporation is associated with the insufficient global governance. In the close economy, the governmental power can shape the country’s economic performance. However, it can be observed that after globalisation; most of the countries have lost the policy space. Therefore, it can be recommended that global governance requires to assure a balance national policy space along with the international policy cooperation. Global governance will be able to accelerate the domestic economy; will balance between the markets and the governments. Moreover, the global governance needs to control and manage the entire process wisely in favour of the markets. It is necessary to focus to the global governance reform in the G20 summit. In addition, it can be recommended that the global governance can adopt a broader perspective on the threat spectrum.

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