Discuss about the International Relations and Global Economy for Globalisation.
Essentially, organization of the global economy has made some very positive impacts in the conduct of international trade. Global Trade is being held together by various international organizations such as the World trade organization which spells out the rights and obligations of foreign trade among countries (Economy watch, 2010).Other international organizations include the European Union, Europe council among other global bodies which set the framework for trade between and among countries. In addition, these organizations have provide dispute resolution framework which is likely to occur due to the global nature of business. Further, these organizations play a negotiative role and encourage global cooperation in trade which makes global economy attainable. The organizations help to maintain order in the international trading system. Further, through the organization, recommendations, complaints and disputes are solved thus the assertion that the organization plays a critical role in the global economy.
Organization in the global economy is a way of fostering cooperation among countries (Gabriela, n.d.).There is need for the existence of a governing body to bring about all countries despite their different practices for the better good. International organization has made it possible for countries to come together and agree on factors that are fostering global trade. Without the organization, there would be order and cooperation framework for international trade to take place. Through international organization such as the world trade organization, trade among different countries is subscribed to and attainable. The organization facilitates cooperation of different countries to achieve common goals and bring about social change and development in various countries. Owing to the fact that most countries of the world partake in global trade raises the role of cooperation by through the cooperation. The organization acts as a facilitator and uniting factor for countries to come together and transact.
Organizations also play a unifying role in the global economy. Due to the fact that the global economy thrives on the cooperation of different countries, the likelihood of conflicts arising out of the trade dealings and negotiations requires a framework for solving it thus the role of the organization Most international organizations have a conflict resolution framework which entertains the complaints of the affected parties thus keeping the trading bloc in business harmoniously. The organization brings different countries of the world under one umbrella such as the World trade organization thus the assertion that the organization is a symbol of unification of many countries of the world for economic and social gains. Organizations such as the European Union unify the European nations and offer them a free market. This European Union, is an organization that symbolizes economic unity and liberalization among the member states thus proving the point of the fact that organizational of an international nature play a unification role in the global economy.
The importance of organizations to the facilitation and success of the global economy cannot be ignored. These international organizations play important roles in international trade, be it unification, facilitation, dispute resolution among other functions. The importance or organizations to the global economy cannot be ignored thus the need to embrace them.
Predominantly, organization has been affected by globalization. Globalization has made it possible for countries to face the same risks and challenges. With the world being a small trading village, the challenges of keeping the trading space free from fraud, money laundering has engineered the role of organizational bodies to take up legislative framework for its member countries to secure global trade. This goes to show that international organization role has taken to oversee international interests as opposed to national interests. With globalization, countries protection their interests (Sovereignty) on certain matters has been challenged. Some international requirement require that member states into certain obligations in their countries through ratification thereby raising sovereignty issues (Oldemeinen 2011).
Through globalization, the world economy has become conveniently reachable owing to the nature of communication and transportation means.Nowadays,it is possible to do foreign business transactions online face to face .In addition, language barriers are overcome through modern technology, translators and translator machines thus making it easier for foreign trading partners to successfully conduct their business without misunderstanding. Globalization has created newer opportunities for different countries. Countries with fewer natural resources are able to source them from endowed countries thereby making foreign trade possible. Globalization has made trade easier and convenient unlike the ancient days where there were various barriers such as distance, language among other setbacks.
Globalization has brought about various changes in the organization such as creation of newer opportunities such as international money transfer services such as Pay pal and other money sending apps across international borders(Rodrigo 2016).Globalization has made communication and electronic money transactions effective and timely.Globalisation has bettered transport infrastructure which has facilitated global trade.Usually,it is possible to conduct foreign trade online owing to the facilitation of globalization. Through globalization, technology transfer has made product quality higher and transactions faster thus the assertion that globalization has reorganized how global economy is conducted.
Through globalization, there has been massive technological transfer among countries and individuals (Dunn,2009).Through technological advancement, some countries of the world such as Japan enjoy comparative advantages which has boosted foreign revenue for their country. Technological transfer has encouraged high quality production of goods which provides various types of advantages to the trading partners. Noteworthy, globalization has also made negative impacts on the economy. Following the online nature of doing business, fraud, crime and other negative behaviors have emerged thus strengthening the existence of global economies. In addition, globalization exposes more than one country to risks which could be disastrous for the affected countries.
For instance, the international lending of financial services among countries, almost destroyed the global economy. Due to the global financial crisis of 2007, the shocks were felt in most countries of the world. This goes to show that the economic stability of some countries directly impacts on the other economies which rely on it.
Undeniably, the role of trans national companies in international trade cannot be ignored. Transnational companies plays various roles in the global economy such as stimulating economic growth and efficiency, reinforcing competition ,integrating economies and restructuring economies across nations(Wrzykowska 2010).Transnational corporations have created competition in the countries hosting them. Through transnational corporations, employment opportunities have been created for host countries population and foreign revenue. Trans –national corporations imply those corporations that operate in more than one country. In a positive way, transnationals are the facilitators of international trade due to the fact that they are based in different countries.
Primarily, transnational corporations are used to cement trade relations between different countries. Through the incorporation of transnational’s in different countries, there is the transfer of technology between the host country and the foreign business venture leading to better economic outcomes. To encourage the growth of transnational corporations, host countries can implement trading incentives such as low capital starting requirements, friendly tax regimes so as to encourage the flow of transnational’s into their borders. Transnational’s corporations have the effect of creating positive and negative effects. Negatively, local employment opportunities in these transnational’s might be limited thereby denying the local s employment opportunities. However, the effects of transnational’s is not always negative.
Internationally, transnational corporations are very instrumental in penetrating new markets. Exploring new markets has been made possible through the implementation of transnational business transactions (Svynarenko & Kirakosyan 2013).Through transnational corporations, new complex opportunities are created thereby making it easy to penetrate new markets thereby expanding foreign Tran’s boundary trade connections.
Through foreign direct investment, states have the ability to negotiate better terms for their economies. Usually, host countries enter into contractual arrangements with transnational corporations thus giving the host country negotiate better terms for itself (Sauvant, 2015).Transnational corporations through foreign direct investment stimulate economic activity which is good for any country. Foreign direct investment is responsible for stimulating investment in the destination company. Employment opportunities emanate from foreign direct investment. In addition, transfer of technology is made possible through foreign direct investment flow. Through foreign investment new management and organizational skills can be acquired by the host countries thereby benefiting its economic growth. Foreign direct investment initiatives are a good propeller for economic growth. Foreign investment is a very key component of fostering international trade relations in the global economy thus the need for countries to provide friendly policies.
For an economy like Australia, foreign direct investment is more than a support backbone to its economy. Foreign investment has supplemented Australia’s savings, expanded its infrastructure and expanded its neighboring economies (Austrade n. d).foreign investment have been able to uplift the economic standing and revenue for the Australians. Foreign investments have boosted employment opportunities, expanded infrastructure and opened newer opportunities for the country and its revenue sources. With foreign investment countries trading relations are more cemented (Australian trade and investment commission n.d).Foreign direct investment is a perfect example of how international business is growing thus the need to encourage foreign direct investment in many countries.
According to Realists, things are like they are and not as they should be .Practically ,the global economic order comes under anarchy sometimes. In the global economic order, there are countries such as the United States of America, whose vote in economic and political goals or international interests overrides the other nations. This is a typical form of anarchy and realism at play (Kat 2015).Usually, global trade thrives on the organizational guidelines put in place by these international bodies .The composition of this international bodies is made up of representatives of different member states. However, for some of these international organizations, a few countries have the Veto vote which in a way overrides the decision of the other member states. Realistically, the global economy follows more than one ideological approach when it comes to the functioning and order of the global economy.
Liberalism does apply to the global economy. Under the global economy, decisions are made by the international organizations such as the world trade organization, European Union, United Nations which are bodies comprising of representatives from different countries. Further, these member states get to vote and decided on international trading matters through their representatives to the international bodies (Darel 2010).According to the liberal ideology, there is freedom of trade. Under the global economy, it is encouraged that member states remove tariff barriers to encourage the free flow of capital and labor, which factors boost international trade. This fact goes to show that to an extent, the global economy thrives on the liberalist ideas. Liberalism is all about free will. However ,not all issues pertaining to the rules of international trade are optional thus making the thought of liberalism in the global economy not entirely true.
In addition, the global economy is partly Marxist in nature. International trade aims to engineer social change through economic empowerment of states. Under the most international organization goals, the desire to promote economic development, uphold human rights seeks to engineer social and economic change among the least developing countries. This is part of the Marxist ideology engineered by Karl Marx. Social changes can be brought about by economic factors. The international goals of trading in a way seek to promote economic development and well-being in developing countries as a way of engineering social change which is more of a Marxist approach to global trading(‘How realism..n. d).Realism looks at the present state of affairs. From a realist point of view, global economy has been boosted by globalization, through the technological advancements transfer, organizational structures, managerial skills, movement of factors of production, newer markets among other enabling factors.
Overall, the global economy is a mixture of the Marxist, realist and liberal approaches. All these approaches over-lap and intertwine thereby making it impossible to assert the dominant approach to the functioning of the global economy.Realism,Marxxism and Liberalism collectively explain the functioning of the global economy due to the various individual ideological contributions they make to international trade relations to which the global economy is founded. The global economy thrives on globalization thus the need for more globalization initiatives by all countries.
Arguably, a limited economic diversification is responsible for curtailing economic growth for developing countries. The primary dependence on limited natural resources to propel economic growth is responsible for the slow economic development rate being experienced by developing countries. Unlike developing countries, the developed nations have embraces economic diversification which has created various economic opportunities, demand and supply patterns which stimulate trade thereby expanding into global trade and achieving its own economic goals and development (Mohammed2016).Most developing nations solely depend on the resources they have rather than venture out for resources that could supplement and complement their existing resources for economic growth.
Most developing countries face various challenges in achieving economic progress. Financial incapacity has curtailed most of the economic achievement .Unlike the developed countries, developing countries lack the financial capability to carry out the economic achievements. Lack of proper funding for least developing of countries has curtailed the implementation of economic stimulating activates. In addition, the is poor financial management in the least developing countries thus making it difficult to implement economic and development projects(Mangeni n. d).Funding for development purposes is a not easy for developing countries owing to different state priorities.
Owing to the global nature of international trade, there are various risks to which the global economy is exposed to. International trade has created dependence on countries on each other. Globalization has made the economic stability of nations depend on other countries (Sunshine 2017).International business has incorporated financial dependency on each other which puts the financial future of one country dependent on the other. Also, foreign trade exposes nations to foreign risks which they wouldn’t be exposed to if they had not considered international trade. The global financial crisis of 2007 is sufficient proof that the fact that international trade is subject to risks (Elliott 2011).The global financial depression effects were felt in most of Europe. With the banking instability, Mortgage debt of the United States of America had its effects felt in more countries than one.
Following the recovery of the global economy, there arose the need to prepare for the eventualities of possible risks to global trade. According to the Organization of economic cooperation and development report, the global economy is still vulnerable to economic risks thus the need to prepare for future risks (O.E.C.D n, d).With global tradethere is cooperation in various sectors, health and finance among other sectors. This trade interconnectedness exposes nations of the world to same risks which can have various adverse effects. Following the financial crisis 2009, most countries directly affected by the global financial crisis have put in place internal structural reforms to cushion themselves against possible global financial shocks. Most countries have implemented structural reforms as a preparatory measure for future global shocks.
Further, global economy trade is subjected to protectionism by some countries thereby risking the future of global trade (Macdonald 2018).Under protectionist initiatives, national interests of protecting their domestic industries is likely to harbor international trade. Tensions on trade also pose a risk to global trade.
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