However, in , J. Dunning defined an multinational enterprise as " Following the above descriptions, someone would wonder, how companies become multinational. Indeed, the development of a firm into a multinational company is a long-lasting, expensive and difficult procedure, which we will discuss later. At this point, it would be good to mention that a firm is any business such as a corporation or partnership. A firm differs from a multinational company by means of the firm's market being mainly in the country it sells into and having no FDI Foreign Direct Investment in any other apart from the one, which it sells to.
This phenomenon greatly influences the world's economy. There are many reasons why firms become multinational enterprises. To begin with, by becoming multinational, a company can spread risks. More specifically, if the economy in one country is slow, or demand is decreasing, it is highly possible that economy will be prospering in another country. As a result, if a company sells products into a country where the demand is thriving, not only will the profits of the specific company increase, but the country's GDP will also increase.
Also, via expanding globally i. For example, if 1 out of 6 UK citizens are interested in an X product, it is obvious that respectively, more citizens in the world's market will be interested in the same product. Therefore, becoming "multinational" not only contributes in the augment of the firms' profits and gives exposure to more markets but also adds more costumers to the company's potential database.
Moreover, expanding a company's market, helps increase the world's GDP, something that constitutes a crucial factor in the outcome of the world's economy. Furthermore, as the market is becoming more global-especially through internet- it is a case of "multinational to survive". More specifically, various companies use the Internet, the greatest innovation of our times, in order to advertise and sell their products.
Hence, the amount of companies that use the Internet in order to sell their products rapidly increases, making the market global, interconnecting several countries' market and leading to the boost of multinational corporations. Moreover, another important factor for firms to develop into multinational companies is cheap labour and cheaper raw materials in several countries abroad.
These two factors have a great impact on a company's profits since they reduce unit costs and hence increase the final profit. Therefore, a firm developing into a multinational company, not only by augment of income since the company's product will be available for a larger population but also by means of reduction of unit costs. Hence, at the simultaneously a company can reduce its unit costs and increase its incomes by just joining another country's market i.
To continue with, by getting into a group of more "technologically developed" countries and companies, firms can benefit in improving their production. More specifically, by integrating with larger companies, firms incorporate better technological equipment. As a result, firms can produce more efficiently and hence, enhance their profits.
This shows how the access to foreign markets by Indians is growing slowly as compared to the entry of foreigners in our domestic market. But the same deficit declined to 2. But in , the same trade deficit increased considerably to 5. This simply shows that the access of Indian markets by the foreign producers has been increasing.
In-spite of high expectation that globalisation would facilitate attaining of higher GDP growth rate through export-led growth but that expectation has failed to materialize. Although in the initial years of globalisation, the GDP growth rates gradually rose from 5. Thus the sluggish GDP growth rates experienced by Indian economy has reflected the failure of the policy of globalisation introduced in the country in raising its GDP growth rates and also raised its dependency burden on world economy.
However, the GDP growth rates in India started to show an increasing trend in recent years, i. The advocates of globalisation has been claiming that globalisation would pave the way for greater inflow of foreign investment. But things are not moving in a right direction. Foreign investment usually enters in two forms—Foreign direct investment and Foreign Portfolio investment. However, the FDI enhances the productive capacity and investment of the country but the portfolio investment encourages speculation activities.
During the period to , the share of FDI was During the subsequent period, i. Again during the period to the share of FDI has again declined to During the next 6 — year period, i. Moreover, from the year-wise data of foreign investment as shown in table no.
It is observed from Table Thus the flow of FPI shows an erratic behaviour. Thus in recent years, the proportion of FPI in total foreign investment is still very high. Thus the expectation of the country in respect of entry of foreign investment as a result of globalisation has not been fulfilled. Moreover, there is a peculiar tendency where there remains a wide gap between the level of foreign investment approved and its actual inflow.
Reduction of poverty is one of the important objectives of development. But in modern times the pace of poverty reduction is gradually slowing down. The main findings of this model is that the rate of poverty reduction in the s is slightly less than that of s. The reason behind this slow pace of poverty reduction is the pattern of growth that has been achieved following the policy liberalisation, privatisation and globalisation.
Such a growth pattern has affected geographical distribution. The globalisation has helped the industrially advanced states much more than the less industrialised states and also neglected agricultural sector leading to a skewed pattern of distribution in this post-reform period.
Thus the paradox of attaining higher growth rate of GDP and lower rate of poverty reduction is mostly resulted from unequal distribution of income between the richer section and the marginalized section of the population. Besides, this slow decline in poverty reduction is mostly resulted from the geographical pattern of growth promoted by the policies of liberalisation, privatisation and globalisation.
As a result of globalisation industrialised states are getting more benefit as compared to that of less industrialised and agriculturally based states leading to a geographical skewed pattern of growth attained during this post-globalisation period.
Thus globalisation has been resulting in widening inequality, growing concentration of wealth and slowing down rate of poverty reduction in the country. Globalisation has resulted in a fall in the employment growth rates. The annual growth rate of employment which was 2. As a result, the unemployment growth rates increased from 5. This was despite the fall in the growth rate of labour force from 2. Such a situation is mostly resulted from the deceleration in employment growth rates in agriculture and community and personal services.
These two sectors contributed jointly around 70 per cent of total employment generated but they virtually failed to record any growth in employment. Thus after making a review of performance of the economy for a decade after the introduction of globalisation, it is observed that the policy of globalisation has not been able to bring the required benefits to the people in general in terms of basic macro indicators such as GDP growth rates, employment generation, reduction of poverty, hike in investment, boost in merchandise exports.
It is only in respect of services export India has been able to record marginal gain due to its cheaper manpower resources. Moreover as a result of globalisation, a good number of small and medium scale enterprises had to face closure due to unequal competition leading to loss of employment to a good number of workers engaged in these industrial units. Thus globalisation has also failed to look fairly at the small enterprises, rural and informal sectors from where majority of people earn their livelihood.
Thus under the present scenario, important steps need to be taken for integrating the growth objective with that of employment objective. In its study on the progress of the corporate sector in recent years, the Institute for Studies of Industrial Development ISID has reported the impact of growth of top TNCs in the post-reform period.
It is further observed that the annual growth rate of profits before tax of these top TNCs during the period to was Such enormous profits earned by TNCs will create an adverse impact on the balance of payments. While the exports to turn over ratio of these companies grow slowly from 8. Accordingly, such workings of the TNCs has converted a net export position of Rs crore in to a net import position of Rs 1, crore in In respect of agriculture, there is also a threat to the Indian farmers from the trading provisions of WTO.
Here the main fear is that with the implementation of WTO agreement and trading provisions, Indian market will be flooded with different farm goods from foreign countries at a rate much lower than that indigenous farm products leading to a death-blow to Indian farmers.
Here the apprehension of Indian farmers cannot be ignored. Countries like Australia, Canada, USA and New Zealand which have a large farm potential along with necessary resources to provide subsidies and improved farm management, will be in a advantageous position to market their farm products in a developing country like India, which are maintaining lesser efficiency and lower productivity at their farm activities.
This would naturally result unequal competition for the Indian farmers in respect of both price and quality. For example, various social service organizations are working at international level for improving the living condition of the people belonging to socially deprived classes. Improved transport system , particularly airways and seaways, have to be credited for massive globalization. Movement between countries has become a matter of few hours.
The increased clarity over international laws have promoted businesses to go beyond national limits. The telecommunication infrastructure and internet has made the world even smaller. The recent technological inventions has brought down the cost of voice conferencing. International webinars are held now and then. Due to deep penetration of Internet, even small eCommerce companies are making cross-border transactions.
An increased sense of humanity , and the brotherly feeling towards global community, has inspired organization to serve people around the world.
Movement of people to foreign countries a for education in international universities, and b for looking for better job opportunities. For example, Indian people form the largest diaspora in the world. In the present age of globalization, the economy of countries are inter-dependent.
If the economy of one country fall in danger, other countries also feel the pain. Businesses are engaged in international transactions.
Globalization has to its identity social, economic, and political reforms,.however the globalization that we are about to discuss is the term that combines the past socio-economic and political reforms and cross with them to the world where their are no boundaries, restrictions, and immobilization what Mittelman describes as. cross-border flows of capital, knowledge, and consumer goods.
Effects Of Economic Globalization essays From the day when I first learned the term globalization it has been a topic that has captured my interests. This country gains while the other looses, these people thrive while others are less fortunate, technology moves in and forces human labor out, and.
Economic globalization is the process of increasing the financial integration amongst countries. Consequently, economic globalization leads to the development of a . In this essay, globalization will be defined and what I believe to be at its core and what the major results of globalization are. At the political and economic level, globalization is the process of denationalization of markets, politics and legal systems.
May 09, · Economic globalization has voluminous positive influences on international security as well. The most important effect of economic globalization is that it curbs the authority of state. It also reduces states’ dependence on military based security and . Economic Globalization and Organization Development Essay. Globalization of the economy refers to the integration of the world economies whereby economies in the world are become more interdependence. This economic development is being achieved through cross-border movement of capital, services, goods, and technology.