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Advantages Of Globalization In Ecuador

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Globalization in Ecuador

The definition of Globalization according to “Business dictionary” means: The worldwide movement toward economic, financial, trade, and communications integration. Globalization implies the opening of local and nationalistic perspectives to a broader outlook of an interconnected and interdependent world with free transfer of capital, goods, and services across national frontiers. However, it does not include unhindered movement of labor and, as suggested by some economists, may hurt smaller or fragile economies if applied indiscriminately.”

“Investopedia” define Globalization as “the tendency of investment funds and businesses to move beyond domestic and national markets to other markets around the globe, thereby …show more content…

One if the greatest advantage is transferring new technology between countries, which is incredibly beneficial for the development of nations. One of the biggest disadvantages is precisely when easy access to incoming technology is not allowed. Take for instance Ecuador, a developing country, which products cannot compete with those from developed countries in terms of quality, advanced technology, know-how, and price.

In order to stimulate local consumption and decrease the amount of money transferred abroad, Ecuador’s government has set several policies, which has considerable effect on imports. Some of those policies are: imports quota and tariff safeguards.

Ecuador is experiencing an economic crisis since a couple of years ago due to the decrease in price of oil, which in 2014 was record ear USD 105,24 and by early 2015 it dropped to USD 47,5.

The reason behind the decision of applying safeguard measures is to regulate the imports and stabilize the Trade Balance. Another big factor that has impacted the Ecuadorian economy is the appreciation of US dollar; this has a negative effect because the price of Ecuadorian products exported to European and Asian markets increases and are no longer competitive against other …show more content…

When first applying the safeguards, one of the official statements was “consumers will not be affected and the increase in costs will be absorbed by the importer or business”. This statement was wrong, in the end there was an increase in price for the consumer. What worry consumers at the moment is that 15 months have already passed and safeguards have not disappeared they only have been reduced by 10%, even though the price of goods have not decrease at all.
- There has been an increase in the price of final goods produced by domestic companies due to the increase in final cost of imported raw materials affected by safeguards. This issued is biased, why did the government tax raw materials? Was not its intention to reduce imports and promote domestic production?
- In addition to the above, this measure caused discontent among countries with commercial ties with Ecuador, especially from CAN (Andean Community) Members. Business representatives from Peru and Colombia expressed their concern and demanded their government act in reciprocity imposing similar barriers to Ecuadorian

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