Exports will also potentially bring stability to otherwise fluctuating market demands. Because of these reasons, local and national government are attracted to exports because their local businesses can gain a share in the global market. Conclusion Morgan Motors and Wadia are just two examples of companies that would not survive with exporting. There are many benefits to exporting such as increasing sales and profits, reducing the risks of being bound only to the domestic market, balancing growth across multiple markets, and potentially lowering unit costs, and possibly achieving economies to scale. Therefore, these types of companies choose to export for these reasons as well as for gaining the continued ability to survive in the
It is the human capital investment, knowledge and innovation that contribute significantly to the economic growth. The theory also gives a focus to the spillover effects and the positive externalities from the knowledge-based economy that leads to economic development. It is from these perspectives that this theory holds policy measures as the key determinants of economic growth. For instance, subsidies to research institutions or the provision of education may lead to an increased endogenous growth as a result of the increased incentive for innovation. On the other hand, exogenous growth theorists gave their support to that economic growth highly depends on either the rate of savings or the technical progress rate (Solow model).
In the business world, the benefits of globalization are not just limited to profit maximization, but also provide other advantages equipping business to carve a niche for itself in today’s highly competitive market. The most significant benefits of globalization on business could be increases in competitive advantage, global collaboration, foreign trade and outsourcing. One of the benefits of globalization on business is the rise in competitiveness of a business firm. Every business, in order to survive and maintain its market share, must have a competitive lead apart from other firms. An increase in competitiveness boosts the efficiency level of the business as they can produce their masterpiece goods or render services that are well known.
Some countries might increase slowly, while, some countries might increase rapidly because of globalization. Therefore, this essay will argue that globalization is beneficial for developing countries in terms of economic growth, quality of education and health care industry. To begin with, globalization is beneficial for the economy of developing countries. Many companies have started to look for outsourcing opportunities in developing countries when businesses went global because money can be saved and businesses can become more profitable. (Hill, cited in Jordan, Garland & Owusu-Nyamekye 2014, p. 91).
Local manufacturers must become more competitive or may run out of business with less limited trade. Capital investment:Trading blocks could also attract capital investment if non-member countries decide to establish subsidiary operations inside blocks in order to avoid the payment of inport tariffs. It should be clear that the primary motivation for the establishment of a trading block is the expansion of market opportunities which in return leads to economies of scale in production, greater volumes of competatively priced goods sold, and higher profits for members of the
Research Question: Does the current Economic Globalization and Interdependence process help or hinder the development of all nations? Theory/Hypothesis/Abstract: Economic globalization is reinforced by the idea that states which integrate with the international economic exchange system will become a more progressive and modernized as a consequence. However this paper will argue that this general perception about development does not take into account that globalization may in fact keep poorer nations weak for the purpose of exploitation. There is a need for the current approach to be adjusted. The international division of labour, class distinction, and the domination of liberal economic theory under the current approach to globalization all serve the interests of the wealthy nations, promoting and supporting dominance and exploitation.
Specialization by countries can therefore increase efficiency in both how quickly a product is produced and the use of capital. For this reason PepsiCo benefits by saving money in production which means they stand to earn a higher profit margin when goods are sold. Imperfect Markets Theory When factors of production such as labour and other resources are immobile in a foreign country, firms such as PepsiCo can take advantage of this. As a large firm with more information and resources, they are able to enter these markets and exploit them. Product Cycle
These factors determine the flows of FDI in the country for the economic benefits of the country. The higher return helps the employees to reinvest in the sector which actually act as the beneficial factors for the country’s economy. However, different authors think about the market size differently. Chakrabarti (2001) believes that for the effective usage of the resources requires the large markets in the country. The larger the markets, the better will be the utilization of resources and this ensures the economies of scale in the market.
It associates competitiveness in countries with good infrastructure, ample education and strong international orientation. Disadvantages: • Competition can result in loss of jobs especially in the manufacturing industry because in order to stay competitive move offshore in pursuit of cheaper labour. • Firms can exploit people, industries and resources in less developed countries in order to fend off competition.. e) Industrialisation Advantages: • Industrialisation sees an ample growth of industries which has resulted in larger scales production of goods which are available to consumers at cheaper rates. • It has raised the standard of living of the people very considerably. • It has also led to the development of new of transport measures enabling quick export and import.
The term trade can be defined as the transfer of the ownership of goods or services from one person to another in exchange for other goods or services or money. Trade is a backbone of a modern economy. It is not only important for developed countries but is also extremely important for the developing countries. Mentioned below are the few reasons to understand the importance of trade and also the reasons why countries should exercise trade: *Trade allows specialization, which leads to the increase in production of the both countries engaged in trade, in this way they can exchange the goods they produce in abundance and can have the good the other country produces in abundance and also can enjoy comparative or absolute advantage. *It creates a sense of co-operation between nations and develops a good relation amongst them and also the other countries dependencies on the reporting country’s increase making them powerful to some extent.