An economy is the activities related to the production of goods and services within a specified geographic region. This can be on a national scale with the trade and services remaining within a country, but equally, if countries trade goods and services with each other, their economies interact on a global scale, fundamentally known as globalisation. This worldwide interaction of economies is else known as the global economy, with NICs and TNCs play a primary role in changing how it operates. An ‘NIC’ (newly industrialising country) are countries whose economies have not yet reached Developed Country status but have outpaced their developing counterparts in economic terms. The reason for the economic growth in NIC’s is mainly due to the undergoing of export-oriented trade or ongoing industrialization, seen in countries such as China, India, Mexico and Brazil with the experiencing of rapid industrialisation due to the export of goods.
By having an economic influence, the country can also have a large number of companies and economic self-sufficiency. Trade is one of the key ways in which superpowers make money. Most world trade takes places between Europe, North America and Asia. This is trade in goods and services and is high value. It earns money for global TNCs, the majority of which are from the developed world.
This increased openess allows countries to specialise in producing goods which they have a comparitve advantage in (this means they can produce goods at lower unit costs) A multinational Company is a corporation that has its facilities and other assets in at least one country other than its home country. There are many examples of MNC's such as Nike or Primark. MNC's play a massive part in the development of globalisation as they often invest heavily into the country they move into. They will build good quality factories to produce the goods and also introduce effective manufacturing methods. These manufacturing methods can be replicated by other businesses in the countries and improve their ability to manufacture goods.
Such companies have offices and/or factories in different countries and usually have a centralized head office where they co-ordinate global management. TNCs (Transnational corporations) – those corporations which operate in more than one country or nation at a
The benefits of globalization are unevenly distributed, and it causes hardship for poorer countries. The gap is widening between developed and developing countries. About two-thirds of the developing countries remain on the margins of the globalization process and are considered "nonglobalizers." Globalization can result in unemployment as businesses relocate operations to lower-cost areas. Many of these outsourced jobs don't pay decent enough wages to lift workers out of poverty.
At a United Nations Summit recently, global trade was hailed as the reason certain newly industrialized countries such as China has become so forthright and dominant in their advances both economic and social, the following report read, ‘In recent decades, a number of developing countries, most notably the East Asian newly industrializing countries, have been able to purposefully use the elemental force of trade to boost growth and development within a relatively short time span.’ (Puri 2005 cited in UNCTAD 2005 report p.22) But this boost in International Trade has not been without its complications and challenges. With increased competition and the laws behind international trade becoming stricter year by year countries who have only recently found a foothold in the world trading community, are struggling to compete with the more economically developed countries, and are finding their trade links cheapened or cut off completely by the wave of competitors, all trying to stay ahead in these economically turbulent times. This report aims to analyse key trade and development issues facing developing countries today, but also expose the opportunities these countries
Countries that have been considered poor and have struggled globally now have the opportunity to sell their low cost labor to the world market. This brings jobs to this struggling countries, even though they are lower paying jobs than the same position
Due to foreign competition, especially Asian manufacturers, the companies rate of growth has been reduced. Mr Klauser is concerned about the competitor low price and is looking forward to analyze if it is convenient for the company to establish a foreign production plant in Asia. Due to the nature of the companies products (commodities) the possibility of buying from low cost countries is also available. ANALYSIS In order to conclude what should be EXIM´s trade mix we focused in analyzing the cost competitive advantage of producing the computers commodities in USA, Japan and Korea. We focused on getting a relationship between production cost in each of the 3 countries to conclude where it is cheaper to produce and where should the company focus its procurement and production activities.
As a consequence many LDC nations rely on foreign health and economic aid putting them in a situation of unrepayable debt, so even less money can be spent on infrastructure and supporting the economy. As a consequence due to low levels of development FDI is more likely to look elsewhere where the economy and governments and stronger and more stable and where there are educated people. South Korea is not extremely religiously orientated, with half of all adults professing no religion. This could be seen as a reason for preventing development in other nations, as religion and tribalism segregate the nation and can lead to conflicts which damage the
Another strategy that could be used to narrow the development gap is trade. I personally don’t believe that trade can bridge the development gap. This is due to things such as exploitation. MEDC’s may pay LEDC’s low prices for their resources, which leads to low wages for their workers. For example Brazil who produce a large amount of coffee, may not be paid a fair amount by MEDC’s.