Impact of Global Economic Crisis on International Businesses

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mpact of the Global Economic Crisis on International Businesses As the global economic crisis rocked the world in the autumn of 2008, there very few sectors and industries that were not affected by the crisis. In particular, the global economic crisis affected the international businesses or the global multinationals as they were unable to match the growth of the period from 2001-08 in the countries in which they were operating after the crisis struck. Indeed, the situation was so bad that many international businesses put on hold the expansion plans and their forays into other markets. Since international businesses rely on global trade to sustain themselves the shrinking of the global economy with exports falling and imports replaced by domestic consumption meant that the international businesses were left in the lurch. The Global Baltic Dry Index, which measures shipping activity, went into the negative territory, which means that shipping (a measure of growth of trade between countries) actually decreased and shrank when compared to the previous years. Double Whammy of Stagnant Growth Back Home and Protectionism in Emerging Markets The other aspect of the global economic crisis was that many international businesses were faced with the double whammy of stagnant growth in the emerging markets and a negative statistic of growth in their home countries. This meant that they could not make up for the lack of growth in their home countries by expanding into emerging markets. Further, the international businesses had to contend with protectionism and raising of the tariff barriers in many countries, which goes counter to the spirit of globalization. In other words, when economies decide to restrict imports by raising tariffs and when they place more importance to domestic industry as opposed to foreign businesses, then the implication is that the international

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