Impact of Globalization on Kenya - Case Study Example

Running header: HRM Student’s name: Instructor’s name: Subject code: Date of submission: Impact o globalization Generally, globalization is seen as the process of transformation of local phenomena into a global one. This is seen when countries start connecting with one another into a global village. As such, globalization brings with itself both positive and negative impacts to the world and to the recipient countries. This paper analysis the impact that globalization has had on Kenya as well as the challenges that have resulted from globalization. The paper will also analyze the efforts that Kenya is taking to deal with the challenges. Trade and integration Globalization has resulted to mass production of goods and services. The average trade between developing countries has risen rapidly over the years. Sellers in Kenya have increased the market for their goods and services while buyers have a wide market of variety products to choose from. Companies in Kenya can source cheaper raw materials as well as quality ones from many parts of the world (Judy, 2009). Farmers in Kenya have obtained international markets which attract higher prices for their horticultural products for instance. Economic integration among the countries as a result of globalization has result to increased trade. Removal of trade barriers and other tariffs encourages trade among countries. However, domestic firms may suffer when large organizations dump their goods in their market. For instance, Kenyan cotton making firms declined significantly since the introduction of second hand clothes into the market from developed countries. Financial globalization has also been enabled by globalizations. Companies in Kenya can allot their shares in the international capital markets where their shares trade. This increases their capital base as well as improving marketability of their shares. Technology Globalization allows any advancements and improvements to be communicated throughout the word. Improvement in technology has resulted to a significant improvement in employment levels in Kenya. The cost of production in the industries has been reduced due to fewer workers and less redundancy. The quality of output has increased. However, Kenya is still in its early stages of adopting extensive technology especially in the Agricultural sector (James, 2010). Most developed countries have adopted biotechnology as well as bio energy which has resulted into sharp increases in productivity as well as relatively low prices will compete against those of developing countries. Migration and employment The temporally faction of low skilled personnel has had a positive impact on the Kenyan economy as well as other developing nations. Such personnel are able to update their skills and this also results to brain circulation. The government benefits from such citizens through the remittances they make. However, country’s workers should not result into permanent migration as this slow down development in such countries due to “brain drain”. The most crucial sectors such as health and development would be left with inadequate personnel if the government allows the situation to get out of hand (Sarah, 2008). However, those citizens that acquire the skills and return to develop the locals result to economic development. Migration result to erosion of the indigenous cultural practices as they adopt the foreign culture in order to fit in. domestic companies on the other hand are able to obtain highly qualified personnel from other countries. However, they are also at a risk of losing their key employees to other international organizations who would be able and willing to reward them quite well as compared to the domestic firms. Firms have adopted international management practices. Accountants have for instance adopted The Accounting Reporting Standards in order to standardize their operations with other firms all over the world. This has resulted to easier comparison of operations and profitability of firms in different parts of the world. Off-shoring and outsourcing Globalization has enhanced outsourcing of goods and services in Kenya. Local companies acquire cheaper raw materials from other parts of the world. Farmers for instance acquire higher quality fertilizers from developed countries. Off-shoring refers to a situation whereby companies opt for their business operations are done in different country in order to cut on costs, acquire new markets and obtained highly qualified personnel who may not be available in their native country. For instance, Safaricom - a telecommunication company in Kenya has adopted this mode for their money transfer services which is done in Netherlands (Sarah, 2008). However, this move tends to move the employment opportunities of the native land to the foreign countries, it must therefore be regulated. This also brings about cultural globalization. The cultures of the mother country of the organization end up being transferred to the foreign country. For example, Chinese students must be taught English in third grade so that they are able to comprehend the Americans operations and for communication purposes. Transportation Transportation plays a major role on a global economy. It enhances globalization by enabling movement of people, goods and services to different parts of the world. Developing countries are benefiting from modern and faster means of transportation that is used in the developed countries. Kenya for instance has adopted modern high ways and the prospects of adopting electric trains are in progress. Transportation in return has boosted tourism activities in the countries which is a significant earner of foreign exchange. Challenges of Globalization Globalization has brought with it various challenges that Kenya has been struggling to deal with. these are explained as follows; a) Terrorism and regional instability Globalization has led to the emergence of terrorism in various parts of the world. Kenya has not been spared either. The rise of terrorism is greatly associated with globalization as terrorist gangs started forming and are able to travel and communicate from all areas of the world (Stanley,2005). Terrorism has seen Kenya loose lives and its place as a regional tourism destination. For instance, the 1998 twin bombings in Nairobi and Arusha bombings saw most of the western countries including USA issue travel advisories to their citizens over insecurity in the region. Considering that travelers from the countries compose the greatest number of tourists to Kenya, Tourism in the country has been greatly affected by the terrorism and insecurity threats. b) Brain Drain Globalization has greatly costed Kenya and other poor countries in terms of brain drains. Most of Kenya’s professionals including doctors and teachers are moving out of the country in large numbers mainly to western counties and USA in search of better paying jobs. Furthermore, when Kenyan students go to study abroad, they rarely return to offer services in Kenya further worsening the situation. c) unbalanced BOP (balance of payment/ trade) With increased globalization, it means that a country can purchase all its needs from elsewhere provided the cost is less than the cost of production would be. In most poor countries including Kenya, the cost of production is usually very high and hence their imports always supersede the exports (Maxwell,2007). This leads to greater problems including high levels of inflation. This has resulted to high cost of living and numerous strikes in the work place in demand for better salaries. d) culture erosion and climate changes With globalization, Kenya has seen introduction of foreign cultures leading to erosion of its rich traditional African culture. Furthermore, Globalization has also resulted to expansion of markets and hence massive industrialization. On the other hand, the rapid industrialization has resulted into global warming which has greatly affected Kenyan climate for the worse. e) piracy For Kenya, piracy along its coast by terrorist groups from Somalia remains a great challenge to globalization. Millions of dollars are paid to pirates as a ransom for cargo they withhold along the coast. This therefore remains a great challenge to trade in Kenya and is therefore a threat not only to Kenya but to the entire world. Kenya’s efforts to overcome the challenges The Kenyan government has made a lot of effort in overcoming the challenges resulting from globalization outlined above. Some of the steps taken by Kenya include; i) Kenya has invested a lot in the military and military equipments in a bid to overcome the threat of terror. In addition, the country cooperates with powerful country in the war against terror (Houston, 2010). Last years purchase by Kenya of military equipments valued at sh27 billion and the fight against Al- shabab terrorist movement currently going on in the neighboring Somali are examples of Kenya’s effort in fighting terror. This is also an effort to fight piracy along the East African coast. ii) The government has embarked on a campaign to adequately remunerate its workers and encouraged private investors to adequately remunerate their workers in a bid to discourage brain drain. iii) The government is also encouraging citizens to consume locally made goods so as in a bid to ensure a healthy balance of trade. Furthermore, the government is cooperating with IMF in a bid to boost its foreign reserves in effort to tame inflation. iv) There are a lot of efforts going on towards afforestation in a bid to guard against climate changes. A recent example is the reclaiming of Mau forest which is an important water catchments area not only for Kenya but also East Africa as a whole. Conclusion It is evident that Kenya has had more good than bad as a result of globalization. However, there are various challenges that still haunt Kenya as a result of globalization. A lot of efforts have gone into addressing this challenges as explained above. However, a lot still need to be done if the country is to fully enjoy the full benefits of globalization. References Judy, M .2009, Impacts of globalization in Africa, Cambridge University Press, London. James, K.2010, Kenya in a globalized world, Longman publishers, Nairobi. Sarah, P. 2008, Globalization and its demerits, Macmillan, Sydney. Sarah, P. 2008, The other side of globalization, Rutledge, London. Stanley, C.2005, Corporate power and globalization, Prentice Hall, London. Maxwell, O.2007, Impact of globalization on African economies, Wiley, New York. Houston, M.2010, In defense of globalization, Cambridge University Press, London. Read More