International Marketing and Business - Assignment Example

Running Header: International Marketing and Business Student’s Name: Instructor’s Name: Course Code: Date of Submission: International Marketing and Business Introduction In November 1989, the fall of the Berlin wall marked the end of he old contest between capitalism and communism. Chua (2007) describes that capitalism is referred as the economic system which shows that the means of production are privately owned and are mostly operated in order to gain profits. Some of the elements of capitalism include means of production, creation of goods and services for profits and prices. Capitalism is where the government does not have any control of its economy or property rights. Communism on the other hand involves shared effort and resources and this is rarely used by any economy. Chua (2007) shows the two represent economic competition which was started by the integration of the European Common Market on the 1st January 1993. This study evaluates how various economies have been performing over the last twentieth century and how they are performing in the twenty-first century. Question 1 Evolution of capitalism and communism According to Bacher (2007) capitalism is an economic system that developed in the sixteenth century in Europe though it has earlier existed in the ancient world. The system is most dominant in the Western world as a result of failure of feudalism. Capitalism spread in Europe in the nineteenth and twentieth centuries providing the means of industrialization which spread all over the world. Today, the system is the most dominant form of economic model being used by most of the Western world which was after the collapse of USSR. Capitalism began with mercantilism which was the period between the sixteenth and the eighteenth century. This period focused on discovery and exploitation from the merchant traders. Wood (2002) describes that at this time, land and labour were the only elements of commerce. Capitalism then evolved to industrialism in the mid eighteenth century which was characterized by increased mechanization of agriculture. According to Wood (2002) the period introduced manufacturing and division of labour. The Keynesian and neo-liberalism was the other stage of capitalism which lasted from 1930s to 1980s. Next was the year of globalization in which over the five hundred years, the overseas trade was associated with the development of capitalism but due to the introduction of globalisation in the twentieth century and mobility of people increased. This has made the recent economist to view capitalism as the world system though others argue that globalisation is not greater than the earlier periods of capitalism. During the last part of the twentieth century, there has been strict control of foreign exchange rates which was estimated to be more than the global movement of goods and services. According to Toje (2010) global income inequality has been experienced in several countries such as China whose growth in economy has been due to Western economics. Since the industrial evolution of the mid eighteenth century, various factors have improved such as availability of adequate nutrition, increased life expectancy, infant mortality, education and prevalence of child labour. Toje (2010) shows in 2008, the financial crisis saw the Western government providing incentives to financial institutions that were undergoing liquidity crisis. From capitalism, rose communism which involves conditions of liberalisation of the working class. Capitalism promoted equal opportunity for all while communism promotes a society showing that all individuals are economically equal. Communism, however, ended in 1990 during the dissolution of the Soviet Union. Question 2 Impact of integration of the European common market The economic impact of integration of the European common market on the rest of the world powers came after the reduction of foreign trade due to factors such as the Greta Depression, protectionism and war. Mark (2005) puts it that in 1948 for example, exports from West Europe had little increase from what it was about 40 years ago and capital movements were stable. The impact of integration resulted to increased volumes of exports and free trade was prevalent in the region. There was also increased openness since capital movements were almost free and some economies had done away with their local currencies due to the favour on the new currency which was the Euro. The fall in transport and increased communication techniques resulted to increased trade and capital mobility. Production gains created new and cheaper products resulting to potential exports and growth proceeds. The financial systems used in Europe were more sophisticated and the influence of controls became expensive. Involvement in international trade led to stimulating competition, developed technology, increased demand and foreign direct investment. The other impact was the abolition of tariffs and non tariff barriers as well as capital controls. The common market moved from a group of six economies to that of twenty seven (Mark, 2005). However, the integration of the European common market has some drawback where if it had not occurred participating countries would have introduced other methods of product variety thus greater trade and farmers would have been protected. The increased profitability as shown by the comparative advantage of neoclassical model of economic growth was to be a temporary condition. Mark (2005) describes that the other argument is that in the absence of European integration, less pressure would have been impacted on the stabilisation of intra European exchange rates used after the downfall of Bretton Woods System. Question 3 Emerging new economic superpowers There are various counties speculated to be the new super power countries. Currently United States is the only one considered though China, India and the European Union are commonly mentioned as potential superpowers. China for example being the People’s Republic has received superpower status due to the rising economic stability. The other factor contributing to this status is the rising military superpower of academics and experts. Shirk (2008) claims that by 2038, China is to overtake the US by being the largest economy maintaining its current growth rate. Credit crisis however, may reduce the chance of becoming a superpower. The European Union is also an emerging superpower as a result of various factors such as its large population, economy in terms of GDP purchasing, low inflation rates and dominance of high quality of life. It is argues that based on its size and global political influence, EU is already a superpower economy. India is also an emerging superpower despite the challenges of poverty and social inequality. Several factors have led to improved economy such as India’s functional institutions of democracy and its corruption free government. Others include rapid economic growth and efficient resource utilization. Rosefielde (2004) argues that it is predicted that in 2015, India is to takeover China by being the fastest growing economy and it might become an economic superpower in the year 2025. Russia is also stated as the emerging superpower due to factors such as mineral wealth and energy which has been used to win friends and influence them. The other factors include small economy and population. The other emerging superpower in Brazil which will be contributed factors such as the large share of world politics, democratic rule and the strong economy. Other factors include increased nuclear capabilities and increased self confidence. Question 4 Characteristics of the UAE economy in the twenty-first century The UAE economic development has made many developing countries an excellent choice for overseas expansion, globalisation and foreign direct investment. The region is currently considered as the world wealthiest and fastest in development. Shirk (2008) explains that China for example is becoming an economic leader and manufacturer in the world as it is famous for its cheap labour workers. The UAE has also increased wealth from the real estate sector which has attracted a large number of FDI. It has also eliminated most of its trade barriers as it is now free trade economy therefore open for any nation that seeks new target market and consumers. The UAE economy is rich in both oil and gas resources with the richest among the seven emirates being Abu Dhabi. Chua (2007) describes that oil trade account for about 25 percent of the economy’s GDP. The economy has been significantly growing though the economic crisis experienced in 2008-2009 brought about various effects to the economy. In terms of maintained average income, UAE is ranked as third after Luxembourg and Norway. After oil, UAE has been focusing on diversification which has increased in the twenty-first century. The factors that have led to the increase include aviation, logistics, manufacturing and tourism. The favourable characteristics have led to development of various economic sector and increase in investment for example through improved infrastructural projects such as the hydro carbon industries and the real estate development. The other characteristic of the UAE economy in the twenty-first century is that the company has increased its support for the multilateral trading system. This is according to the international bodies such as WTO. Abdel and Ibrahim (2001) put it that the population growth is currently 9 percent where 13 percent of people make up the workforce. 87 percent of the population includes expatriates who have taken over the market. In 2007, the UAE GDP increased by 15 percent to 450 million dirham. 99 billion dollars was got from oil revenues and 121 from non-oil revenues. Abdel and Ibrahim (2001) describes that the export from UAE is about 48 billion dollars with partners from Korea, India and Japan. UAE countries are being cautious in their fiscal policy as there is need to retrench some due to the sharp economic cycle experienced in the region. The fiscal sustainability has presented itself as a policy issue as a result of increase in government spending which has been made possible due to high oil prices while microeconomic stability is currently not in question. Question 5 Identify the leading world powers on the beginning of the twenty-first century The United States has been the leading world power since the end of Cold war though signs show that the powers are eroding as some economies have significantly improved in growth such as China and India. Chua (2007) explains that the emergence of global threats such as pandemics, climate change and depletion of resources leaves no one country to solve on its own. It is therefore importance to consider national security and build good relationships with nations around the world. The awakening of the Arab community has also shaken world politics for example due to the recent development of the Middle East as well as the Northern countries in Africa. Up risings have been taking place in the Middle East and this might change their relationships with the United States. Politicians in US are afraid that a Muslim brotherhood could come to power and the US is not sure whether it should support free and fair elections in the Arab countries (Chua, 2007). According to Chuck (2009) small countries have taken over world power from US such as Israel and BRIC countries which stand for Brazil, Russia, India and China. These countries have not only gained economic power but have also improved on their political powers. One issue with a China is its political stability at home since most citizens would not the idea of changing the political structure. This is because most Chinese believe have the mentality that US represents the major values of Western civilisation and that China’s values represent Eastern civilization. France, Germany and UK have increasingly been seen as world powers being member states of the European Union and have more capacity of changing foreign affairs and defence policy. Question 6 Conclusion on who will own the twenty first century In my opinion, having the history of the twentieth century and now of the twenty-first century marked by occupation and civil war, I think that China qualifies to become the leader. This is due to its significant growth in technological developments and transformations which have resulted to tremendous economic turnaround. Mark (2005) shows China population is at 1.3 billion which is about a fifth of the world’s population and covers about 10 million square kilometers becoming the third largest after Russia and Canada. Today, China is the major trading nation which has brought about exciting foreign currency holding. The country has also been predicted to be the next superpower by overtaking the US by being the largest economy maintaining its current growth rate. The Chinese government has realised that implementing reforms in the economic sector brings about achievement of the status that the country has desired to be. Despite not being threatened in terms of security, the country has implemented radical changes in its military forces in order to gain power projection and capabilities of fighting the modern world with sophisticated technology. A military modernisation program has been started as a result of the countries economic boom and changing the military strategies. These strategies include possession of nuclear weapons. China will be leading in the twenty-first century since the US has been declining in factors such as increase in corporate tax rate and therefore most companies are now relocating to countries with lower federal and state taxes. Aubin (2008) describes that China is gaining from this US decline with its important factors which include economic freedom and liberalisation, lower taxes at 25 percent and having a strong research and development growth. However there are factors that could hinder China from being leading which include its political situation. The political status is perceived to be too fragile that it can not cope with the superpower status. There are other factors which include limited supply of energy and availability of raw materials. Inequality, corruption, and the environment could also hinder China from becoming a superpower. Globalisation and modernisation will however favour China since it will be more compelled by internal logic and dynamism. In conclusion, China possesses the qualifications of becoming the superpower in the twenty-first century due to is great power in the traditional sense. References Abdel, A. & Ibrahim, S. (2001). Productivity Problems in the UAE. The role of productivity organisations, Research report, Tanmia, Dubai. Aubin, P. (2008). China: Yes, worry about the future. Strategic Review, (17-20). Bacher, C. (2007). Capitalism, ethics and the paradoxon of self-exploitation. Grin Verlag. Chua, A. (2007). Day of empire: How hyper-powers rise to global dominance and why they fall, Random House. Chuck, S. (2009). Why the 21st century belongs to China, viewed 27 May 2011, Mark, L. (2005). Europe: The new superpower, Irish Times, viewed 27 May 2011, Rosefielde, S. (2004). Russia in the 21st Century, Cambridge University Press, viewed 27 May 2011, Shirk, S. (2008). China: Fragile superpower. Oxford University Press, USA. Toje, A. (2010). The European Union as a small power: After the post-Cold War. New York: Palgrave Macmillan. Wood, E. (2002). The Origins of Capitalism: A Longer View London: Verso Read More