Essays on Globalization and Entrepreneurship Assignment

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The paper "Globalization and Entrepreneurship" is a wonderful example of an assignment on business. The global capital markets have grown so rapidly because there has been a rise in the privatizations globally, which have in turn allowed a free flow of capital (Etemad & Wright, 2003). The result is that the capital markets continue to grow, and will continue to grow even through the next decade, considering that much of the modern global economy is driven by private entities that will continue to inject capital. The difference between capital inflows in Japan and Ireland is accounted for by the internal economic, political and legal environment within those countries (Siddaiah, 2009).

Thus, where the economic and regulatory environment may be hindering investors to inject capital in the Japanese market, the Ireland economic and regulatory environment is more open, thus allowing for high FDI capital flows. The internationalization theory of FDI provides that multinationals investing in the foreign market must possess certain advantages that are not present in the country they are investing in. On the other hand, the Knickerbocker's theory of FDI holds that the multinationals operating in the foreign market will copy each other and thus form oligopolies (Roubini & Backus, 1998).

The internationalization theory gives a more applicable theory of FDI investment historically since most multinationals seek to invest in the countries where either technology or infrastructure is not up to the standards of their home countries, so they can take advantage of the uncharted markets. The IMF policy of reduced government spending is not suitable for developing countries with the financial crisis since such countries highly dependent on government support for the economy as opposed to private sector contributions (Etemad & Wright, 2003).

Thus, the IMF should change this policy by encouraging government spending in the economies. However, such policy change will increase the sovereign debts for such developing countries, since they will be required to borrow more in order to spend (Etemad & Wright, 2003). The merit of floating over fixed exchange rate is that the floating exchange rate allows for the market to self-regulate the financial markets, which in turn create more stable exchange rate equilibrium, compared to the fixed rate.

The fixed exchange rate creates financial regulatory problems through the central banks, and thus may neither be suitable for domestic or international businesses (Roubini & Backus, 1998). If USA, Canada, and Mexico decide to adopt a fixed exchange rate, the consequence is that there will be a problem in the exchange value of the imports and exports to these countries, since it will be the role of their central banks to regulate the foreign currency in circulation so that the fixed exchange rate remains. However, if the central banks run out the foreign currencies, the currencies are likely to depreciate significantly, thus reducing trade internally, while at the same time reducing investments among the trade partners (Roubini & Backus, 1998).

  The government should consider human rights when giving preferential trading rights to countries, since human rights are part of the labor laws regulating the economic environment in a country, and thus only foreign investors who can satisfy the labor requirements should be considered (Siddaiah, 2009). However, this consideration is disadvantageous, since it results in discriminatory trading activities, which may result in leaving out a trading partner with more economic gain prospectives. The arguments for political and economic regional integration are that integration would foster cultural diversity, peace and economic benefit for the countries involved, through making trade free and easier and also allowing free movement of labor (Etemad & Wright, 2003).

However, the regional integrations have always been hindered by the suspicion between countries, which feels that some nations may benefit more than others, while also fearing the loss of revenue obtained through tariffs and levies charged on foreign trade.    

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