The advantages of globalisation (an economic view) The economic benefits that greater openness to international trade bring

are: Faster growth: economies that have in the past been open to foreign direct investments have developed at a much quicker pace than those economies closed to such investment e.g. communist Russia Cheaper imports: this is down to the simple fact that if we reduce the barriers imposed on imports (e.g. tariffs, quota, etc) then the imports will fall in price New technologies: by having an open economy we can bring in new technology as it happens rather than trying to develop it internally Spur of foreign competition: foreign competition will encourage domestic producers to increase efficiency. Carbaugh (1998) states that global competitiveness is a bit like golf, you get better by playing against people who are better than you. Increase consumer income: multination will bring up average wage levels because if the multinationals were not there the domestic companies would pay less. Increased investment opportunities: with globalisation companies can move capital to whatever country offers the most attractive investment opportunity. This prevents capital being trapped in domestic economies earning poor returns. Disadvantages of globalisation The negative drivers of globalisation included culture which is a major hold back of globalisation. An example of how culture can negatively affect globalisation can be seen in the French film industry. The French are very protective of this part of their culture and provide huge grants to help its development. As well as government barriers market barriers and cultural barriers still exist. Also a negative aspect to a countries development is war e.g. tourism in Israel fell by 40% due to the latest violence. Corporate strategy can also be a negative driver of globalization as corporation may try to locate in one particular area. Another negative driver of globalisation is local focus or localisation as it is termed in Richard Douthwaites book Short Circuit. Douthwaite (1996) believes that globalisation can and should be reversed. He also believes that localisation is the way to do this. He defines localisation as not meaning everything being produced locally but it means a better a balance between local, regional, national and international markets and thus bring less control to multinational corporations. Another step to reverse globalisation would be for governments to club together to curb the power of multinational by negotiating new trade and treaties that would remove the subsidies powering globalisation and give local production a chance. Douthwaite also states that the global economy is itself nothing less than a system of structural exploitation that creates hidden slaves on the other side of the world and also that the North should allow the South to produce for itself and not just for us (North). So it can be seen that Douthwaite is very opposed to globalisation especially that part of it exploited by multinational corporations. Further arguments put forward against globalisation by Mr. Lawton include that it actually destroys jobs in wealthy advanced countries. This is due to the lower costs of wages in developing countries. Multinationals will move to areas of lower wage levels at the drop of a hat e.g. Fruit of the Loom. Also this ability to relocate has meant that wage levels of unskilled

workers in developed countries has actually fallen relatively speaking. This is down to the fact that one now needs skill and knowledge in developed economies to survive. Also there is the loss of sovereignty that globalisation brings. Many anti-globalisation believers state that nations are loosing their identity and selling their soul. Then there are environmental factors of globalisation as described earlier. These are becoming more and more controversial. Technology, though usually viewed as a positive aspect of globalisation, also has some negative points. Jeffry Sachs (The Economist, June 24th 2000) argues that technology is now what divides the world. Sachs states that 15% of the worlds population account for nearly all the worlds technological advances. This has to be a concern if developing economies are ever going to catch up. Many countries, almost 30% of the worlds population, are technologically excluded (this means not only that they do not innovate but also that they cannot adopt new technologies). In recent years some countries, such as Taiwan, South Korea and Israel, have become top rank innovators and with this their economies have flourished. This would indicate that perhaps the best way to tackle world poverty is to provide aid through education and technology.

Exports in the UK are growing. The major catalyst was sterlings weakness which meant that the demand for UK goods and services expanded greatly. What is interesting though, is the benefits are not just price driven. Earlier this year, we attended International Giftware which fills all 20 halls at the NEC Exhibition Centre just outside of Birmingham. We found international buyers purchasing UK goods because of the quality and innovation as well as the price. We then decided to talk to our clients about the benefits and the risks of trading internationally and the key points they highlighted are discussed below:
Top five benefits: 1 Grow your business

When trading internationally the universe of potential clients and suppliers will increase significantly. Just imagine increasing the number of potential

clients by 100 percent each time you start selling in a new country. In all likelihood, this will probably be much easier than trying to expand your market place in your home country.
2 Diversify risk

The idea that a business relies solely on one market and directs all its resources into a single currency may prove to be more risky than it may first seem. Just look at the number of unprecedented global disasters (financial meltdown, earthquakes and unrest in the Middle East) over the last few years and the drastic impacts these have had on markets. Your home market could contract or even disappear, but your business may be saved by the revenue it generates overseas.
3 Better margins

As well as seeing increased sales, you may well enjoy better margins. Sterling which is currently weak may give you a head start when exporting. Pricing pressure could be less and it could also reduce seasonal market fluctuations.
4 Earlier payments

When working with companies overseas, both you and your customer will want to execute the transaction in the safest and most efficient manner possible. One of the many advantages when trading internationally is that overseas payers often pay upfront. This reduces payment risk and may well help your working capital.
5 Less competition

The ability to stand out amongst competitors is a crucial factor in business. When there are fewer competitors, this task is made easier. Your business, which may be viewed as comparable to others in the UK, may, when placed in a larger and more diverse environment, turn out to be a unique product or service not to be missed. By making the product or service available to worldwide buyers, you instantly create another life line for the business by being in less competition and increasing the possibility of standing out. This will in turn boost sales potential and allow your business to flourish.
The top five risks: 1 Not spending enough time defining the risks of international trade

Are you clear why you want to trade internationally? Are you aware of its risks? What are the reasons you want to sell or buy from overseas? It is crucial that you have a clear understanding of what international trade

involves. It is easy to become engulfed in the excitement of its benefits and marginalise the risks to your detriment.
2 Misunderstanding the local legal framework

It is dangerous to assume that laws in other countries are similar to that of the UK. The reality is laws differ in every country which means it is essential you spend sufficient time educating your company about the legal framework of the country you are doing business with. Identifying a local lawyer is a good idea so that you can get a full picture of the laws that will apply and which ones will affect your business. Doing something legally right the first time can save you a lot of time, money and possible future heartache.
3 Not communicating effectively with your business partners

Relationships have to be worked at as there are always problems and emails can be very easily misunderstood. Time spent on the telephone and visiting will make life so much easier in the long term as you are likely to develop a rapport and gain a firmer understanding of how your partner works and thinks. Invaluable.
4 Not spending enough time with your potential business partners

Long distant relationships leave a lot to be desired. Two good friends of mine who have been buying goods from China and selling to a number of countries for more years than any of us wish to remember, spend even now, a huge amount of time up front with new potential partners. This is time very well spent as it has meant they have developed some very good partners and avoided some very dodgy characters along the way.
5 Unstable profits

With so many aspects to consider when trading at an international level, it is easy to leave currency exchange to the last minute. Unfortunately, in doing this, there is a risk of not getting the best exchange rate which in turn could have a negative impact on your business profit. As we live in the UK, anything we export or import will have to be exchanged into sterling. This means that between setting your budget, buying the goods and then paying for them, if you do not plan ahead, the markets volatility could always change the worth of the sterling and not always for the best. Many of my clients international trade has brought them huge benefits but not without additional risk. International trade has to be approached sensibly and with a clear thought process so as to maximise the benefits and minimise the risks.