Task2 - Ethics >> Globalization & Local Businesses

"Globalization & Local Businesses"

Some people feel that the local companies of developing countries should be protected from international competition, while others think that they benefit from it.

Discuss both viewpoints and provide your own opinion.

As part of the globalization trend, many multinational companies are entering developing countries in search of new markets. Because of their established international supply and distribution networks, as well as access to cheap labor, multinational companies are able to offer products at significantly lower prices than their local counterparts. This has placed increased pressure on smaller local businesses, and in many cases has pushed them out of the market entirely.

Proponents of globalization will often focus on the consumer, and point out that it is the consumer who benefits from the lower prices offered by larger multinational companies. However, they fail to mention that it is the same consumer who loses his job because his company was pushed out of the marketplace by the multinational company.

Those in favor of globalization will go on to say that competition stimulates local economies to grow and improve their products. This is like saying that placing a schoolchild in the boxing ring with a seasoned prize fighter will improve his boxing skills. Local companies need to be protected to grow and develop their skill base at their own pace.

A major criticism of globalization is that it is making the rich richer and the poor poorer, and this is nowhere more evident than in developing economies. Local businesses simply cannot compete with larger multinational companies, and should therefore be protected and allowed to grow naturally. Possible sources of protection could be found in tax breaks, anti-monopoly laws, import tariffs, and employment and supply quotas.

It is my strong belief that the effects of globalization on the businesses of the third world are adverse. Consequently, mutinational companies must be controlled in the economies of developing countries.