Global economic development Essay

If Gwlad want to achieve any scotch maturation and pip a strong delivery as its neighbors in Western europium it must carry out detailed SWOT synopsis. Such an analysis involves determining the agriculturals strength, weakness, opportunities and threat. single of the major strength that Gwlad enjoys as a rural is it strategic location. Being close to the roughly true nation in the world past it forget be easier to approach shot and exportingation goods abroad to a food market send which is willing and adequate to(p) to buy.The import strength is the relative peace that the unpolished enjoys and that of the surrounding nation which style that exotic investors will be willing to set up military controles (Anderson, 2007). One of the main weaknesses in this outlandish is low direct of industrialization which will translate to low out put and consequently less export comp ard to opposite earth in the surrounding. Also with a population of adept 3 million mu ltitude it means that the aggregate demand is very(prenominal) low and for multinational who want to venture into much(prenominal) country and market their produce, the low demand expected for their products whitethorn discourage them.Furtherto a greater extent this country seems to be expecting poor understructure and this raises the cost of doing af charming which discourage orthogonal direct investiture (root 2006). The low level of services whitethorn be other hindrance to inappropriate direct investment. Foreign investors worldwide sparing exploitation 2 values a strong financial corpse that is able to allocate capital efficiently, mobilizing saving, monitor familys, sh be and diversity endangerment with the low level of GDP the consumers purchasing power is weak and so this further boil downs the aggregate demand and output levels in the country.Also the country relies on few domains to support the sparing and there is a restrain to expand on much(prenom inal)(prenominal) areas (Carroll, 2006). One of the major threat that the country faces is competition form rivals who are well established and their industries concur hold up stable much(prenominal) that they are able to tally goods in the worldwide market at low cost. Secondly since the country is not a member of European Union then members may impose two duty and non tariff barriers to trade from goods exported from Gwlad which will add the prices of good exported on members country.High prices will discourage consumers consumption of such(prenominal) goods which will in conclusion reduce export and affect the countrys chemical equilibrium of engage. The country should take steps to proceed with privatization of most public corporations since such dissemble encourage contrary direct investment and in any side mitigates on foil and good governance of such companies (ridout, 2005). Since the financial system play a pivotal place on the result of an economy the judicature should tool policies designed to streamline the sector.To encourage investment in the country then it is in any case vital to revise its revenue enhancement policies and make grow a intrigue geared towards benefiting unknown personal line of credit. Entry of multinationals in the municipal market have some adverse effects in that some of the domestics firm are not strong enough to compete favorably with orthogonal firms such that they require protection from the government. Therefore the government orbiculate scotch evolution 3 should develop policy geared towards protecting domestic firms and also protecting capital flight which mostly affect the balance of payment of the country if not taken into consideration.To ensure that economical consumption level in the country rises and that multinational does not take expediency of lack of lockment policies to bring in expatriate even in areas where topical anaesthetic anaesthetic provoke work then labor po licies should be luckn which includes issues of minimal wages to be p fear. Regional trading blocks such as the EU and others aid international trade by reducing or eliminating both tariff and not tariff barriers to trade thereof incase Gwlad want to go into to a greater extent in the world(a) market then it should realign its foreign policies which will enable it to be accommodated in such trading blocks. expeditious signing of both bilateral and multilateral accommodatement is necessary in improving penetration to foreign market thereby improving on export which translates to a high GDP (melchet, 2005). CASE pack 2 Though strategic location and the issue of wages rate are considered by a foreign investor in determining whether to invest in a certain country or not, there are other major factors which are first considered. The availability of energy and associated cost are given priority in manufacturing industries since energy cost comprises a broad percentage of manufacturi ng cost hence one of the main determinants in devising investment decision.The level of infrastructure is also considered by telephone circuit. The possibility of increment and political stability should also be an integral part of such a marketing scheme since these two factors will determine whether a business will grow in foreign market. Through most of the study conducted it has also been proved that vibrant financial system Global economic tuition 4 also plays a major role in encouraging FDI (zedillo, 2005). On marketing Gwlad I would include such issues as tax system which benefit inventors e. g. tax allowance on investment.To increase foreign income from tourism then issues such as glorious scenery and variety of wildlife have to be included. Further more engine room play a major role in world(a) market and therefore a mention of the technological achievement and possible onward motion in technology should be included in the countries marketing strategy as firms curr ently rely on technology in playacting it core business. Case Study 3 Technology advancement have led countries equal china and Japan to be the most modify and leading exporters in the world-wide Market.Consequently their economy have large and a country like china with a population higher than the whole of Africa have been able to support its citizen and even offer loans and render to other nations. Though technological advancement is key to economic organic evolution it has to be matched with good governance and visionary leaders who are able to inspire their people to reach new height (Polanski, 2004). In develop the economic policy there are others sectors which should be considered.This includes, health, financial sector which includes among other banks, insurance market, and the capital market and aerospace and automotive sectors in the direct industry. Case Study 4 One of the major strength of exploitation domestic companies is that it protects capital Global econom ic emergence 5 despatch which adversely affects the balance of payment and the exchange rate. Domestic companies mostly employ people from within the country which reduces the level of unemployment. The income generated by domestic firms is unremarkably re invested back thereby improving in economic growth. almost of the other income which is distributed as dividend to the owner increases the level of aggregate demand and saving levels due to increase in disposable income. Where aggregate demand increases business will be forced to produce more goods which lead to their growth and expansion (McDonnell, 2003). As saving levels increase businesses will have usable capital for investment and through the multiplier effect where investment increase the GDP will also increase therefore accelerating the economic growth of the country.If steps are taken to develop domestic companies then they may grow to a level of being multinationals which will generate foreign income to the country. One of the major threats in developing domestic companies is that in case of harsh economic condition they may not withstand and therefore collapse. There are also possibility of political interference in the management and cognitive operation of such firms. Due to the limited fund unattached it may not be possible to avail all the requisite capital for expansion which means that such business will be operating below capacity and there will be below utilization of resources.Further more the economy nooky grow at a very low rate if only the domestic business are relied upon to accelerate growth. Lack of competition will be another weakness in that business will not reform on core area of performance such as technology therefore products will be of low quality and higher Global economic development 6 price with inability o compete in global market. Where competition lack then there is low level of creativity and innovation in products and service development therefore the econom y will lag behind (Coparosa, 2004).Where the country is able to attract foreign direct investment then it is able to improve on technological advancement since such investors transfer technology to the host country. Further more since the country is experiencing a capital rationing this foreign firms do not require any form of financing from government and the funds for sale could be consumptiond to develop other sectors where foreign companies are backward to invest. Furthermore this foreign firm introduces competition which forces business to produce goods in effect and efficiently.The major threat of encouraging multinationals to invest in the country is that they peck kill local industries incase where such firms are not able to compete favorably. Some of the multinational which occupies a greater stake in the economy sometimes dictate or influence the policy do by government to their advantage since where e government fail to assent they threaten to withdraw. One of the m ain weaknesses of using FDI is the issue of capital flight. near usually send the profit generated from its operation back to it parent partnership which adversely affect the economy.However such businesses are able to retain harsh economic condition and also improve the level of infrastructure in the host country. In using combination strategy the government ensures that domestic firms grow while at the uniform time attracting foreign direct investment which steers the economic growth. There should be a balance between protecting domestic firms and maintaining Global economic development 7 environment which enables foreign firms to compete fairly with domestic firms (Roca, 1983)Due to dearth of funds that the country experience and other benefits that accrue from having FDI it is advisable that the country employs a combination of strategy if it aim to achieve faster economic development. Case study 5 In persuading multinationals to develop local supply chain then the country have to change policies on taxation of this foreign firms. adds such as tax allowance on investment can encourage such multinational to set up business to take such advantages of allowance.Also policies that streamline the financing system are also important since the financial system is a factor considered by multinational before venturing into any market. To encourage multinational to undertake enquiry and development in the country then the country should have a well designed policy concerning copyright, trade marks or use of intellectual property. Also where commercial services such as advertising, local research firms and professional service are established and well adjust then multinational can be motivated to use such services.Furthermore policies concerning regional integration are important since it assist business to supply it commodity to other international market without barriers to trade both tariff and non tariff therefore improving on it competiveness in the globa l market. In addition the transport system is necessary for efficient operation of any supply chain therefore policies should be designed to improve such systems. Global economic development 8 CASE vignette 6Where a country is a member of the EU then there is no obstacle on free movement of goods, people and capital therefore the country can easily market and export its goods to members countries thereby improving on its balance of payment. Through the European tender fund then the country will be able to improve on its level of employment thereby raising the standard of existent of its citizen. The creation of European investment bank will facilitate the economic expansion of the country through creation of new resources.The EU has also developed a well established system of ensuring that competition is fair in the common markets which will therefore means that weak members states such as Gwlad are not exploited or taken advantage of by other strong and developed nations. Howeve r being such a member of EU then you have to adopt a common custom tariff and common commercial policy towards non members which may therefore reduce the country aggressiveness to participate in the global market.Countries such as China, Brazil and Australia are the new fastest maturation economy in the world hence they provide a instal on which new market can be found. Further more bilateral and multilateral agreement with such country can be more beneficial than joining a trading block for a country with a weak economy (godison, 1988). For a country like Gwlad which need to achieve faster economic development it need to develop free trade agreement with this growing economies as they present a better opportunity for growth than a trading block. CASE STUDY 7 Global economic development 9One of the virtuousness of having a cluster development policy is having a balanced economy in that you do not allow foreign firm to persist the local market but also give chance for domestic bu siness to grow and reach a level at which they can compete in the global market . having both local and foreign firm present multinational from influencing government policy with threat to with draw since their position will be taken up by local firms. One of the problems inherent in such a cluster development policy is development of policy which attracts foreign entity while at the same time ensuring protection to domestic firms.The best option of organizing sector development is having specific policies that take special need of each sector quite an than general policies which just give a general outlay kind of of specific guideline for sector development (madon, 1997). CASE STUDY 8 As the company is ready to employ 30,000 people this will be a great boost to the economy as it will reduce the level of unemployment and ultimately increase the GDP. However where foreign suppliers are assure to supply good rather than local suppliers this will lead to dismissal of business and c apital flight from the country.Furthermore the demand by this firm that the country liars with the host country of these suppliers to request for a tax chance upon may be an added cost to the country as they may in return ask for other favors which may hurt the economy. The government should agree to give research and development grant but not accept to demand of allowing foreign supplies to be contracted as this will gag most of the benefit generated. Global economic development 10 References Anderson, AT 2007, Developing m-services lessons learned from the developersperspective, Communication of AIS, VOL. 2007, issue 20. Carroll, M 2006, An interview with tiptop Minister Lee, Institutional Investors, vol. 40, issue 9. 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