Globalization & Enterprises: An Analysis of Trade Dynamics

This essay provides a comprehensive analysis of international trade and enterprises within the context of globalization. It discusses the underlying factors driving globalization, identifies the winners and losers in this process, and examines the debates surrounding free trade and migration. The essay also delves into the theories of absolute and comparative advantage, illustrating their relevance to trade with examples. It further assesses the validity of arguments against free trade, particularly concerning wage competition and job displacement in developed countries. The document concludes by emphasizing the complex interplay between globalization, trade policies, and their socio-economic consequences, providing a detailed overview for students studying international economics and business. Desklib offers this document as part of its collection of solved assignments.

Running head: INTERNATIONAL TRADE AND ENTERPRISES
International Trade and Enterprises
Name of the Student
Name of the University
Author Note

1INTERNATIONAL TRADE AND ENTERPRISES
Table of Contents
Answer 1....................................................................................................................................2
Answer 2....................................................................................................................................3
References..................................................................................................................................6

2INTERNATIONAL TRADE AND ENTERPRISES
Answer 1
Globalisation refers to the process by which the organizations and businesses across
the world operate in an international level, in a globally integrated, inclusive and
intercommunicated environment (Intriligator 2017). There have been several factors
underlying globalisation, the primary ones being as follows:
Less protectionism- Over the years, the protectionism policies in most of the countries, like
those of foreign exchange controls, import licensing and others have been dismantled, which
in turn has led to more inclusive commercial frameworks.
Technological Progress- The development in global technology and infrastructure have led
to decrease in the cost of transmitting and communicating, which in turn has led to increased
integration of the international trade and commercial scenario (Holton 2013).
Growth strategies of multinational companies- To achieve revenue and higher profit growth,
more business have been going global and have been exploring new markets and regions and
also taking advantage of the global marketplace.
Political integration- The political scenario of the globe can also be seen to be integrating
over the years (Wei 2013).
Globalisation has not had uniform impacts on all the sectors of the population across
the globe. Some sections of the population have been more benefitted from others. The
winners of globalisation are as follows:
 The capitalist class, having considerable capital and other resources of production
 The huge and production efficient multinational companies
 The global middle-class which has developed and has been getting benefited from the
globalisation process (Tin et al. 2012)

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 The consumers who now have access to more options at efficient market price
The losers in the process of Globalisation can be seen to be the following:
 The poor people who have been getting poorer as rich people are becoming richer
 The people in the indigenous and small-scale domestic industries
 Low skilled and subsistence level employees who are not fit for the technologically
(Giddens 2018)
This different between winners and losers have mainly occurred due to the fact that
with a more integrated and less protectionist framework, the big, cost efficient multinational
companies, experienced economies of scale, have been infiltrating in other countries and
posing as threats and unfair competitors for the domestic small and indigenous industries,
which has led to the creation of this distortion (Teney, Lacewell and De Wilde 2014).
However, there also remain counter arguments, which indicate that that globalisation has led
to development of industries and increase in employment, thereby leading to increase in the
standard of living of the population as a whole.
Answer 2
In the globalised framework, with technological progress and ease of transfer of
resources across the globe, the notion of free trade has been becoming increasingly popular.
However, the same is not accepted happily by people across the globe, especially by the
majority of the population in the developed countries (Adesina 2012). This is primarily
because, the globalisation and free trade systems help the industries and businesses of these
countries to tap the lucrative labour markets in the low developed or developing countries,
where abundant labours are present at much cheaper rate. This has resulted immense
dissatisfaction among the workers in the developed countries, like that of the United States of

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America, as much of their wages, employment and standard of living are affected by the
same.
The economic reasoning behind this argument can be formed on the basis of the
demand-supply theory of economics. When the supply of labour is greater than that of the
demand for labour, then the situation in the market can be shown to be as follows:
Figure 1: Conditions in the labour market Post Globalisation
(Source: As created by the author)
As can be seen from the above figure, with the increasing access of the companies
across the globe, especially of the labour markets of the developing and less developed
countries, the labour supply can be seen to be high, which in turn reduces the cost of the
labour. The companies, in the age of improved technology and infrastructure, can export the
tasks to the cheap and able labour force in the developing countries (Hall and Lieberman
2012). This in turn, forces the labours of the developed countries, like that of the USA, to

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decrease their demand for high wage as if they do not do so, it can lead to high
unemployment on their part. Again, accepting the low wage rates decrease their purchasing
power, which in turn leads to fall in their overall demand and consumption and also leads to
fall in the standard of living of the population in the developed countries, like that of the
USA, which makes their arguments and justifications valid.

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References
Adesina, O.S., 2012. The negative impact of globalization on Nigeria. International Journal
of Humanities and Social Science, 2(15), pp.193-201.
Giddens, A., 2018. Globalization. In Sociology of Globalization(pp. 19-26). Routledge.
Hall, R.E. and Lieberman, M., 2012. Microeconomics: Principles and applications. Cengage
Learning.
Holton, R.J., 2013. Economy and society. Routledge.
Intriligator, M., 2017. Globalisation of the World Economy: Potential Benefits and Costs and
a Net Assessment. In Economics of Globalisation (pp. 85-94). Routledge.
Teney, C., Lacewell, O.P. and De Wilde, P., 2014. Winners and losers of globalization in
Europe: attitudes and ideologies. European Political Science Review, 6(4), pp.575-595.
Tin, P.B., Ismail, R., Othman, N. and Sulaiman, N., 2012. Globalization and the factors
influencing households' demand for higher education in Malaysia. International Journal of
Education and Information Technologies, 6(3), pp.269-278.
Wei, Y.D., 2013. Regional development in China: states, globalization and inequality.
Routledge.