Globalization isn't what it used to be. In its heyday, trade and capital flows boomed. Multinationals made unparalleled advances and traversed boundaries. They introduced new products and latest technologies in emerging economies and exposed them to western cultures via movies, music and plays. They were able to offer a wide range of high quality goods and services at very affordable prices until world governments descended to hidden protectionism.
Businesses have a divided approach towards gated globalization. Some businesses are furious at the various obstacles in the way of open trade and investment. They believe that it puts them at a disadvantage and traps capital in an economy with little use for it. These are the large, efficient and innovative multinationals that hold enough power and prestige to turn around markets in their best interest. These businesses seek to exploit all business opportunities and enter emerging economies. They can afford to take risks and function at very low prices in order to drive out the competition. These multinationals argue that increased competition incentivizes all companies to improve the range and quality of goods and services offered and decrease prices. It encourages them to be innovative in order to stand out and stay dominant in the market. One other strong argument these businesses put forth is that globalization facilitates specialization and trade, increasing individual profits and reducing prices for consumers.
Businesses have a divided approach towards gated globalization. Some businesses are furious at the various obstacles in the way of open trade and investment. They believe that it puts them at a disadvantage and traps capital in an economy with little use for it. These are the large, efficient and innovative multinationals that hold enough power and prestige to turn around markets in their best interest. These businesses seek to exploit all business opportunities and enter emerging economies. They can afford to take risks and function at very low prices in order to drive out the competition. These multinationals argue that increased competition incentivizes all companies to improve the range and quality of goods and services offered and decrease prices. It encourages them to be innovative in order to stand out and stay dominant in the market. One other strong argument these businesses put forth is that globalization facilitates specialization and trade, increasing individual profits and reducing prices for consumers.
On the other hand, some businesses are delighted when foreign companies and investments are granted only partial freedom. These are mostly the emerging and local businesses who seek to avoid foreign competition. These businesses do not have enough capital and expertise to expand and stand out in a market full of raging bulls. They offer products similar to that of their competitors and charge extremely high prices. They have little incentive to innovate and constantly pressure governments to protect them from foreign powers. Their main argument is that protecting interests of domestic companies helps stabilize and economically strengthen the economy. It also helps make crises less damaging and financial systems less vulnerable to contagion. They also argue that it gives them a leg up and helps keep domestic currency into the economy.
Under pressure from businesses, governments are trying to restore the momentum of free trade through regional free-trade agreements. Some businesses highly appreciate the concept of the North American Free Trade Agreement (NAFTA) because it at least grants them opportunities to practice free trade regionally. NAFTA is a binding agreement between the United States, Canada and Mexico. Before NAFTA, Mexican tariffs on US goods had been a staggering 250 percent higher than U.S. tariffs on Mexican goods. After NAFTA came into the picture, restrictive inter-country trade and investment policies among the three nations were abolished and fair competition and investment were promoted. NAFTA decreased tariffs and prices of products; increased wages, trade between the three nations, and industrial integration between the US and Mexico; and created jobs for US workers.
Under pressure from businesses, governments are trying to restore the momentum of free trade through regional free-trade agreements. Some businesses highly appreciate the concept of the North American Free Trade Agreement (NAFTA) because it at least grants them opportunities to practice free trade regionally. NAFTA is a binding agreement between the United States, Canada and Mexico. Before NAFTA, Mexican tariffs on US goods had been a staggering 250 percent higher than U.S. tariffs on Mexican goods. After NAFTA came into the picture, restrictive inter-country trade and investment policies among the three nations were abolished and fair competition and investment were promoted. NAFTA decreased tariffs and prices of products; increased wages, trade between the three nations, and industrial integration between the US and Mexico; and created jobs for US workers.