Globalization and SC Johnson

Tariffs are duties, also known as taxes, which each country puts on the imports and exports of that country. The government of the country in question wages a tariff. The World Trade Organization (WTO) oversees all countries. Absolute advantage supports the concept of globalization, because this concept ensures that one country can produce a product better and more efficient than another country. By importing or exporting this product or good, the countries that use this product can easily trade other products or goods.

The outsourcing of jobs from US flourished after the "North American Free Trade Agreement" which moved many jobs in US to Mexico. The wages paid to the ... ... middle of paper ... ... can be considered as a win-win situation (1). Some economists also mention that a single country cannot monopolize in outsourcing jobs forever. It goes on till there is saturation in their economic growth and then they might loose their monopoly when some other nations come out with a cheaper labor than theirs, then these companies will shift their operations to that side of the world. This keeps going as long as labor becomes cheaper from nation to nation.

Economic exchange is an important tool to enhance economic growth. However, contrary to the expectation, intensified economic exchange in America, as a result of free trade has negatively impacted on wage rates. Consequently, as free trade extends to non- American economies, converting the whole world to a global village, the impact on wages spreads out to other nation and with the current trend it will soon flatten wages across the globe at a low level. The deregulation in trade has resulted to relocation of production towards the cheap labor zones hence gaining a completive advantage. In an effort to compete fairly, production firms left in the developed countries try to reduce their production costs by reducing labor costs and deteriorating work environment conditions, hence resulting to a race to the bottom.

However, I will be solely discussing the economic aspects of globalization and how it effects the prosperity and living standards of people around the world. Though the current international economy faces many challenges, the idea of trade liberalization is superior to its alternatives. Economic globalization improves the world and is ultimately good. By integrating markets, globalization generates economic growth by fostering efficiency and specialization. In addition, globalization uplifts those in poverty and creates more technologically advanced societies.

In terms of efficiency, free trade thus means that every state should play to maximise their specialisation of production and to minimise doing less efficient tasks (Kindleberger, 1995). Liberals believe that specialisation will improve the welfare of an individual country and that of the world as a whole if countries specialise in one task according to their comparative advantage (O’Brien and Williams, 2013). Moreover, nation states can expand their businesses with foreign direct investments, and this leads to more dynamic business style. Free trade opens up a door to the world for every single state, and domestic companies can export and import their commodities without paying extra tariffs or tax. Eliminating trade barriers creates a field which people can play a role internationally to compete one another in order to improve national as well as international economy (Balaam, and Dillman, 2011b).

The process of globalization is accelerated by the dynamic nature of technology, change in price, and liberalization of trade makes it easier for countries to merge their trade rules, minimizing competition. The countries of transition show integration of the global economy as characterized in specific regions. The concept of globalization is complex and controversial happening over time. The growth of globalization over the year’s takes time as numerous features requires the global economic integration. Globalization ensures internalization of the products produced by different countries.

In the time of globalization internationalization is becoming more relevant for company’s strategies. All companies look for the opportunities in expanding their markets. The main reasons for them are: growing further, creating shareholder value, accessing profit pool, tax barriers transposition, demonstration effects, diversification and sustaining long term competitiveness. Globalization created resources and organizations, which build a great supportive platform for companies to go abroad. Internet, WTO, low-cost communication technologies and increased knowledge about different cultures made the way of internationalization much easier and transparent.

INTRODUCTION Regional trade agreements and global trade liberalization are common terms that are used to analyze different market structures in the market. According to international economics, RTAs (Regional Trading Agreements) are the agreements in which members give each another privileged treatment with respect to the extent by which the trade barrier have been established. On the other side, global trade liberalization, is a general term referring to the depletion of trade boundaries globally to ensure free trade among all states. Free trade agreements are more formal than the global trade liberalization policies. It is deemed that Regional Trade Agreements are yielded from the global trade liberalization.

Furthermore, his theory is more precise and clear where the countries should export whenever the production intensive cost is lower and import when the production intensive cost is higher and limited. Based on the assumption of Heckscher-Ohlin theory, the countries have the same level of technology. However Winters (1991) argues the technology is different and changes with innovation activities for all countries. Therefore, the need of technology in influencing international trade is modelled by Vernon

Internationalization is the process of producing and designing products or services that satisfy the needs of and are adaptable to consumers in different cultures and languages (Investopedia, n.d.). It can also be defined as boundless operations of companies besides the domestic market (Business Dictionary, n.d.). Because the products are being internationalized, which means they are available in an enormous market, global marketers not only have a chance to utilize the benefits of the international market to increase profits, but also do they need to consider the barriers to avoid costs. Different preferences, languages, cultures or even laws and regulations are good examples of the international market barriers to global marketers. Thus,