A Global Economy
The world we live in today has become a global village where different people from all parts of the world can interact and conduct business. It has led to interdependence among economies globally, meaning if one economy experiences boom, the impact is felt globally and vice versa.
Globalization has played a big role in promoting international business, but it has also affected the local business environment both positively and negatively. It gives the consumer a wide selection for goods and services, new cultures, and new ideas. Local businesses are also able to access a worldwide workforce which brings in new skills and new philosophies that can improve the local business environment. Similarly, they can source supplies from foreign suppliers. Thus, globalization affords more choice for consumers.
However, there are also concerns on the negative impact of global forces on domestic businesses and workers. Local workers may be unable to compete with global competitors exploited in terms of pricing and quality of output. Similarly, local businesses will face stiff competition from foreign, well-established corporations which may eventually drive them out of business.
Using the analogy of economic naturalism, globalization is a lot like introducing non-native species into a new environment. Some new species thrive and even become invasive, driving some native species to extinction. Yes, the fittest organisms survive through iterative competition, but natural selection results in extinction for the less fit species. In a global economy, the fittest organizations tend to survive while less efficient or less dynamic companies tend to suffer. Increased competition means that workers will be forced to find new jobs more frequently and that workers and organizations will be competing with people from around the globe.
Some industries are more insulated from globalization than others. In particular, services that are administered in person, physically, are hard to outsource. Examples of such industries are hair salons, food service, and nursing. Industries that are more sensitive to outsourcing include publishing (this text, for example, was written by a group of international collaborators from multiple countries), tech support, textile manufacturing, and electronic device manufacturing. If a technology can cheaply expedite a product’s delivery over long distances, then outsourcing is a threat.
Truly, technology has made the world smaller and has fostered competition among rivals located around the world.
The United Kingdom in the Global Economy
The United Kingdom may be a small country in size, but it is an economic powerhouse that ranks as the fifth largest economy globally. Many UK businesses have been successful in trading globally. The impact of these businesses engaging in international trade is that they will have a wider market for their products and services. Trading on a global scale increases the likelihood of generating more profits. They will also be able to cut down on production costs since there are some regions where it is cheaper to set up a production unit. Another impact on businesses is that they will have easier access to raw materials which are not readily available in the UK. This points toward food and beverage companies which may have to source for raw materials outside the UK since the climate in the UK is too cold for some fruits and vegetables to grow. The European Union which oversees cross-border trading across Europe came up with policies that have protected UK businesses against unfair competition practices brought by large multinational firms. These policies have also offered patent protection for UK businesses across the EU; therefore, the companies need not register trademarks again in any of the 25 member countries.
The European Union has simplified and protected international trade for the UK, and the sum of the EU’s member nations dwarf other trade partners. The UK has sent more exports to the United States in 2011 than any other country, amounting to 31.7 billion pounds of goods and services. However, the next seven largest trade partners were European Union members: Germany (27.5 billion pounds), France (18.9 billion pounds), The Netherlands (18.8 billion pounds), The Irish Republic (14.1 billion pounds), Belgium (12.9 billion pounds), Italy (8.3 billion pounds), and Spain (7.9 billion pounds). Taken together, these countries account for over three times the export volume of the United States.