IDENTIFY THE VARIOUS FACTORS THAT HAVE PROMOTED THE GLOBALISATION OF BUSINESS?

IDENTIFY THE VARIOUS FACTORS THAT HAVE PROMOTED THE GLOBALISATION OF BUSINESS?

The aim of this essay is to untangle the main factors that have promoted the globalization of business. In this essay, l will attempt to define globalization and to discuss the theory of international production including the various factors that have promoted the globalisation of business. I will conclude that the factors that have promoted the globalization of business so far as the technological changes that have occurred, the paradigm shifts in ideologies, economic liberalisation policies and the effects of migration trends.
Globalisation is a phenomenon that gained popularity in the early 80’s and has shaped the structure of what the global village is this day. Stiglitz (2002) defines globalization as the closer integration of the countries and peoples of the world brought about by the enormous reduction of costs of transportation and communication, and the breaking down of artificial barriers to the flows of goods, services, capital, knowledge, and (to a lesser extent) people across borders. Wolf (2005) suggests that globalization is a long run process with powerful forces behind it. Hill (2009) argues that globalization refers to the shift toward a more integrated and interdependent world economy, citing the decline in barriers to the free flow of goods, services and capital since the end of World War II and the wave of technological change as key factors.

The eclectic theory of international production brings together three dimensions to the globalisation of business. The “why” approach which explains competencies that TNCs need in-order to penetrate foreign markets, the “where” approach that underpins the location theory. The location theory explains the notion that TNCs only invests in favourable markets in terms of optimum market size, tariff barriers, costs, skill intensity and investment incentives. The third dimension is the “how” approach which focuses on the internalisation theory. It explains why TNCs opt to maintain control of key functions and what to outsource in these markets (Alderson, 2004). Alderson (2004) in summary argues that TNCs will relocate if and when ownership and location conditions are in its favour and it is in the interest of the TNC to internalise in the global markets. The following are the factors that have promoted global business within the context of this theory.

Technological change is the first factor that has promoted the globalization of business through advances in information technology, communications and transportation logistics. Hill (2009) argues that technological changes since World War II have transformed the global audience through leading to the emergence of the World Wide Web and the creation of the global village through advances in transportation logistic. This resulted in the development and popularization of mass media and communication technologies such as cell phones, credit cards and e-commerce which has transformed the way we do business today (Totir et al, 2011).

Advances in transportation logistics have been pivotal to the development of commercial jet aircraft, super freighters including the concept of containerization which significantly lowered costs and transformed transportation logistics (Hill, 2009). Technology has had a causal effect on the emergence of new process industries as well as the demand for more complex technical skills (Nascia, 2009). It has facilitated information and knowledge gathering techniques (Arnheiter, 2010). Developments in technology has resulted in the globalization of production, financial markets, transnational institutions and the unfolding shifts in demographic patterns of the global economy (Dickens, 2009).

James (2001) argues that countries that have embraced technological changes such as India and Japan became more competitive in foreign markets (James, 2001). The World Bank report (2010) on world development indicators from 1960 to date summarizes that technological advances have led a cumulative causation in the global economy linked to economic growth, improved standards of living and poverty reduction in developing countries. The Indian industry has in the last two decades proactively responded to market demands due to the introduction and effective application of new technological capability (Krishnan, 2010).

The shift in ideology is the second factor which facilitated globalization of business. The shift from the traditional conception of sovereignty based on nation states and governments as the supreme and ultimate authority in a society accelerated after 1980 (Eroglu, 2010). The privilege to engage in global business shifted to international institutions, transnational corporations and individuals. The geo-economic shift of centrally planned economies to transitional economies was another significant factor when more than 30 countries from the former Soviet Union shifted towards market based systems (Hill, 2009). The Uruguay Round finalized in 1993 adopted key deregulation measures culminating with the formation of World Trade Organisation to institutionalise and internationalise global trading systems (Hill, 2009).

More significant ideology shift by China, other states in Southeast Asia and Latin America continue to move progressively towards greater free market reforms (Hill, 2009). Hoare (2008) argues that since China set about reforming its economy a decade ago, its economy has continued to grow at the rate of 9,5% per annum. The fall of the Berlin Wall and the completion of the European Single Market in 1992 eased trade and investment between countries in the EU as markets were opened (Dickens, 2010).

The third factor that facilitated globalization is the economic liberalization of global financial markets, privatization and foreign direct investment (FDI). This was facilitated by policy prescriptions from the International Monetary Fund (IMF) which forced governments through liberalization and privatization to relinquish control of economic policy instruments (Eroglu, 2010). The OLI framework developed by John Dunning (1977, 1981) is one of the models of foreign direct investment which guided TNCs to decide which markets to operate in (Barbra-Navaretti et al, 2004). FDI promoted free trade which allowed workers in poor countries to get a living wage and helped alleviate global disparities in income and life chances (Sort, 2001).

Demand for Foreign Direct Investment has grown largely due to privatisation measures and deregulation of the financial markets. Over the past decade FDI flows into India have averaged around 0.5% of GDP against 5% for China and 5.5% for Brazil. FDI inflows to China now exceed US $ 50 billion annually. It is only US $ 4billion in the case of India (Goyal, 2006). TNCs also developed social networks and a global network of knowledge workers (Hill, 2009) which facilitated the development of value chain production networks such as Dell and Air Bus.

Restructuring of Hong Kong’s banking industry contributed positively to regional economic development by channelling funds from outside the region to countries in the East Asia Pacific region (Arestis, 2001). The World Bank (2006) annual report argues that ounce considered the periphery of the global economy; emerging economies are transforming to become the main drivers in the global economy (World Bank, 2006). China has since surpassed Japan in 2010 to become the world’s second-largest economy, capping the China’s three- decade rise from Communist isolation to an emerging superpower (Bloomberg News, 2010).

The other factor that promoted globalisation of business is the increased demand for labour migration across borders in response to shifts in global patterns. Economic liberalisation policies caused disparities in skill intensity which precipitated the increased demand for foreign labour (Taran et al, 2003). Migration is a key factor which has been linked to globalisation (OECD, 2000). Wickham et al (2008) argues that rapid expansion of high-technology industries in Ireland in the 1990s lead to a shortage of suitable labour resulting in mass migration and the recruitment of migrants an integral of Ireland’s human resources strategy. However, despite advances in the globalisation of business, migration remains a volatile issue with many countries opting to impose restrictive policies and as a result in the policies on migration lagging behind on the global arena.

This essay explored the main factors that have since promoted the globalisation of business. It looked at the theory of international trade and how it has facilitated the policy on globalisation to support the emergence of TNCs. The essay concludes that globalisation of business has been mainly spurred by technological changes particularly in the digital era, shifts in global ideologies particularly the former soviet bloc countries and the China’s shift from a command economy towards market based reforms. Economic liberalisation policies and foreign direct investment drives led by the International Monetary Fund (IMF) and the global migration trends which have facilitated human skills development and capacity to drive these reforms.
BOOKS
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An overview of theory and empirical findings.
Dickens, P. (2010) Global shift: Mapping the changing contours of the world map. Sage.
Hill, C.W.L. (2009) International Business: Competing in the Global Market Place. McGraw
Joseph E. Stiglitz, Globalization and Its Discontents (New York: Norton & Company, 2002)
Organisation for Economic Co-operation and development (2000) Globalisation, Migration and Development. OECD Publishing 2000.
Short, J.R. (2001) Global Dimensions: Space, Place and the Contemporary World.
JOURNALS
Alderson, A.S. (2004) Explaining the Upswing in Direct Investment: A Test of Mainstream and Heterodox Theories of Globalisation. Source: Social Forces.
Arestis, P. Demetriades, P. & Fattouh, B. (2001). Financial liberalization and the globalization of financial services. Two lessons from the East Asian experience. Source: Regionalism & Globalisation; p223-241.

Arnheiter, E.D. Maleyeff, J. Venkateswaran, V. (2010) Lean Six Sigma for the 21st Century. Source: Proceedings for the Northeast Region Decision Sciences Institute (NEDSI). Information technology, cumulative causation and patterns of globalization in the third world. Review of International Political Economy 8:1 p 147-162.
Bloomberg News (Aug, 2010) China Overtakes Japan as World's Second-Biggest Economy
http://www.bloomberg.com/news/2010-08-16/china-economy-passes-japan-s-in-second-quarter-capping-three-decade-rise.html Accessed 10/03/ 2011.

Eroglu, N. (2010) The Effects of Financial Globalization on Economic Policies. Source: International Research Journal of Finance and Economics, ISSN 1450-2887 Issue 47

Goyal, K.A. (2006) Impact of Globalization on Developing Countries: (With special reference to India). ISSN 1450-2887 Issue 5; http://www.eurojournals.com/finance.htm

Krishnan, T.N. (2010) Technological Change & Employment Relations in India. Source: India Journal of Industrial Relations.

Petrescu, C.E.M. Jola, R. Hurduzeu, G. Vlad, L.B. (2011) Foreign Direct Investments
Expansion-Essential Globalisation Factor: Theoretical and Applied Economics Vol. XVIII
1(554), pp. 163-172
Nascia, L. Pianta, M. (2009) Forces of Inequality? The Impact of Technology and Globalisation. Source: Intereconomics.

Taran, P. Geromini, E. Globalisation, Labour and Migration: Protection is paramount: ILO.

Wickham, J. Bruff, I. (2008) Skills shortages are not always what they: migration and the Irish software industry. Source: New Technology, Work and Employment 23:1-2

World Bank (2010) World Bank Economic Indicators: Working for a world free of poverty: World Bank Publication.
http://data.worldbank.org/indicator Accessed 15/ 03/ 2011.

ABOUT JOSHUA CHIGWANGWA KARUMAZONDO

Joshua is a co-founder and director of a new UK based start up ESBM-Hub (https://esbm-hub.co.uk/) which focuses on building project management skills and development for small businesses and entrepreneurs. Josh has a unique performance leadership reputation of consistency and delivering results on assigned projects, strong communication and interpersonal skills that are critical to project success working in teams and keeping stakeholders on board, always striving to exhibit precision in quality delivery on time and within budgets. A great asset in researching, planning and budget scheduling. According to Traci Schwarzenegger (2019), the most effective teamwork is nurtured when individuals harmonise their efforts and commit to work towards a common goal.

Josh was conferred a distinction and graduated with an MSc in Project Management in October 2019 and holds a BA (Hons) Admin degree both from the University of Hertfordshire. He also holds a Diploma in Public Sector Accounting from Harare Polytechnic and is a qualified member of the Association of Accounting Technicians in Zimbabwe (ZAAT). He currently works for Hertfordshire County Council as a Support Specialist since 2006. Prior to that he acquired commercial working experience with Ocado for 4 yrs as a Personal Shopper and worked for 10 years in the Public Sector in the Zimbabwe Public Service specialising in Local Government Finance and Management of Donor Funded programs with the Public Service Commission involving the Civil Service Reforms, Performance management systems and dynamics of culture change in the public service to be more responsive to the needs of the people. He holds several in-service competence training and development courses acquired over the years.

According to Raghupathy (2011) ethics and social responsibility adds a moral dimension to leadership qualities of project managers. Joshua has served his community as a Trustee of Welwyn Hatfield Ethnic Minorities Group (WHEM) between 2009 and 2010. He assisted in restructuring  WHEM from a charity sustained on public donations to a company limited by guarantee capable of generating its own revenues to sustain its operations as Kaleidoscope Enterprises Ltd. Josh is a past director and Panelist’ in 2011 of the Zimbabwe Achievers Awards (UK) a philanthropy that seeks to identify outstanding Diaspora talent, innovations and creativity in a variety of genres.Visit http://www.zimachievers.com/uk/.  He is a founder and technical strategist of the Zimbabwe Global Business and Political Issues social media networking group which seeks to nurture and develop budding entrepreneurs on LinkedIn and Facebook.

                      Started from the Bottom Now l am Here !!

With lovely daughters Vimbai and Gamu

Started from the Bottom Now l am Here !!

CONSTITUTION MAKING ROAD MAP: A CASE FOR ZIMBABWE

OPINION - A review of Zimbabwe's Constitution is now being rolled calling for the participation of all Zimbabweans in crafting a historic document for the present and future generations. The controversies about the "Kariba Draft" appeared to have been watered down in the interests of progress.

Local and donor resources have been pledged to ensure the successful implementation of the consultation exercise in Zimbabwe in the next 65 days or so. The chairperson of the Commission indicated that consultations with people in the Diaspora will also be done and interest groups have shown willingness to fund the outreach to augment the initiatives of the State. It is estimated that at least 4 million Zimbabweans are residing abroad all over the World, and hence calls for the need to ensure a clear outreach strategy is adopted that will not disenfranchise the views of the majority of these Zimbabweans.

The challenges now are on Zimbabweans in the Diaspora to pool resources and to come up with effective strategies to popularise this historic event across the World so that as many Zimbabweans as possible participate. It may therefore be prudent to establish focal points which will be within reach of the Commission to consult and gather views given the resource constraints and finite time at its disposal. It will also be ideal for diverse representative groups to begin consulting their membership and to gather critical points of discussion which seek to harness talking points peculiar to the diaspora. I believe some accreditation criteria for such groups is agreed to present views on behalf of members given the sporadic settlement and distribution patterns of Zimbabweans across the world. This consultation should capture views from as many Zimbabweans in the diaspora as possible irrespective of immigration status. As such there should be a way of ensuring that undocumented migrants’ views are taken on board, as these may be crucial in ensuring the views of the worst case scenario are taken on board. How this is done, its the Zimbabwean people who needs to decide..

It is encouraging to note that the Commission acknowledges the apolitical status with which the consultation needs to pursue, as anything short of that will seriously undermine the objectivity of the views and how they will be considered for incorporation into a final draft. The need for members of this Commission to separate themselves from the partisan perspective in pursuit of this objective cannot be overemphasised, and only time will tell if they can withstand this objectivity test. Lessons from the 1999 consultation should be an easy guide on the current initiative to contain the tendency to digress to partisan platforms. Ethical standards and remedial measures needs to be in place to redress this issue should signs of it emerge.

In my earlier deliberation on this subject, I have emphasised on the need for government to separate itself from this exercise and to play a more facilitatory role in ensuring its successful implementation. Like l said, "if a constitution is the source from which government derives its existence and power, the government cannot logically create itself” Logically, a constitution cannot be the act of a government which is to be constituted by a non-existant constitution ; something as yet to be constituted (and therefore as yet non-existent) cannot act. Having said that, it is important to appreciate that in reality, there cannot be a power vacuum in government at any one time inorder to facilitate this role, hence it has to be tackled rather as a going concern, calling on the Constitutional Commission to display maturity, objectivity and professionalism in the conduct of its business. A transparent point of last resort, ideally invested in the Praesidium needs to be invoked strategically as well to guide the sticky and volatile moments in pursuit of a common goal. This task will be challenging given the fragile and skewed nature of the GPA consultations running concurrently with this consultation. The task for the GNU negotiators should be to tackle sticky issues including the media in a manner that does spill into the work of this Commission or influence its work in any way which may render its efforts futile.

My view is that this Constitution making process takes precedence on all other matters of governance as its successful implementation will ensure a stable and tolerant Zimbabwean society. A nation built on a firm and rocky foundation will not falter during trying times, and as such the constitution should be there to guide generations with a sense of pride and belonging. It should encompass Zimbabwe's cultural unique values and ethics that will enshrine sovereign and universal appeal. The question of legitimacy of the constitution is concerned with how to make it command the loyalty and confidence of the people, thus, it must be understood and be an acceptable product of the Zimbabwean people. It needs to be put through the process of popularisation with a view to generating public interest and participation in it and an attitude that everybody has a stake in it. The ultimate product from this process should represent the views and interests of the majority of Zimbabweans to make it legitimate and should guarantee the rights and freedoms universally perceived to be fundamental.

The height of challenges obviously are on how the issues of the rule of law, the property rights and freedoms of expression are formulated. For Zimbabweans abroad, this document should give them hope, inspiration and a source of national pride, which should resonate spiritually with Zimbabwe's national colours and anthem. The key issues of dual citizenship, governance philosophy and protection of property rights will feature prominently in the Diaspora.


The history of constitution-making in Zimbabwe has witnessed self-evident tension between the need to reach a broad-based consensus in the process of constitution-making on one hand advocated by the National Constitutional Assembly (NCA) including other civil society groups, and the need to ensure that the authority of the government is not undermined on the other hand. The subjective outlook of the modus operandi of a people driven constitution is appears to a trump card for the civil society. For all intents and purposes, ‘people-driven’ in this context, means involving key stakeholders in determining the points of consultation in the drafting of the constitution. Perhaps, civil society groups need to reflect on best practises globally, to appreciate that as Zimbabweans, we have a sovereign state to preserve and that the participative role of the Civil society will always be a complimentary role to the State. Perhaps, it may be the lack of this appreciative role that has generated mutual mistrust that has underpinned the constitution-making process that resulted in the rejection of Constitution in the 2000 referendum.

Civil Society ideally exist as a plethora of pressure groups which have evolved as a third sector in corporate governance to provide an independent opinion in governance matters. Ideally, it should an oversight in the independence and professional conduct of the Constitution making commission in the discharge of its functions, in regardless of whether it is as an independent body or not. The Commission should be guided by its terms of reference and ethical code of conduct,because ultimately, its not accountable to itself. It is accountable to the people through the machinery which sets it up, which is the government ultimately. It should provide the much desired checks and balances and perpetually probe this entire process so that the Commission discharges its role satisfactorily. It is critical that as far as possible this Commission be well resourced and be manned by a full -time Secretariat, contracted or seconded for this specific task and directly reporting to the Commission for the duration of the process, so that it does rely on the State to implement its obligations. The funding of this exercise by donors ideally creates this independence for the Commission which should not rely on the whims of the machinery of government to access resources.

It is vital fur us to take a leaf from constitutional reform experiences of other countries as part of a learning experience. The South African Constitution is widely regarded as one such document we may benefit from noting that it has unique situations almost similar to our background and history. I have discussed experiences from the Nepal's constitution-making road map which we may also draw lessons from, particularly in the areas of terms of office for the parliamentarians and the Praesidium.

In conclusion, it is vital for the final document to jealously guard the rights and freedoms of its citizens, to deal with issues of corruption which have eroded the social fabric, to strengthen the independence of the judiciary, create a rationalised bureaucracy which is optimum for the needs of our country, address the issues of economic confidence and poverty alleviation among other key issues. We need to appreciate that this constitution is no ordinary law to be modified or replaced by ordinary legislative processes. It must be perceived as a higher law, authorising and governing ordinary law, and commanding adherence to constitutional precepts. While ordinary law may be adopted and altered by legislative majorities of whatever size, the adoption of this constitution and its subsequent amendment should require much more widespread participation by the citizenry, and achieves broad-based consensus. Ultimately, this should render the referendum a formality, and only time will tell.


Josh Chigwangwa writes in his personal capacity. He is the Executive Secretary of the Zimbabwe Community Groups Initiatives UK and is a Business Management student at Hertfordshire University. He worked previously in the Zimbabwe Public Service for 10 years and supported implementation of the Civil Service Reform programme in Public Finance and Administration. He can be contacted on jmchigwangwa@hotmail.com