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THE IMPACT OF GLOBALIZATION ON MANAGEMENT IN DEVELOPING COUNTRIES

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ABSTRACT

Globalization is the term used to describe the growing worldwide interdependence of people and countries. The process has accelerated dramatically in the past decades largely due to advances in technology. With the advent of globalization, trade barriers between countries have come down, movement between countries has become easier and world’s major financial market have been integrating. This growing worldwide integration has produced diverse consequences may be beneficial or detrimental. This work examines the effects globalization has on developing countries. The instrument for data collection was the questionnaire. The analysis and findings highlight the two – fold impact of globalization on developing counties. Finally, this work recommends implementation of sound policies in order to moderate the adverse effects of globalization while consolidating its benefits.

CHAPTER ONE

INTRODUCTION

1.1     Background of the study

The phenomenon of globalization begin in a primitive form when humans first settled  into different areas  of the  world;  however, it  has shown a  rather steady and rapid progress in the recent times and has become an international dynamic which due to technological advancement. Has increased in speed and scale, so that countries in all five continents have been affected and engaged.

The  term globalization, cover a  wide  range  of distinct political, economic and cultural trends. It has become one of the most popular topics of debate around circles. It has been used by economists since the 1980s, social theorist have moved beyond the relatively under developed character of previous reflections on the compression and annihilation of space to offer a rigorous conception of globalization.

Human societies across the global have established progressively closer conducts over many centuries, but recently the pace has dramatically increased. Jet air planes. Cheap telephone service, email, computer, huge oceangoing vessels, instant capital flows; all these have made the world more  interpedently  than  ever.  Multinational  corporations  manufacture

products in many countries and sell to consumers around the world. Many, technology and  raw  materials  move ever  more swiftly across  national borders. Along with products and finances, ideas and cultures circulate more freely. Many politicians’ academics and journalists treat these trends as both inevitable and welcome. But for billions of the world’s people, business-driven globalization means uprooting old ways of life and threatening  livelihoods  and   cultures.  Intense  political  disputes  will continue over globalization meaning and it’s future direction.

What is Globalization? it is defined as a  process which, based on international strategies, aims to expand business operations on a worldwide level and was precipitated by the facilitation of global communications due to technological advancements, and socio economic, political and environmental developments. Globalization, the  growing  integration of economies and societies around the world, has sparked one of the most highly charge debates of the past decade. Critics of globalization have argued that the process have exploited people in developing countries, caused massive disruptions and produced few benefits. Supporter point to the significant reductions in poverty achieved by countries that have embraced integration with the world economy such as China, Vietnam. India and Uganda.

Contemporary analysts associate globalization with deterntorialization, according to which growing variety of social activities takes place irrespective of the geographical location of participants. As Jan Aart Schulte observe global events can via telecommunication. Audio- visual media almost occur simultaneously anywhere and every where in the   world”   (Schotte,   1996:   45)   Globalization   refers   to   increased possibilities  for  action  between and  among  people  in  situation  where latitudinal and longitudinal location seen immaterial to the social activity at hand. Business people in different continents now engage in electronic commerce, academics make use of the latest video conferring equipment to organize seminars in which participants are located at different geographical locations. In this sense, the term globalization refers to the spread of new forms of non-territorial social activity.

Globalization  also  include  reference  to  the  speed  and  velocity directly of social activity. Heterritorialization and interconnectedness initially seem spartial in nature. Yet it is easy to see how these spartial shifts are directly tied to the acceleration of crucial forms of social activity. There have been various ideas and definitions by different scholars, economies, social and political scientists.

Globalization as defined by Allansare – Ouatera (1997) as the integration of economies throughout the world trade, financial flows, the exchange of technology and information and the movement of people. The extent of trend towards integration is Cleary reflected in the rising importance of world trade and capital flows in the word economy.

An increasingly large scale of world GDP is generated in activities linked directly or indirectly to international trade. And there has been a phenomenal growth in cross- boarder financial flows, particularly in the form of private equity and portfolio investment compared with the past. In addition, the resolution in communication, transportation technology and availability of   information have allowed   individuals and firms to base their economic choices  more on the quality of the economic environment in different countries.

Globalization as defined by OECD (1993) as a process by which markets and production in different countries are becoming increasingly interdependent due to the dynamics of trade in goods and services and the flow of capital and technology.

Scholars like Ghai, Robertson feather Stone and Ake, see globalization as the restructuring of global capitalism characterized by the increased profile of international financial institutions, corporations and

information technology. In the sociological and cultural realm, it is impossible to see elements of an emerging “global culture” which Tade Akin – Aina argues, have combined to create new conditions of proximity, intensity and Intimacy.

Globalization according to  Omolayole (2002), as  the  process by which the world has been made to shrink to a point that accessibility of ideas and products of every nook and crannies of the world is no longer a problem. They constitute the “army of the champion” of globalization supported by most the government of highly industrialized nations.

Globalization has become a process of regarding the world as a single economic market and the ultimate in the push for and all pervading market economy in the world. However, trade liberation is the international process by which countries that belong to the trade organization work towards the lowering or removal of trade tariffs and barriers or the setting of a quota for certain goods from some countries.

Globalization according to Omoweh (2000) is the transcendence of the economic, social, cultural, political environmental constraints across territories. Globalization does  not  really  mean crossing or  opening up borders, but the transcendence of borders.

Globalization according to lpie Yamazawa (2000) is very much the “maga trend” of the current world economy and the process is irreversible. Owing to rapid technological progress in information, communication and transportation private enterprises have intensified their efforts to do business across national borders and constructed production and distributing networks on a global scale. The trend towards globalization involves both large enterprises as well as their small and medium sized counterparts  in  industrialized  countries  to  developing  countries,  this process has become inescapable.

Globalization as described by Akpotor (1999) refers to the rapid integration of  economies and  markets  world wide  intensified  financial flows, the  information revolution and cross cultural currents. However Mitllmen  (1994)  explains  that  it  involves  the  dissemination  of  the economy, polity and culture of one sphere into another, if this is so the human endeavor to influence or dominate has been evident throughout the ages. In common usage, the notion of globalization encompasses a wide range  of  phenomena  from  economic  activities  to  the  international  of culture, communication, technology and tastes.

According to Gidens (1996), he explains it as not only to the emergence of large scale world systems but to transformation in the very

texture of every day’s life. It affect even intricacies of personal identity. To live in a world where the image of Didier Drogba is more familiar than the face of one’s next door neighbours is to move in quite different contexts of social action from those that prevailed previously.

From the different definitions of globalization, one can deduce that globalization can be a powerful and dynamic force for strengthening co- operation and accelerating growth and development . At the same to time, it is accompanied by global constraints and amplified disturbances in the supply and movement of production factors. that is  why Amin (1998) described it as a process that has led to a trend in which information, events and ideas corporations and commodities, identities and lifestyles move with such rapidity today and space have been compressed, tastes and consumption homogenized by inequalities, socials exclusion and polarization.  Globalization can  be  a  threat  to  a  weak  or  capriciously governed state, but it also opens the way for effective disciplined state to foster development and economic well being and it sharpens the need for effective international co-operation pursuant of global collection

1.2     Statement of the Problem

There is apparent doubt as to the precise effects of globalization. There seems to have emerged two extreme views about it. One argues that

it is a threat, leaving only destruction in it’s path especially for developing economies, whereas the other prophesies that globalization is the greatest thing to happen. This has initiated the need for this research. The major reasons therefore for this research is to find out the effects or implications of globalization on developing countries and the practice of management in such countries.

What are the Demerits and merits of Globalization on developing countries? Globalization has its upside and downside. Globalization brings benefit through greater access to global resource and markets enabling countries to  achieve economic progress beyond the  limits  imposed by domestic resources and market. The ability to reap benefits from globalization depends on a country’s stage of development, it’s economic competitiveness and the flexibility and adaptability of its institutions and policies to global tends and developments.

On the downside, globalization increases exposure and vulnerability to global disturbances in supply of factor resources, market as well as intrusion of global norms, practices and values. The economies of developing countries at this moment cannot compete with those of the advanced countries that have the advantage of high technology, advanced

management  skill,  efficient  infrastructure  support  services  and  highly stabilized systems.

As globalization appears inevitable and irreversible, the response is not to reject it, but to take advantage of the opportunities of others and mitigate its undesirable effects. Responses to globalization differ between countries. Policy responses can be at national, regional   and global levels. A balanced approach to globalization is needed in order to enable developing economies  to  take  advantage  of  its  benefits  and  avoid  its demerits since economic development is transmitted from advance to modest economics through movements of capital and technology. The rate of growth developing economic and the speed of the process of catching up

were far higher in the last few decades of the 20th country than were before

world war 11.

1.3     Objectives of the Study

The primary objective of this research is to critically review the positive   and   negative   effects   of   globalization   on   management   in developing  countries.  ie  it’s  implication  for  the  conduct  of  economic polices in developing countries.. Aside from reviewing its potential benefits, risks and challenges, it will also do the following.

(a)   Examine the impact of Globalization on developing countries.

(b)   Review the effect of Globalization on the practice of management in developing countries

(c)   Examine the role of international   financial institutions in a global economy

(d)   Determine the problems and prospects of globalization for developing countries

(e)   Determine the strategies developing countries should consider in order to maximize for themselves the benefits of globalization, while minimizing its adverse effects.

(f)   This work will also look at the effect of Globalization on such key management issues as:

i      Human resources, training and developing ii     Resources allocation and capital flight

iii    Technology

iv    process and product improvement

1.4     Research Questions

The research questions for this work include:

(i)   What is the impact of Globalization on developing economies?

(ii) How has Globalization affected the practice of management in developing countries?

(iii) What positive impacts can international financial Institutions bring to bear on a global economy

(iv) What strategies do developing countries use to maximize benefits of globalization as well as minimize their adverse effects?

(v)   What are the effects of globalization on human capital development, resource allocation, technology and product improvement?

1.5     Significance of the Study

This research study aims at identifying the benefits and true risks of the trend of global integration and in turn determines the correct policy responses. This study is also expected to bring to awareness a balanced view to globalization which is needed to enable developing countries take advantage of its benefits and avoid its ills.

This research study is meant to sensitize both the public and the government on how developing country can best or acquit the  human competences and created assets that increasingly define competitive advantage in global economy. Finally this research study is expected to stimulate research interests in other aspects of globalization in general and developing countries in particular.

1.6     Scope of the Study

This study will concentrate on the implication or effect of globalization (negative and positive) on developing countries, it will consider its effect on investment, trade, science and technology flows.

This research will consider what developing countries stand to win or lose from the growing flows of international direct investment, cross border transactions and technology transfer and other co-operate business ventures that feed the growth of increasingly border-less global economy.

This research work will consider the place of human resource development in globalization not forgetting its effects on small business in a global world dominated by maga-corporations. This study will also look briefly into the effect of globalization on poverty alleviation.

1.7     Limitations of the Study

This research study is more of a pioneering work. It is meant among others, to be the ground work for other similar studies. The limitations associated with this study being on exploratory work are time access to publish work and more especially the restriction of this study to developing countries.

1.8     Definitions of Terms

MANAGEMENT

The act of getting people together to accomplish desired goals and objectives. Management comprises planning, organization, staffing leading or directing and controlling an organization (a group of one or more people or entities) or effort for the purpose of accomplishing a goal – Gomez – Mejia et al (2008).

GLOBALIZATION

Describes  an  ongoing  process  by  which  regional  economies, societies and culture have become intergraded through a globe- spanning network of communication and execution. The term is sometimes used to refer specifically to economic globalization; the  integration of national economies into the international economy through trade,  foreign direct investment, capital flows, migration and the spread of technology. However, globalization is usually recognized as being driven by a combination of economic, technological, socio cultural, political and biological factors. The term can also refer to the transnational circulation of ideas, languages or popular culture through acculturation – Moore et al (2009).

ECONOMY

An economy consists of the realized economic system of a country or other area, the labour, capital and land resources and the economic agents that socially participate in the production, exchange, distribution and consumption of  goods and services of process that area.  A given economy is  the end result of a process that  involves its technological evolution, history and social organization as well as its geography, natural resource  endowment and  ecology  as  main  factors.  These  factors  give context,  content  and  set  the  conditions  and  parameters  in  which  an economy functions Fehr et al (2005).

ECONOMIC POLICY

Refers to the actions that governments take in the economic field. It covers the systems for setting interest rates and government budget as well as the labour market, national ownership and many other areas of government interventions into the economy.

Such polices are often influenced by international institutions like the international monetary fund or world Bank as well as political beliefs and the consequent policies of parties- Hoover (2008).

CAPITAL FLIGHT

Described  as  when  assets  and  or  money  rapidly  flow  out  of  a country,  usually due  to  an economic event that disturbs  investors and causes  them  to  lower  their  valuation of  the  assets  in  that  country or otherwise to  lose confidence in its economic strength. This  leads to a disappearance of wealth and is usually accompanied by a sharp drop in the exchange rate of the affected country (depreciation in a variable exchange rate regime or a forced devaluation in a fixed exchange rate regime)- Kar et al (2008).

TECHNOLOGY

Technology  can  be  most  broadly  defined  as  the  entities,  both material and immaterial, created by the application of mental and physical effort in order to achieve some value. In this usage, technology refers to tools and machines that may be used to solve real – world problem – wise (1985).

PROCESS IMPROVEMENT

A series of actions taken by a process owner to identify, analyze and improve existing processes within an organization to met new goals and

objectives. These actions often follow as specific methodology or strategy to create successful results.

INFRASTRUCTURE Infrastructure  is  the  basic  physical and  organizational structures needed for the operation of a society or enterprise or the services and facilities necessary for an economy to function – Sullivan et al (2003).


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