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Consequences of Globalization

Niraj made a post, “The Developing World Like Globalization”:http://www.nirajweb.net/mt/niraj/archives/001603.html few days back citing the Pew Global Attitude Survey explaining why globalization is popular among poor nations. The Economist has an article which tells the same. The lesson learned is that:

bq. “Liberty’s great advance:”:http://www.sulekha.com/redirectnh.asp?cid=312143 The countries that have succeeded in raising living standards rapidly, over long periods, have followed many varieties of economic policy and have lived under many different forms of government. What they have had in common, though, has been a policy of opening their economies to trade and to foreign capital. Countries that have opened their borders in this way have seen their incomes per head grow rapidly?much more rapidly than either the existing rich countries or those that have not globalised, either by choice or through lack of opportunity.

The article has a graph which shows that more globalized countries have a higher annual rate of GDP growth. Swaminathan S Iyer has an article in Times of India which tells how foreign capital is now transforming India into a global auto power.

bq. “Unanticipated consequences of FDI:”:http://www.sulekha.com/redirectnh.asp?cid=312131 But only after the biggest multinationals entered India did they seriously look at and help upgrade India?s tiny ancillary companies, which were (and in many cases still are) too small and unknown to meet global demand. MNCs will nurture your small and medium companies, and convert them into giant exporters. Ford, for instance, is using small and medium companies that most readers have never heard of, such as Cooper Tire, Visteon, and Synergy Dooray. A medium company called Motherson Sumi has won a huge export order of $125 million for dashboard components.

Global Auto Power is a strong word to use for a country which has only “0.1 percent”:http://varnam.nationalinterest.in/archives/000127.html of the 1 Trillion dollar auto parts market. But there are many positive signs in terms of employment which would not have been possible otherwise. The lessons is that “attract FDI and you will create exports, often in unexpected areas”.

One Response to Consequences of Globalization

  1. L. July 4, 2003 at 6:34 am #

    If I remember, Visteon is a subsdiary of Ford, though they also get components from Indian companies. One thing I observed about Ford is that they tried to bring in Escort which was one of their worst products. Only after it bombed in the market, they realized to bring in Ikon (which is a modified version of Focus.) The same is now with Fiat’s Palio which is badly-rated in Europe.

    L.

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