ECONOMIC CONSEQUENCES OF GLOBALIZATION ON TELECOMMUNICATION INDUSTRY Case of Vodafone
ECONOMIC ANALYSIS OF GLOBALIZATION3
GLOBALIZATION OF TELECOMMUNICATION INDUSTRY- CASE OF VODAFONE4 CONSEQUENCES OF GLOBALIZATION ON TELECOMMUNICATION INDUSTRY- CASE OF VODAFONE4 EVALUATION AND CONCLUSION6
While discussing the topics of trade, development and political economy, globalization is often discussed. In general, globalization means a process in which world economies become highly integrated, leading to a global economy and highly global economic policymaking, through international agencies such as the World Trade Organization (Todaro & Smith, 2006). Since late 1980s, the increasing globalization in the manufacturing sector and service sector has also globalized the telecommunication industry. A large number of telecom companies are expanding rapidly from their home countries to other countries in order to increase their customer base and their sales, off course. Globalization has with it many challenges and economic benefits too. For many economists, globalization can cause serious troubles in the whole world, such as inequality is accentuated, environmental degradation, and dominance of rich countries etc. But at the same time proponents of globalization are of the view that globalization leads to the rapid growth of knowledge and innovation and improved living standards.
ECONOMIC ANALYSIS OF GLOBALIZATION
How globalization occurred or which forces gave birth to this phenomenon? The three chief economic and financial indicators that led to globalization are: The international trade of goods and services, the widening and freeing of trade has led to globalization to increase at a rapid pace. The greater flow of capital because of growth of global capital markets. Globalization of financial sector is the most influential aspect of economic globalization. The greater movement of people around the globe has also contributed to rapidly growing globalization, breaking down cultural barriers. Globalization means integration of different markets in the global economy. Globalization may occur in different markets such as financial markets, commodity markets and even in the service sector (Scholte, 2000). Producers and consumers and national economies as a whole benefit from the process of globalization. For example, economies may benefit from specializing themselves in particular products in which they have comparative advantage. Firms may become cost competitive through globalization by accessing to cheap raw materials from other countries. Similarly, benefit of economies of scale is achieved through access to large markets and higher demand for products, thus reducing average production cost of the firm. Large multinationals are the main carriers of economic globalization. They are globally aligning their production and resources according to the principle of profit maximization.
GLOBALIZATION OF TELECOMMUNICATION INDUSTRY- CASE OF VODAFONE Initially telecommunication industry was owned and controlled by state-owned national telecommunication companies. But with the passage of time, innovation in technology and globalization has transformed the nature of telecommunication industry. Globalization has opened up markets and brought competition in this sector. National telecommunication companies were being privatized and the industry deregulated to make it competitive. All over the world, the multinational companies have become the main vehicle for accelerating globalization. Vodafone, a British multinational telecommunication company, is the world’s leading telecommunication having significant existence in Europe, United States, Middle East, Asia Pacific and Africa. It is one of the most rapidly flourishing global companies, which started as a holder of one of the first two mobile communications licenses in the UK and now it’s a dominant...