Nottingham University Business School
N14M79 Business Economics
Globalisation and the Economic Impact on Small Island
January 6th 2011
Globalisation and the Economic impact on small island states: Caribbean This paper conducts an analysis of Small Island States of the Caribbean, the Economic effects of Globalisation and addresses both the macroeconomic and microeconomic issues. The paper will begin by defining globalization from a generic perspective and then focus more specifically on Caribbean. In addition, the paper will briefly describe the present Caribbean Economic Environment highlighting historical reasons for the economic dilemma it finds itself, and will also show the effects of international trade policy on the Caribbean Economic Environment. It will address the issues surrounding the removal of economic barriers and the potential loss of sovereignty of the small island states. Critical analysis will be directed towards a specific Market within a Small Island State in the Caribbean illustrating the potential effects of globalization on this market with the use of demand and supply curves. Globalisation
There are countless theories, definitions, and interpretations that surround the term Globalization, however, there is one view that is commonly shared, which is the inevitability of some effect and impact this phenomenon will have on every country or nation-state. Globalization is a multi-dimensional process, which is transforming at a rapid rate and in a profound way all aspects of national and global activities and interaction (Peretz 2001). This process of globalization encompasses the eradication of barriers that prevent the free movement of capital, goods, technology and labour across international borders. Society has benefited in many respects from globalization, for example, an increase in market efficiency resulting in greater availability and lower costs of information, a larger diversification and competition among goods and services resulting in reduced costs, greater mobilization of assets to increase profit or wealth, and the movement of labour to regions that offer better opportunities within any professional context. However, in contrast globalization has also brought its share of problems, for example, the monitoring of borders have become increasingly difficult due to a significant rise in imports and exports internationally, free movement of labour and outsourcing has caused significant wage cuts and job loss, the reduction in tariffs and trade blocs have resulted in loss of business and revenue to local businesses due to global competition, and economies and environments are now at greater risk to external forces such as unethical firms with an objective of only profit and environmentally unsafe materials imported which can harm and destroy the economic and physical environments, through the overexposure to fraud, financial risks and environmental hazards. In the broadest sense globalization--the construction of an international capitalist order embracing all the regions of the world -- has been under way for the past 500 years. However in current usage we understand the term to refer to a project of the post Cold War era and the decade of the 1990s, whose aim is to transform the world into a single economic space along the principles of neo-liberalism. These principles mean that national barriers to the movement of goods, services, investment capital and money must be done away with; and government intervention in economic life must be kept to a minimum (Girvan 1999). Through liberalization of environments some governments have capitulated to the capitalist ideology of the “market” over government intercession.
The Caribbean Economic Environment
The Caribbean Economic Environment has also felt the effects of globalization through trade liberalization. The early business and economic...
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