Introduction to Global Business

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Table of Contents

Introduction
Stemming Immigrants’ Influx
Legal System
Foreign Aid and Savings Push
Foreign Direct Investment (FDI)
Relevant International Business Concepts used in the Analysis
Conclusion
References

Introduction

With the continued integration of the global economy, more countries are finding it necessary to cooperate with each other for the good of their individual economies. Physical barriers to interaction, such as geographical location, have been rendered irrelevant by the technological advancement that has improved communication and interaction between countries.

Today, many countries of the world are moving toward adapting a democratic system of governance in order to link their national political ideology with the shifting world order. This essay analyses the aspect of international integration with particular reference to Australia.

With elections just about to be held, Australia faces the challenge of reducing its international cooperation and being sidelined economically by the international community.

This is as a result of the new economic policy that has been proposed by the opposition coalition and which will be implemented in case the coalition gets elected into office. It seeks to reduce foreign spending by proposing that such funds be channelled toward strengthening infrastructure.

Stemming Immigrants’ Influx

Increased influx of immigrants into Australia poses a grave danger of reducing the economic well-being of the country. Most of the immigrants are running away from the poor conditions in their countries as they seek for employment and other advantages that are unavailable in their native countries. In most cases, such immigrants lack competitive skills and are least likely to find better paying jobs in Australia.

Thus, their presence in Australia only strains the economy as it will be upon the government to cater for their basic needs. The government will be forced to buy food, medicine, and pay for their housing, instead of channelling funds to other important development courses (Watts, 2002).

Australia must strengthen its political economy in order to address this menace effectively. This will involve introducing political policies that work in tandem with both the legal and economic systems of the country. In strengthening the political system in order to achieve this objective, the opposition coalition will have to concentrate more on achieving collectivism as opposed to individualism (Chiswick & Hatton, 2003).

Border security must receive adequate funding from the government to improve on its effectiveness in addressing the increase in the number of illegal immigrants coming into the country. The state must be the principle owner of all security systems such that it may manage the entire situation with the focus of benefiting the society.

However, in pursuing collectivism, the opposition coalition must ensure that it also supports individualism in order to benefit from free market economies, as well as democratic political systems. In other words, the coalition government should only insist on collectivism in very few critical aspects, such as issues to do with the overall security of the country, but allow individualism to prevail in other sectors.

Legal System

Achieving the intended control mechanism that would help the Australian government to put the influx of immigrants under control would require a comprehensive and highly effective legal system.

A civic law would be the most appropriate choice in enabling the opposition coalition to achieve its objective. Under this legal framework, the government will give consideration to a comprehensive set of laws that will be organised into appropriate codes for ensuring that the appropriate channel is followed.

However, the Australian government must also consider international integration even as it addresses the challenge of illegal immigrants into the country. International conventions on immigrants and asylum seekers exist, to which all United Nations’ member states must ensure they adhere to even as they ratify their own domestic laws (Boeri, Hanson & McCormick, 2002).

It would be illegal for Australia to come up with laws that neglect and undermine the rights of the immigrants who seek to settle into the country. Regardless of the legality of the immigrants’ actions, Australia has a jurisdiction to ensure that it incorporates international law requirements on immigrants if it has to be considered as a member of the international community.

Any deviations might see the country’s human rights records being blacklisted. This is a move that would further affect the country’s interaction with other international community (Cavusgil & Tamer, 2008). Contravening the international convention on immigrant’s rights could see Australian companies and products being denied entry into other international markets.

This would mean reduced revenue for the country. Equally, such contraventions could also see foreign companies bypassing the country and establishing operations in other markets. Such a move would deny the country employment positions and opportunity for raising more revenue through taxation.

In essence, while the question of illegal immigrants is one that affects Australia directly, the government must consider globalisation effects when handling the issue. The internal interests of the country must be protected, at the same time giving due consideration to the international standards and practices when handling the matter (Watts, 2002).

Foreign Aid and Savings Push

The Coalition government’s plan to pursue massive cuts in foreign aid funds puts Australia’s commitment to fighting global poverty levels at a collision course. With the advent of globalisation, all countries in the world have a role to play in ensuring that the global economy achieves a single objective and mission (Ram, 2004).

By virtue of its economic standing, which is relatively superior compared to those of a majority of the developing nations, Australia must show more commitment in helping to reduce the global poverty levels. No move that seeks to reduce its ratio of foreign aid to poor nations should be condoned (Quartey, 2005).

Any attempts by an individual country to strengthen its economy while doing very little to assist the struggling nations is likely to backfire because of the complex integration of the global economy (Ouattara, 2006). It is critical that Australia enhances the improvement of her economy through improving infrastructure, but the mission should not affect its commitment to alleviating global poverty levels.

Like all other developed economies in the world, Australia relies on the developing economies for marketing its processed goods. Developing nations must have the financial ability to acquire finished goods from Australia in order to enable the country’s economy hold on to its progressive agenda (Organization for Economic Corporation and Development, 2009).

Withdrawing financial aid to these economies, therefore, limits their ability to strengthen the individual economies. It reduces their buying power, thereby limiting the overall global market power (Morrissey, 2001). This means that such a move could trigger another global financial crisis because most of the poor nations will lack the ability to acquire manufactured goods.

Given that most of the developed countries are the ones manufacturing these goods, they will lack the necessary revenues because their targeted markets, mainly the developing world, will not be in a position to cater for the demand due to of lack of funds (Facchini & Mayda, 2008).

The Coalition government, therefore, should realise the fact that strengthening the infrastructure while reducing the foreign aid ratio might not necessarily lead to an improved national economy. It would, instead, subject Australian multinational corporations operating in these economies to tough economic situations, including losses that may eventually see the companies shut their operations down.

Foreign Direct Investment (FDI)

The Coalition government can still come up with a policy that would see it acquire funds to improve on its infrastructure, while at the same time maintaining or even increasing foreign direct investment to the developing economies (Tavares, 2003).

This can be achieved through the government working hard toward securing investment opportunities for Australian companies in the developing economies. Australia stresses on individual goals because it pursues a democratic political system. This means most of the companies in the country have their own financial capital which they decide to spend without seeking the approval of the country.

Thus, Australia can influence these companies to expand their operations through establishing operations in foreign economies, particularly economies that are considered to be developing. Such a move would see the firms expend their capital base in those countries, thereby increasing the overall FDI from Australia.

Developing countries benefiting from such expansion programmes by Australian multinational corporations would have the advantage of enjoying additional employment opportunities that would, in turn, increase the revenue amounts acquired by the developing economies.

Australia would also benefit because the multinational companies would increase the market opportunities for their goods by virtue of operating within the developing economies. This would, in turn, increase their profitability. This way, the government’s decision to lower its direct foreign aid ratio and, instead, use the funds to strengthen its infrastructural base would not affect the global economy negatively.

The gap created owing to the reduction in foreign aid would, in turn, be filled by way of FDI through increased activities of the multinational companies (Organization for Economic Corporation and Development, 2009).

The Coalition government must be at the forefront in writing off debts owed to it by developing economies as a way of fighting global poverty levels. Australia can use such scenarios to influence its debtors into relaxing stringent barriers into their markets such that multinational corporations from the country can have an opportunity to operate in these markets (Quartey, 2005).

This will be beneficial to both economies because Australia will benefit from increased revenue due to availability of a ready market for its companies, while the developing countries will have additional employment opportunities for their populations.

Relevant International Business Concepts used in the Analysis

National differences in political economy

This concept is relevant for application in addressing Australia’s intent to limit the influx of illegal immigrants into the country. For Australia to come up with mechanisms that will enable it to critically address this menace, it will have to ensure that its political economy is rightly set for this purpose (Sitkin & Bowen, 2010).

The economic, legal, as well as political subsystems will be expected to be interdependent such that they interact with each other effectively in order to influence results.

This concept is more relevant for this scenario because the solution to increased illegal immigration lies beyond national politics only, yet the issue might appear to be internal.

The government will have to consider its political system with regard to acceptable national principles before executing its remedies. Failure to observe such an important global rule in determining the political economy could see the country get sidelined by the international community (Watts, 2002).

Globalisation

The theory of globalisation applies relevantly well with the Coalition government’s decision to cut its foreign aid ration to the developing economies. The global economy is so much integrated that any decision arrived by an individual nation concerning how to spend its financial wealth must give due consideration to the global economy first (Wild, Wild & Han, 2010).

This theory is useful in my opinion because globalisation means the global economy is an average result of the actions by individual nations of the world. Any decision to eliminate or lower foreign aid meant to fight poverty in the underdeveloped world means even the developed countries will face the repercussions (Chiswick & Hatton, 2003).

For the global economy to register marked improvement, all countries in the world must work toward eliminating poverty. Any individual efforts to spur internal economic growth might not provide positive results because the external economy has more influence towards the internal economy.

Conclusion

Australia has for many years faced the challenge of illegal immigrants who seek for asylum in the country. Addressing this menace requires a sound political economy that will ensure that proper legal and economic frameworks are put in place to work interdependently. This will ensure effectiveness is achieved in controlling the influx.

However, the political economy must take into consideration the international convention that governs treatment of immigrants. While the immigrants negatively affect the Australian economy, the authorities must ensure that the corrective mechanisms put in place do not violate the refugees’ rights. Failing to observe such an international principle could see the country get eliminated by the international community.

The plans by the Coalition government to cut down on foreign aid in a bid to save funds for purposes of improving the infrastructure may also fail to register the anticipated economic growth. All countries in the world must seek to address global poverty levels to be able to achieve economic growth.

References

Boeri, T., Hanson, G., & McCormick, B. (2002). Immigration policy and the welfare state. Oxford: Oxford University Press.

Cavusgil, S., & Tamer, (2008). International business: Strategy, management, and the new realities. Upper Saddle River, NJ: Pearson Prentice Hall.

Chiswick, B. R., & Hatton, T. J. (2003). “International migration and the integration of labor markets.” Chapter 3 In. Globalization in historical perspective, eds. M. D. Bordo, A. M. Taylor, & J. G. Williamson. Chicago, IL: University of Chicago Press, pp. 65-119.

Facchini, G., & Mayda, A. M. (2008). From individual attitudes towards migrants to migration policy outcomes: Theory and evidence. Economic Policy, 56, 651-713

Morrissey, O. (2001). Does aid increase growth? Progress in Development Studies, 1(1), 37-50

Organization for Economic Corporation and Development (2009). DAC News: Development Aid 2008. Paris: OECD.

Ouattara, B. (2006). Foreign aid and government fiscal behavior in developing countries: Panel data evidence. Economic Modeling, 23, 506-514.

Quartey, P. (2005). Innovative ways of making aid effective in Ghana: Tied aid versus direct budgetary support. Journal of International Development, 17, 1077-1092.

Sitkin, A., & Bowen, N. (2010). International business: challenges and choices. New York, NY: Oxford University Press.

Tavares, J. (2003). Does foreign aid corrupt? Economics Letters, 79, 99–106.

Watts, J. R. (2002). Immigration policy and the challenge of globalization. Ithaca, NY: Cornell University Press.

Wild, J. J., Wild, K. L., & Han, J. C. Y. (2010). International business: the challenges of globalisation, 5th ed. Upper Saddle River, NJ: Prentice Hall.

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