Sunday 27 January 2013

The connection between global poverty, multinational corporations, and the United States as an empire



In today contemporary society, the United States of America has positioned itself well globally and is accredited for being a commanding force and nerve of global establishments and empires. According to Kolk and van Tulder (2006), the United States of America is considered a super power and is arguably one of the powerful nations around the entire globe. Their power often determines the nature of international politics, economic and cultural aspects. In addition, it is also responsible in the formulation of rules that aid in guiding the nature and state of global integration, trade and diffusion. However, that does not imply that the United States of America dictates all international players especially those who are not at the center of power.  Economies at the periphery also have a voice in global matters especially those whose impacts directly affect them. However, despite having a say in international matters, these economies are not well positioned to or rarely do they formulates rules and regulations that guide global integration. More often, they react to already formulated policies and guidelines. The power of United States has opened up global economies to international trade. In addition, it has liberalized states by lambasting and critiquing protectionism measures that were employed by emerging and developing economies. The United States of America has played a cardinal role in addressing global poverty. It has done this solely through a number of measures. One noteworthy measure is through global investments through its domestic companies that have spread their wings globally. These companies are often called Multinationals. This essay seeks to ascertain how global poverty, multinationals and the United States as an international empire are related.

Global poverty is largely intertwined with multinationals. Multinationals have had relative impact on economic growth and development of quite a number of economies. Multinationals are foreign companies that are keen to open up branches in countries not their mother nation. First, these companies seek to establish business units in economies where they can have easy access to cheap labor and other resources. Proponents of globalizations are in full support of the rapid growth and expansion of multinationals. They assert that, multinationals are responsible for the flow of wealth to those economies and communities that have embraced them. However, opponents view multinationals as unnecessary encroachers that are out to fleece resources of other countries while exploiting its citizens. This is not necessarily the case because multinationals bring with them additional jobs to local communities and economies that embrace them. In addition, they help improve living standards of the populace as they provide easy access to not only quality but also quantity goods and services which are often subsidized as compared to those produced by local companies. Looking at the other side of the coin, multinationals are often keen to establish new branches in new zones or places where markets are yet to be exploited. Breaking the ground and injecting capital on new zones are responsible for economic development. Multinationals strive to ensure that they develop or else improve the infrastructures near the places of establishment. This opens up the economy for other businesses as businesses tend to be attracted to places with improved infrastructure. On the other hand, the influence of multinationals on the formulation and implementation of national policies cannot be understated. They often guide government in the development of policy papers that are keen in opening up the economy to business. Furthermore, these papers are tailored and well aligned to both the corporate and the public demands (Paupp and Urbain 2012).
The global influence of the United States of America has played a major role in reshaping the operations of most economies. According Aronowitz (2009), the United States is responsible for the global village concept and the changed dynamics of political social and economic relations between nations. For example, it created and advocated for the policies that propagated dynamic changes in the operations of not only Africa but also the Asian emerging tigers. The outward policies brought about greater economic prosperity and transformed East Asia from a very poor region to a remarkably progressive region. In the contrary, economies that failed to embrace these outward policies as advanced by United States Policy makers in the late 20th century, such as Africa and the Latin America were got up in economic stagnation. The failure to accommodate sound policies led to the deterioration of their social economic standings. The vicious cycles of poverty together with runaway inflation gagged the developments of these economies (Aronowitz 2009).
In the 21st century, the global standing of the United States has engineered a number of changes directed towards the development of sound economic development policies. Growth of world markets together with the changes in demand and supply patterns are some of the aspects responsible for breaking the global vicious cycles of poverty. To realize the aforementioned, economies need to disband protectionist measures to be able to fully harness more from their international partners. The coming in of liberalization together with the breakdown of economic barriers has spurred development and growth of nations. In addition, the move has enhanced competition between economies. This economic reforms and adopted strategies have encouraged the free flow of capital, investors and commodities. In addition, modern technology has been able to penetrate. Technology has enhanced ways of doing business and has subsequently reduced the costs of doing business. The communication costs have also been brought down through the rapid innovation in the telecommunications sectors. Low costs of communication together with advanced ecommerce have relatively increased the flow of global finance. Through the increase in international financial flows, economies have realized improved levels of economic development and growth. The aforementioned factors are paramount in breaking the global vicious cycle of poverty (Jain and Vachani 2006).
According to Asiedu and Gyimah-Brempong (2008), the growth of global trade courtesy of the United States influence has resulted in not only the improvement of living standards but also the economic standings of economies. International trade has enhanced economic development and growth through increased foreign receipts. The increased levels of trading between nations who produce different goods have enhanced economic growth and developments in economies relatively because the funds from foreign receipts are incorporated in the larger plan of a nation. The United States has also advocated for global research and innovation. Technical know-how and innovations play a cardinal role in the elimination of global poverty. While there is a general assumption that the above only happen in developed economies, the same is transferred to developing economies courtesy of multinationals. It is therefore evident that the United States plays an integral role in ensuring that no economy is left behind in matters innovation. Moreover, it is evident that the accrued advantage could not be a reality if economies were not integrated. The spread of new innovations is not limited to technological innovations as economics, political and social knowledge is also exchanged. The transferred knowledge is therefore coined well to suit the economic needs of an economy. In addition, it can be packaged and sold to other economies i.e. in terms of labor exchange programs. The exchange increases the economic receipts of a country and spurs rapid development internally that subsequently bring down the poverty levels in a country (Asiedu and Gyimah-Brempong 2008).
Poverty Eradication goes hand in hand with quality education. The spread of quality education is one of the huge advantageous effects of the United States Empire. In the 21st century, one is able to search and enroll in the world best facilities without any controls courtesy of global educational policies. This implies that one is not limited to local educational facilities that might otherwise fall short of expectations. On the other hand, one is able to acquire required knowledge from one country that is to be utilized in another country without and form of restriction. Through the influence of the United States, a number of companies and economies have been encouraged to invest in developing countries. These investments help the least developing countries increase the foreign exchange reserves and address issues that bind the populace in abject poverty. In addition, it provides employment avenues to citizens who will in turn utilize the earned wages to improve their welfare. Due to the opening up of global market, economies will tend to produce what it can produce best incurring minimal costs. This move to inject countries capital on commodities that give it a competitive advantage globally will enhance economic growth and development and subsequently bring the poverty levels down (Bailey 2007).
The economic prosperity of an economy relies largely on the formulation and subsequent adoption of feasible trade and investment policies. According to Jain and Vachani (2006), over a billion jobs currently enjoyed by the global populace are in one way or another derived courtesy of sound global polices created by the United States. The rationale behind full realization of global benefits by an economy is the elimination of trade barriers. Trade barriers minimize the movement of goods and services between states. Therefore, their dismantling enhances economic growth and subsequent macroeconomic stability of an economy. That is possible as exchange between economies is eased. Developing economies need to support the World Trade Organization on matters trade liberalization in order for them to address the impending issues of poverty.
The least developed economies often benefit more from freeing trade. Developing economies accrue subsidies from developed economies that are channeled to liberal economies. In addition the increased economic growth and development that is often associated with free trade brings with it an increase in income (Paupp and Urbain 2012). Therefore, citizens from these developing economies are able to improve their living standards through an increase of income. Moreover, increased foreign investments lead to establishment of new firms that brings with them new jobs. The unskilled populaces are able to secure new jobs which transform them to middle class people. The general improvement people welfare guarantees economic growth of a state. In addition, it aids in breaking the vicious cycles of poverty. From the above, it is noteworthy that open economies are able to accrue more benefits from engaging global partners than their counterparts who are exercising trade protectionism. Indeed, the benefits associated with liberation outshine the costs associated with the opening up of an economy to other states. Trade liberalization has brought with it a lot of benefits to both the developed and the developing economies. Despite the magnitude of these gains, developing economies are not able to fully enjoy these gains. That is largely because they still over depend on developed economies for aid. For example, of all the liberalization gains, the developing economies only enjoy a 30% with the developed economies going with the other percentage (Jain and Vachani 2006). However, the developing economies can still tighten its borrowing policies to ensure that it equally enjoys the benefits from trade liberalization and free market. Despite the amount of benefits harnessed from accessing the market of a trading partner, countries are better placed to benefit massively by freeing their own markets. However, industrial economies are well placed to accrue more gains given they remove protectionism policies in their agricultural markets. Industrial economies have often been lambasted for not liberalizing the agriculture. These economies are associated with high protection measures that are often derived from high tariff levels. According to Aronowitz (2009), agriculture has the highest average of tariff when compared with manufacturing i.e. it is nine times higher. This showcases agriculture as one of the areas that need a lot of consideration in matters liberalization. The developing economies are also better placed to benefit from the liberalization of agriculture. However, those economies with relatively low income have great potential of gaining a lot from the liberalization of Agriculture. This is relatively because they are largely depended on it for survival and growth. In addition, a good number of its citizens are dependent on agriculture meaning the sector affects them directly.

            The livelihood of most developing countries is agriculture. That is, their foreign receipts are largely inclined towards agriculture. This is so because agricultural produce make up a major part of their exports. For agricultural exports, protectionism and tariffs pose a major threat to the survival and subsequent thriving of the economies (Jain and Vachani 2006). Developing countries look up to agriculture to address the United Nations Millennium development goals. The global agriculture trade is a cardinal issue that cannot be brushed off easily when it comes to international trade. Problems associated with global trading of agricultural produce have advanced effects on developing economies simply because agriculture is their primary source of export. In addition, agriculture is the source of livelihood for most citizens in these countries. Therefore, to matters appertaining to global poverty, issues surrounding agriculture need to be solved. This will enable developing countries contain the acute poverty levels as well as position themselves well globally by enhancing sound relations with their trading partners (Asiedu and Gyimah-Brempong 2008).
            Developing economies are faced with acute problems that are often interrelated. First is the issue of global market instability. Instability in the global market largely hampers the development capabilities of developing economies (Kolk and van Tulder 2006). Decline in the export price of agricultural produce jeopardizes the competitiveness of the third world countries. This is because it their foreign exchange receipts are largely affected. In addition, considering these economies rely primarily on agriculture, its citizens will not be able to meet the ever rising cost of living. Secondly, the capacity of these economies also does not match the international demands. This alienates them from the derivation of enough benefits from their exports. Thirdly, developing economies have continually tightened their protection policies related to agriculture. This rapidly hampers their chances of benefiting from global trade because the policies curtail free movement of goods from other trading states. Finally, developing countries lack the production capacity that is able to quench global market thirst. This is a cardinal reason why the less developed economies are unable to accrue full benefits from global trade. To address these impending problems related to agricultural trade, the United States of America being a super power and having a lot of global influence needs to exert more pressure on developing economies. This will see them drop their protectionism measures and ease the movement of products across borders (Jain and Vachani 2006).
In conclusion, the United States of America has been instrumental in the formulation of sound policies that have opened up the world and brought solutions to the impending global problem of poverty. From the above discussion, it is apparent that multinationals have played a cardinal role in breaking the vicious cycles of poverty by creating opportunities to individual citizens and economies as a whole. In addition, it is evident that the corporation between states has relatively increased the level of capital investments that have consequently opened up growth opportunities. Moreover, economies have been able to break the vicious cycles of poverty. The aforementioned was made possible by the sprouting of new companies that created employment avenues to the masses. However, the ultimate gains associated with the influence of the United States of America are yet to be fully realized. That is so because quite a number of developing economies still embrace protective policies. In the other hand, some who have embrace free market are not able to derive the full benefits as they are still gagged by foreign debt burden. Finally, it is evident that issues surrounding global trade, the place of multinationals and the United States as being an empire are largely intertwined.

Bibliography
Aronowitz, Stanley. Implicating Empire. New York: Basic Books, 2009.
Asiedu, Elizabeth, and Kwabena Gyimah-Brempong. "The Effect of the Liberalization of Investment Policies on Employment and Investment of Multinational Corporations in Africa." African Development Review 20, no. 1 (2008): 49-66.
Bailey, Robert. "Multinational Corporations and Global Poverty Reduction." Development in Practice 17, no. 3 (2007): 451-452.
Jain, Subhash, and Sushil Vachani. Multinational corporations and global poverty reduction. Cheltenham: Edward Elgar, 2006.
Kolk, Ans, and Rob van Tulder. "Poverty alleviation as business strategy? Evaluating commitments of frontrunner Multinational Corporations." World Development 34, no. 5 (2006): 789-801.
Paupp, Terrence, and Olivier Urbain. Beyond Global Crisis: Remedies and road maps by daisaku ikeda and his contemporaries. New Jersey: Transaction Publishers, 2012.

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