Business and Government in the Global Context

Business and Government in the Global Context

Title – It has been argued that globalisation created a vacuum of governance as it has shifted power away from governments to businesses. Do you agree with this view? Do you think new and/or more vigorous international governmental bodies are necessary to govern business activities? Your answer needs to be based on one of four major issues in the contemporary global context, (i) climate change; (ii) labour conditions; (iii) corruption; or (iv) technological advances.

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Submitted By – Sachin vats
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Executive Summary

The essay highlights the importance of globalisation and its impacts on the government policies. The essay discusses the issues why and how globalisation is affecting the governing bodies. Additionally, it depicts how the power has been moved from government agencies to private businesses. The essay also putting light on the operation of the international bodies like IPCC, UN and questions about the standard of regulations. Moreover, it displays how these international industries and the businesses are affecting the global climate and their effect on humans as well as on environment. The essay finally discusses whether the present international regulatory bodies are capable or not, for keeping a check on the activities of the industries with regards to global climate change or we require some new and stricter governing bodies to keep the business activities of globalisation in control and ensure that the atmospheric conditions should not be compromised.


In today’s context, Globalisation is playing a critical role. The whole world has seemed to be globalised now. No matter what the situation is, everybody is connected with each other. We can purchase anything from anywhere no matter what the product is or how big or small it is. All this made possible through going advancement of the globalised world. Before moving further, let us discuss the point what Globalisation actually is?
Globalisation basically is the connection among people or international companies which all begins with trade in 1800 and now has flourished to a great extent through the communication and transportation method. For instance, in the early stages, the most famous silk route which was connected from east to west through which the trade of spices and silk happened was the result of the globalisation. It is the transfer of technology, labour, information, capital and skills across international boundaries to form an interconnected network among the nations (Wu, 2012). In simple and plain words, Globalisation is the interlinking and interdependency of the nations on one another to increase their trade and the business network.
With the rise of Globalisation, popular MNC’s and private firms has started to make their hold in the respective countries. These MNC’s are not only providing business to the countries but also generate employment and economic benefit. Globalisation emerges as boon for some countries. Globalisation providing opportunities to developing countries to set up their hold in the economic market as well (Hamdi, 2013). Globalisation assist countries in breaking the trade barriers and initiate their economic growth with rest of the world. Additionally, poverty situation of the developing nations has been diminished by the rise of globalisation. Apart from the positive side of this, there are some negative involved in this. For instance, the rise of globalisation is affecting the local trade market. The international products are available at a cheaper rate. Hence public demands to have international one as compared to the local product. For setting up their base in the country, the MNC’s require funding to establish their factories in the country. For this purpose, the affluent businessman of the particular nation invests their money in the upcoming industry.
The business profit generated by them is huge. In this cut-throat competition, government of the country is attracting the multinational companies with their policies. The basic reason for inviting them is that globalisation develops business and raise the economy of the country. For this reason, government policies are marginalised by globalisation. For example: –
• Giving cash finance to multinational companies visiting the country.
• Providing tax rebates to them.
• Other benefits like cheap electricity, water or tariff related benefits.
Globalisation has flourished because of numerous reasons. The fast shipping methods are now available for delivering items from one place to another like through seaways in containers. Along with this, the communication methods with internet methods provides the facility to see what is happening all over the world and enable a company to see which country is suitable to set up their base in reference to the low cost of production and labour (Economics online). Additionally, the electronic payment methods like e-wallets accelerated the global trade method. Moreover, through globalisation, we can get much cheaper price product by just clicking some buttons sitting at home. The enduring effect of globalisation is the generation of more number of employment opportunities for the country.
With all advancement happening in real world, there are some downsides of globalisation too. It is evident that the control of the country’s global market has been shifting from the hands of government to the business and private companies. Now, they are the sole party who are regulating and making their own decisions to run the business. The reason behind this is quite obvious. First of all, Globalisation is bringing so much business into the country which is fruitful for the country’s economy. Secondly, it involves so much investment on the large scale that can only be fulfilled by the business tycoons of the nations. After all this, if government and officials try to regulate and set their own rules to operate the market. It would not be possible for them. The reason being, the business is so vast, that the local government can not do anything. If they try to interfere in between this. There is always a hovering threat of losing the MNC’s companies offices and industries which would affect the country economy drastically. According to UNCTAD,2012 report the total export from all nations of the world was $15 trillion (united states dollars) in 2010. Out of this, the share for the developed nations was 54 percent and the remaining were for the developing countries (UNCTAD, 2012). The figures show a great percentage and huge amount of money that involves in globalisation. Due to this, the developing as well as the developing nations do not want to imply barriers on trade for globalisation, as it will lead to a great economic loss for the country.
If a country imposes stronger taxation on a company, the investment and the capital start to shift from one territory to another (Stiglitz, 2003). According to Chandler of Harvard University, with the enormous rise of the globalised world, there is a serious need for international institutions like IMF, WTO, UN to deal with its outcomes. The sole reason behind this is to regulate the global market. So that the tycoons and the big industries do not impose their rules and restrictions on the market. To support this, American Tobacco company, Andrew Carnegie Steel (popularly known as U.S Steel) and John. D Rockefeller Standard oil company are some examples of the traditional companies that took advantage of the globalisation and set their own prices and regulations without thinking about the concern of the consumers. All these incidents made it inevitable to have an international regulating authority to keep an eye on the functioning of the companies so that the customers as well as the other industries will not be harmed.
In the light of the above arguments, there is a need of an international authority to regulate the international market. The agencies could be WTO, UN or world bank which can take stern steps to maintain the smooth functioning of the market with the consumer as well as the producer satisfaction. All these agencies require to check the work strategies of the international companies.
The adjoining part of the question ask about the need of the new rules for supervising the changing climatic conditions that were constantly changing due to the rapid industry growth. The developing and fast pace life definitely affecting the climate in an adverse manner. There is a requirement of natural resources to meet the demands and eradicate poverty level of the country (Munslow ; O’Dempsey, 2010). The worst affected by this will be the underdeveloped and developing nations. Because they are the one who needs a better quality of life. There are many factors that are affecting the global climate. Due to the international trade, the amount of CO2 emission is increasing day by day. Over 5 Gt of CO2 has been emitted globally through international trade (Peters & Hertwich, 2008). That much emission is creating health problem not only for the current generation but only poses a threat for the upcoming generation. Due to the high rising emission of CO2, the scenario of global warming is worsening with the passage of time. Global warming results in the increase in the temperature of the earth to a certain extent which is responsible for the melting of the glaciers in the Arctic and the Antarctica region. Owing to this, the oceanic level is increasing which is a hovering threat to human generation. The other climatic problems involved due to globalisation are health problems, air pollution, water pollution and waste management issues. The other side involves the floods and drought situations. Subsequently, the greenhouses gases such as NO2, CO and chlorofluorocarbon (CFC) altogether are responsible for the thinning of the ozone layer (O3). The ozone layer is very useful for the humans to protect them from the harmful ultraviolet rays coming from the sun (Ramanathan & Feng, 2009). On the other side, the thinning of the ozone layer will let the harmful UV rays to reach which create various problems for human species like skin diseases.
International bodies are trying their best to tackle these issues, such as Kyoto protocol which was taken to regulate the global climate policies. In this, the countries involved reduce the amount of deforestation so that the climate would not be affected ( Santilli et al. 2005). On the other hand, International Energy Agency (IEA) is working on to reduce the greenhouse emission with the lower emission of the CO2. The other motive of the agency is to popularise sustainable development methods among countries so that the level of carbon emission can be reduced and more number of renewable resources can be used. The local government of the countries is not capable of handling the issues like climate change. That’s why these international bodies came into force to regulate the issue. The other agencies involved with climate are Intergovernmental panel on climate change (IPCC), International Union for conservation of nature (IUCN), Earth System Governance project ( ESGP) and Global Green Growth Institute (GGGI). These institutions are working to control global climate by enforcing fines and penalties on the companies breaking the standard of environment conservation. Inspite of all, they are unable to tackle the issue of global climate. The IPCC reports need to be reviewed (Rosen ; Guenther, 2016). The level of environmental pollution is deteriorating day by day. The global temperature is rising which is creating serious threats to the countries with high pollution level.
All this is happening due to the weak policies of the current international organisations to mitigate the issue. The trend of globalisation has not only affected the particular nation but also the international climatic control organisations. They are compromising the current environment needs to just increase their personal profit. To cite an example, the most important transport method for globalisation, which is through the sea route. The shipping industry has failed to maintain the standard of carbon emission which is causing the greenhouse effect. The International Maritime Organisation has also agreed to this that they are not able to control the carbon emission during the process (Harvey, 2016).
Climate change has been the most discussed topic among the world these days. Still the international governmental bodies are not able to control this. The liberalisation has caused the human activities to grow to such a large extent that the environment as well the global level of CO2 emission is not controllable. Even the IPCC reports issued by the international authority has failed drastically (Manne, 2015). Even the issue of climate change remained at the last spot when discussed among the US natives. The denialist parties of the industries are not accepting the fact of global climate change crisis. On the flip side of this, the major country of the globalisation era is largely operated by fossil fuels. Owing to this, 1.6 million people dies each year with poor air quality which makes it lethal for them to breath (Jenson, 2018). This led to an average decline of two years in life expectancy. Above all this, the international institutes as well as the governing bodies are not capable of resolving this harmful issue. The key factor behind this can be seen as the pressure from the business authorities to neglect these. Additionally, the business as well as the whole circle of globalisation is so vast that it is not possible for the current governing bodies to keep a check on them. These are the shortcomings of the present climate bodies that are in existence these days.

In this fast pace world of globalisation, every nation is just after building wealth as well as rising their economy. Globalisation has make the whole world as a single market. Just like every coin has two sides. In the similar way Globalisation has both the positives as well as the negative effects. With one side it is strengthening nation economy, on the other hand it is taking the ruling as well as the deciding power away from the government hands. Now, in these days, it is the businessman and the private firms who are ruling the market. The whole coverage of global market is so broad that the local government can not do anything in this regard. Without the globalisation, their economy will not run. It is the need of an hour for them. They can not refuse their entry to national market. The reason being, without the foreign currency accumulation and FDI, a country can not develop. Because of this, the country government are even ignoring the harm they are creating to atmosphere. Although there are several international organisations as well to control this menace. But they are also incapable of controlling this. In light of the above given arguments, I strongly believe that there is definitely a need of new and stern international government bodies to regulate global business in context of the global climate and pollution as well. Climatic conditions are at worse condition at present time. Some new laws should be made to strictly control and manage the business activities before it is too late. The new agencies should work without pressure and unbiasedly so that atmospheric conditions will not be compromised by the current business activities. The Global business should be done in a controlled manner so that the climatic conditions should not be altered. The industries that are creating pollution such as water pollution, air pollution and other harmful effects to human’s generation and environment should be seriously controlled and heavy punishment should be imposed on them on breaking any law related to that. The new governmental bodies must include members from other international organisation like UN,UNEP that can strictly manage the global business so that the future generation’s needs and global climatic situations will not be compromised.

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