Discussion 1: Financial Effects of Globalization
In recent decades, the emergence of global economic, political, environmental, and cultural interconnections has greatly impacted people, companies, and nations regionally and in different parts of the world. Consider, for instance, the following mission statement: “Partnerships International, Inc. periodically brings together industry and government in a collegial and informative setting in order to enhance the U.S.’s abilities and presence throughout the global marketplace, and to promote our continuous growth and development in that competitive, demanding and dynamic environment” (Partnerships International, Inc., 2014). There are financial implications associated with the emergence of global partnerships and globalization in general. In this Discussion, you consider some of these.
With these thoughts in mind:
By Day 3
Post an explanation of the financial benefits and limitations of global partnerships. Provide specific evidence of one positive or one negative impact of globalization on a government organization.
Financial Effects of Globalization
The global partnership involves organizations working together and pooling skills and resources together for better provision of products and services. Global partnerships provide synergy for businesses. Global partnership results in the financial market becoming deeper and more sophisticated through integration with the world market resulting in increased financial alternatives for investors and borrowers. It also increases the financial base of local organizations enhancing their capacity to provide services. Organizations benefit from reduced costs in areas such as acquiring new technology and hiring experts. According to Lascurain Fernández (2017), globalization is characterized by technological innovations, trade openings, and liberalization of foreign direct investment in the country. Foreign direct investment is characterized by training for employees. Foreign investment has the capacity to increase the revenue of a country.
The global partnership, however, increases the probability of financial crises. The mix of creditors changes, raising the number of foreigners holding domestic debts. According to Broner and Ventura (2016), the government cares more about domestic debtholders; the government takes action when their share is high, reducing the chances of financial crises. When the share of domestic debt holders reduces significantly, the government takes no action resulting in an increased probability of financial crises. Other negative impacts include procyclical and volatile capital inflows, raising capital inflows, and loss of democracy in government institutions. Evidence indicates that requirements imposed by globalization inevitably collide with an organization’s commitments of domestic policies (Lascurain Fernández, 2017).
Evidence of a positive impact of globalization on government organizations is the U.S Agency for International Development (USAID), an independent federal government agency. The organization works with different partners to tap their expertise and capital to enhance the operations of the organization. The organization, through the global partnership, supports economic growth in developing countries, facilitating the establishment of stronger and resilient markets for the U.S (U.S Agency for International Development, 2018).