关于国际政策和政府的留学生paper范文
发布时间：2017-01-31 19:17
1 引言——Introduction
准确说就完全当最近一段时间全球化才开始有反对意见。兰德和威廉姆森断言，全球化开始在 200 多年前，而 Scholte 认为贸易和投资流量增长只是在二次世界大战后。根据罗比 · 罗伯逊，过去 500 年来已经三次浪潮的全球化;1500年、 1800年和最后 1900年的呈现。很多关于全球化的文献是指它作为一个新的视角看老现象。
There are also opposing views on how to define globalization and what its effects have been on developing and developed countries. There are three common arguments which have emerged; globalization has had a negative impact on developing countries;globalisaktion has had a positive impact on developing ocuntries;globalization has by passed developing countries.
Globalisation has had a positive impact on developing countries: According to classical and neoclassical theories; globalisation has been beneficial to developing countries.
Globalisation has had a negative impact on developing countries -This perspective originates from Prebish (1950) and Singher (1950) and was further expanded by economist. Those who oppose this perspective compare the present international economy to the one that existed before the benefits of trade were proposed.
Globalisation has by-passed developing countries - Those who support this perspective argue that while there are benefits of trade as expressed by classical and neoclassical theorist, developing countries have yet experienced these benefits (see for example, Hirst & Thompson 1996; Hoogvelt 1997, H. Richardson et al.,2005 p163)).
In fact, many globalised developing countries claim that they not have benefited from globalization and are still confronted with the same economic struggles ( J.Jette, 2003) Western developed countries however, have had quite a different experience with globalization. According to Brittan (1998: p 8), globalization has led to an increase in the wealth of developed countries but not necessarily increased poverty in the developing countries.
When observing the developing states in the Caribbean, which are classified as Small Island Developing States (SIDS) by the United Nations, it is questionable as to whether or not globalization has been beneficial to this region. Has globalization obliterated the lines of inequality between states and within states? Has openness to foreign trade and investment accelerated economic development within SIDS? Are these states any better off or much the same since the most recent wave of globalization?
In an attempt to answer these questions, Add on about development
1.1 Research Question
Has globalization had a positive,negative or no effect on the Economic Development of Haiti and the Bahamas?
What role has openness played if any, in the economic status of these countries today?
1.2 Gaps in Literature/Limitations
Although vast amounts of literature was published on of globalization and developing countries, most studies focused on the environmental effects of globalization, while ignoring other aspects. This apparent gap in literature makes it makes difficult to conlude on the following points;
How developing countries were affected by globalisation
How individuals within a country are affected in regards to poverty, inequality and development
The compatrative impact of globalisatin between developing countries
1.3 Research Issue
There are conflicting views as to what type of impact globalization had on developing countries, in particular, Small Island Developing States (SIDS) of the Caribbean. While it is true that some islands in the Caribbean are prosperous, some islands are also in dire poverty. Very little is known about the actual affects of globalization on SIDS of the Caribbean.
1.4 Research Purpose
The purpose of this study is to assess the impact of openness, trade and investment on the economic development in the SIDS of the Caribbean, with a special case study of Haiti and the Bahamas. To make a comparative analysis of how different countries in SIDS have progressed since the period of colonialism to independence. This study will hopefully add more knowledge to a previous research by Ronald Ramkissoon (2002), entitled, Explaining Differences in Economic Performance in Caribbean Economies. At the end of the research, the author hopes to be able to safely conclude on what the impact of globalisatin has been on SIDS of the Caribbean.
1.5 Limitations
Limitations in this thesis are largely based on the narrow word limit that the author has to cover such a broad topic, despite all efforts to narrow it down to two case studies.
While the author has done a thorough, there is infact a lack of country statistic and data in part, which has also limited the confines of the research.
Development is often measured by economic growth, the level of trade, investment, imports and exports or the human development index (HDI). The focus of this thesis is to assess the well being of individuals within the case studies and then further analyze changes within economic development.
The author will also employ the following approaches to further arrive to a fair conclusion.
Selection of a measure of development that is responsive to changes in the short term and reflective of the current issues facing developing economies;
Selection of a measure of openness that is reflective of participation in the international economy;
Selection of a time period which is representative of the current period of lobalization;
Analysis of movement in both the measure of openness and the measure of development over the lobalization period, and in the period preceding the lobalization period, in order to ascertain differences between the two times periods;
Analysis of the relationship between the measures of development and openness during the lobalization period, and in the period preceding the lobalization period, in order to ascertain differences between the two time periods;
Consideration of factors that have influenced the development of each of the subject countries during the lobalization period;
Consideration of factors that have influenced the openness of each of the subject countries during the lobalization period;
Comparison of the findings for each economy in order to understand and potentially explain similarities and dissimilarities.
1.8 Disposition
Chapater 2 provides a literature review of globalization and its theories. The chapter then explores globaliations role in the internation economy and developing cuntries. It then discusses the recent arguments that have emerged on globalizations impact on developing countries.
Chapter 3 examines Tarde and Investment thories as they relate to globalization. Common arguments for and against these theories are discussed with a review of what has transpired in the international economy, in developed and developing countries due to Trade and FDI.
Chapter 4 presents the economic theories that have emerged over the past six decades that focus on the implications of trade for developing countries. The alignment of these theories with the arguments presented in relation to globalisation and developing countries are considered. The rationale for only presenting trade within this chapter is that there is extensive literature on trade and developing countries, whereas investment theory has focused largely on explaining the investment flows between developed countries.
Chapter 5 presents a review of the literature on measuring development. This is an important context for determining how development will be measured for the current research. The chapter considers how measuring development has moved away from considering purely income toward more encompassing measurements before reviewing the literature on the HDI, a widely accepted measurement of development. With the previous chapters having set the scene for understanding globalisation, how economic theory relates to what has been observed within the most recent period of globalisation and how development has previously been measured, Chapter 6 presents the research methodology in detail.
The purpose of Chapter 6 is to outline how this research will contribute to the body of knowledge on globalisation and developing countries. Each research component is discussed in detail, including the measurement of openness. A considerable part of the chapter involves describing how the measure of development will be produced, the decisions that need to be made and factors taken into consideration. Chapter 7 introduces the two countries that are the subject of the research. It briefly looks at SIDS as a group and before embarking on detailed analysis of the Bahamas and Haiti. A brief review of the recent economic history for the period preceding globalisation is provided for both countries, before examining how each country changed throughout the globalisation period. The focus of the analysis in this chapter is understanding how output and production changed, and also how the external sector changed, specifically in terms of export volume and value, the goods and services exported and imported by each country during the globalisation period, and the countries traded with. Investment is also considered. The experience of each country is compared and contrasted.
Chapter 8 presents the creation of a modified development index based on the HDI, but taking into account the nature and objectives of the current research, and criticisms of the HDI and suggestions for improvement. The modified index is calculated for Bangladesh and Tanzania for a forty year period, and then analysed.
In Chapter 9, the modified development index is analysed with the measure of openness utilising widely accepted economic analytical approaches, culminating in testing for Granger causality between openness and development to ascertain if openness does precede development.
Chapter 10 presents what has been learned about the impact of globalisation on two of the world's poorest developing countries, in light of the original research objectives set. The contribution that has been made to the body of knowledge on the subject is explained, research limitations and areas for future study are provided.
2. 文献综述和理论框架——Literature Review and Conceptual Framework
2.1 Globalisation
This chapter reviews various literature based on globalisaiton and perspectives on the process.
There will be a brief review of its background and the role it has played in the international economy and in developing countries.
2.1.2 Definition
The process of Globalisation is nothing new; it can be traced back to the ancient Romans, the German Hansa of Bergen who in 1350 formed a barter trade with the fisherman of Northern Norway and the imperial trade during the colonial era.
Amongst scholars, there are five commonly discussed forms of globalization; political, cultural, social, technological and economic (Howlett & Ramesh, 2006, p.175). In Daly's definition, deregulation refers to the increasing importance of international trade, international relations, treaties, alliance, financial flows, deregulation and integration. Wohlmuth states that "globalization is often used to explain the development of economically underdeveloped countries because it is assumed that it helps economic growth" (Wohlmuth, 2001, p.20). According to David Held (1999) globalization is "the widening, deepening and speeding up of world-wide interconnectedness in all aspects of contemporary social life, from the cultural to the criminal, the financial to the spiritual".
From the definitions above, it is clear that globalization is viewed and means different things to different people, therefore making it rather difficult to define. Based on the work of Mittelan, we can conclude that globalization as the increase of global flows of goods and production aided by advances in transportation and communication (Mittelman, 2006, p. 64).
2.2 Theoretical Perspectives of Globaliation
While the theories and debates on globalization are many, they can be systemized into three classes (McGraw, 2007, p. 2): hyper globalists, transformationalists, sceptics.
Hyperglobalist Perspective
From the globalist perspective there are two opposing opinions on globalization. Micklethwaite and Wooldridge (2000) feel that world integration is a good thing and will lead to increase in capital flow. However, Rodrik (2000) warns of governments losing the ability to protect its sovereign because of the demands of rapid development. In the book, Global Transformations (Held et al 1999), the hyperglobalist perspective is described as as an approach which sees globalization as a new era in the development of civilations. It also involves economies becoming denationalized whilst the relevance and authority of nation states decreases or is destroyed.
Sceptic/Traditionalist Perspective
Sceptics or traditionalists also have a negative outlook on the impact of globalization or the increasing power of MNEs, however; they feel that there are alternatives to protecting ones country, namely, Keynesian protectionism under new conditions (Lang & Hines, 1993). Sceptics such as Hirst and Thompson (1996) questioned the very existence of a global economy. These critics believe that the period of colinistation (1890 to 1914), more closely represented global economic and political integration than the present. They felt that this economic period more resembled that of internationalization and regionisation (Held & McGrew, 2000b: 4-5). Sceptics feel that sates are not helpless in the wake of globalisatin and can either chose to make decisions which will help and protect its citizens (act as a socialist state) or make decisions which will benefit rising MNE and international markets.
Transformationalist Perspective
Transformationalists agree that there is nothing inevitable about globalisation and the process can be reversed. According to Ankie Hoogvelt, globalisation is a process, not an end to state of affairs (Hoogvelt 1997, p131) as governments can determine the outcome of globalization and set regulations to control its development. Roseanne and Giddiness state that, ''contemporary patterns of lobalization are conceived as historically unprecedented, in that, governments
(States) and societies across the globe have to adjust to a world in which there is no longer clear distinction between international and domestic, external and internal affairs". Transformationalist argue that there should be reforms in global governance (Mcgrew 2000)
Halliday, 2000; Brown, 2000 and Bull, 2000); that globalization should be regularized at all levels (Held, 2000b & Bello et al, 2000. In a recent book George Monbiot (2003) proposes a directly elected World Parliament to replace the UN, an International Clearing Union that discharges deficits and prevents the accumulation of debts (as first proposed by John Maynard Keynes) to replace the World Bank and IMF, and a Fair Trade Organisation that favours poor nations, to replace the WTO. In their book Empire (2000), Hardt and Negri compares globalization to the formation of an Empire, who's over state, is imperial. Implying that while globalization represents progress in human history, it is accompanied by exploitation, inequality and oppression. In their book, subordinate states break away from the norms of globalization and seek protection while decocratising globalization (Hardt & Negri, 2003).
2.3 Globalisation and the international economy
The impact of globalization on the international community has transformed it into a single, transnational economic unit. This means more integration of national economies (Bordo, Eichengreen & Irwin 1999), increased capital flows, trade liberalization and growth (Hoogvelt (2001). While there has been an active participation in markets between countries, not all countries have been able to equally participate in globalisation. This has resulted in those countries, mostly less developed ones, being less integrated into the world economy.
Advances of communication have allowed consumers to shop and business to operate without restrictions. The advances in communication and transportation technologies have led to the convergence of global markets (Salvatore 1998). As a result of the above, competition has intensified. MNEs are realizing an increase in profits due to cheap labor and affordable raw products and cross border economies which hope to attract MNEs, trade and investors. Local governments are also less able to regulate the activity of MNEs as they tend to expand and operate beyond local borders.
Globalisatin has also brought about a break down of the value chain in production (Krugman 1995). Firms now have the options of dividing the production of goods into components and use the best strategy to cut cost and increase profits in order to sustain a competitiveness advantage. This may mean assembling a product in various countries or outsourcing. According to Yusuf and Sigliitz (2001), in the production chain, developed countries tend to have activities that add high amounts of value within production, whereas, developing countries have low value added activities.
Trade is another element of globalization in the international economy; it involves the flow of goods and services. It was noted by (UNCTAD 2004) that the amount of good and services traded more than doubled during the period of 1988-2000, an increase from $2,875bn to $6,364bn. Developing countries have remained the dominant participants in trade, representing 70% of the goods and services traded over the last ten years (UNCTAD 2004). Trade has increased at a rate faster than the growth of the worlds GDP (World Bank 2001).
Since the last wave of globalization, there has been an increase in financial flows, FDI increased at a rate faster than trade. Net inflows increased from $156bn in 1988 to $884bn 2000 (The World Bank 2001). This represents an annual growth rate of approximately 15.5% while trade grew at only 7% during the same period (UNCTAD 2004). Unfortunately, despite the integration of financial markets, these flows were more experienced by developing countries (Crotty, Epstein & Kelly 1998).
2.4 Globalisation and developing countries
There are conflicting views in literature as to what the exact impact of globailsation has been on developing countries. The three emerging themes as mentioned earlier are that globalisatin has had a positive, negative or no impact at all on developing countries. Much of the literature refers to an unequal effect between developed and developing countries (Baker, Epstein & Pollin 1998; Kiely 1998b; Morris, 1996). Globalisation has also differed between developing countries and within developing countries (CEPAL 2002). It has been observed that the impact of globalization and development has also been uneven in SIDS of the Caribbean.
2.4.1 Globalisation by-passing developing countries
For most developing countries, the lack of participation in economic global activity has not been voluntarily. There are factors which have made it impossible for some developing countries to fully embrace all of the opportunities and benefits of globalisation
Due to the increased activity of MNE in developed countries, consequently, capital flows have also been directed towards developed countries (Hirst & Thompson1996). This has presented a problem for developing countries; however, there are several SIDS which have had large capital inflows. According to Enid Bissember (2004), during the first half of the twentieth century, the majority of capital flows went to Barbados and Jamaica and only a trickle to the remaining states.
New standards introduced by developed countries have created barriers of trade for developing countries (Oman 1996). This is mainly in the exportation of agricultural goods and commodities. In addition, farmers in developing countries are finding it difficult to compete with farmers and products from developed countries such as the USA and Europe. Developing countries are being forced by developed countries (North American Free Trade Agreement, European Union) to further open their economies and reduce tariffs and if they do not comply, then trades will be blocked.
Production trends as discussed earlier has also hampered developing countries involvement in globalization. New technology and automation has partially eliminated the need for labor intensive manufacturing (Kiely 1998a). In addition, infrastructure and human resource capability in developing countries are high compared to that of developed countries.
There are a number of domestic factors which influence the extent to which developing countries are able to participate in international economic activity (Gundlach & Nunnenkamp 1996). Resource endowment provides the initial basis of what developing countries are likely to export, and also what will attract FDI to developing countries. The quality of human and physical capital is important, with the most basic level of manufacturing requiring a minimal level of workforce education. Domestic infrastructure such as transportation networks is important.
Infrastructure is also a major issue for developing countries. Developing countries have to be flexible and adapt to changing technologies to attract FDI and ensure that the country has the ability to export at a global standard.
Other factors such as political stability, macroeconomic polices in regards to trade and investment, geography and regional linkages also influence a countries participation level in globalization (Redding & Venables 2004).
2.4.2 Disadvantage of Globalisation in Developing Countries
The second school of thought implies that developing countries have not been bypassed by globalisaton but rather, are worse off from participation in this phenomenon.
The poorest developing countries tend to lack export diversisification and export low value added products. This makes these countries vulnerable to external shocks and less competitive. If the product is argriculturla goods, there is risk of a natural disater which would interrupt exports and more importantly profit earnings, as forseen by Prebisch (1950) and Singer (1950). According to Porter (1990), developing countries are mostly involved in industries which have very little prospect of growth. However, these industries have been inherited since the period of colonialism and many developing countries have found it very difficult to cultivate new markets. Agricultural products have experienced lower price fluctuations and demands in comparison to manufactured goods. Product substitution and protectionism laws as implemented by developed countries has also presented competitive barriers for developing countries whose main export happens to be agricultural commodities.
Developing countries often participate in manufacturing but tend to work at the end of the value chain. The major disadvantage of such participation is that there is no knowledge or skills attained for further advancement and also, the income from such exports is very low (Chussodovsky 1997).
MNE and FDI have also been seen to put developing countries at a disadvantage. In most cases MNEs tend to be self serving as share holders are more interested in profits than the well being or development of a country (Chang 1998; Goldsmith, J. 1996). In an attempt to compete for FDI, developing countries may lower or compromise labor, health and environmental standards, which may leave them worse off than before (Nayyar 2001; Obstfeld 1998). Governments also make huge giveaways to MNE and FDI which reduces the amount of income to the country. In other cases, governments spend large amounts of money to put in place infrastructure for the MNEs, which could have otherwise been invested into the economy. In many cases, the technology or skills introduced by these firms are not aligned with the resources and skills of the developing country. Investment in developing countries does not always mean economic growth, if the investment is made in a market that is already exhausted. (Baker, Epstein & Pollin 1998).
Other negative factors of globalization on developing countries are the overuse of non replaceable natural resources (Goldsmith, E. 1996; Hamilton & Clements 1999). Damage to the ecolological environment due to over farming and over-fishing of rivers and mining (Cole 2000; Daly 1996; Khor 1996). Water pollution which ultimately affects the health of individuals in that country (HWGNRD 1996; Larkin 1998). The loss of cultural identity has also been an issue (Scholte 1996).
2.4.3 Advantages of globalisation for developing countries
Despite the opposing view that developing countries are disadvantaged by their involvement in manufacturing at the end of the value chain, there is also an advantage. Globalisation has given developing countries the opportunity to participate in product manufacturing, which they would not have had otherwise (Gundlach & Nunnenkamp 1998. According to Dollar and Kraay (2001), those developing countries that do participate in globalization fare better than developed countries.
FDI and MNE provide increase capital flows and knowledge sharing in terms of technology and managerial and production in developing countries. It is also logical that thru globalization and exposure to international markets, developing countries can become more efficient and improve product quality and output.
In actuality, the participation in globalisatio by developing countries helps to improve the standard and quality of living within that country. Locals have access to clean water, education, life expectancy is increased and child birth immortality is lowered.
2.5 Conclusion
In this chapter, various aspects of globalization were discussed. Globaliation was viewed on an international level and then on a national level or as it relates to developing countries.
It can be concluded that globalization is a muti faceted phenomena with many definitions. There is no exact consensus as to when it began, except that it began in the early 1990s.
The economic drivers of globalization, trade, investment and production were also discussed with a scope of how these three factors have evolved in developing countries.
The three schools of thought state that globalization has had a positive, negative or by passed developing countries. It can be concluded that not all developing countries have had the same experience with globalization, some doing better than others. This outcome is determined more by individual country characteristics and economic status. For example, geographical location, infrastructure, ability to produce products at a global standard.
3 贸易和投资理论——Trade and investment theory
In the following chapter, a review of economic theories as they relate to globalization and development in developing countries will be discussed.
3.1 Introduction
In the previous chapter, the concept of globalisation was explored, and more specifically the most recent period of globalisation, what has influenced this period and how it is different to other periods in economic history. As has been discussed, the main economic components of globalisation are trade and investment. The first part of this chapter reviews classical and neoclassical trade theories to examine their relevance to the current international economy and more specifically to developing countries. In the second part of this chapter investment theory is considered, focusing on how growth in FDI over the past four decades has been explained, the role of MNEs, the relationship between trade and investment, and what investment has meant for developing countries.
3.2 Trade
3.2.1 Trade Theories
Adam Smith was one of the first economist to theorise the benefits of trade in his theory of absolute advantage (Smith, 1939, p446-47). This means that a nation benefits from manufacturing more when it has a particular commodity, resource, method or knowledge that increases production efficiency. This has led to most developing countries, due to their large amount of available land and unskilled labor, into nto agricultural industries and simple product markets. David Ricardo later expanded this theory and called it the comparative advantage. According to this theory, nations should export the goods they are efficient in producing while importing the goods that are efficiently produced by other countries (Thirlwall 1999 p.425). Despite this exchange, it is important to note that according to economist, trade will be beneficial to all countries but does not eradicate inequality between countries (Harberler 1959).
In addition, economist have identified other benefits of trade, in particular to developing countries. Myint (1955) asserts that international trade helps developing countries to escape narrow markets and expands production possibilities. Market irregularities are also lessened when more countries compete in trade (less market dominance of one firm due to competition).
3.2.2 Criticisms of traditional trade theory
There has been much criticism of the theory of comparative advantage by economist such as List (1966), Schumpeter (1911; 1952), Young (1928) and Williams (1929). The biggest criticism is that the comparative theory is static in nature and unrealistic in a world that is constantly changing Baldwin (1955), Myint (1955), Nurske (1961) and Chenery (1968).
Critics suggest that the comparative advantage theory is unrealistic because it does not take into consideration factors such as; equal production functions, absence of economies of scale, full employment of all resources, balanced trade, no capital flows and perfect competition.
In Chenery's (1975) criticism of classical and neoclassical trade theories, he asserted that the benefits of trade were exaggerated, as factors such as uncertain export prices and changes in market conditions were not taken into consideration. Developing countries are vulnerable if the demand for the specialized products or services dimishe. Other factors, as mentioned earlier in the chapter would be in relation to land infertility due to over farming, thus an inability to services a demand of a supply. Schultz (1961) and Linder (1967) , made reference to developing countries being stuck in unattractive industries, whereby the goods they produce efficiently are not on high demand by developed countries and the goods on demand by these advanced countries are not produced by developing countries. In addition, there are also limitations in the supply and demand chain, as developing countries produce agricultural goods, their main export, on a very small scale or subsistence farming basis.
3.2.3 Trade theory and the international economy
Many changes have occurred in the international economy since the theory of comparative advantage which was published in the 1800's. Trade patterns no longer fall into the description of comparative advantage as trade is no longer dominated by commodities but rather advanced and midrange goods. According to Ohmae (1994), wealth is now created in the marketplace rather than in the soil. This view was supported by Porter (1990) who said that the previous development strategy which was predicted by neoclassical economist is no longer sustainable and may limit rather than benefit the advancement of developing countries. Porter also asserts that countries which are not rich in natural resources are advantaged because they will not be tempted to rely on these resources but rather venture into other more substantive markets.
Other factors ignored by comparative advantage are; mobility of capital for production and labor, technological changes which now drive globalization and diminishing demand for labor due to advances in technology and production trends. MNEs are now the major drivers of globalization in the international economy, as will be discussed later in the chapter.
3.2.4 Trade theory and developing countries
Most of the literature on comparative advantage and developing countries relates to the distribution of gain from trade. and developing countries being disadvantaged because of their specialization in unattractive markets such as agriculture and participating at the end of the production value chain.
It has been concluded by economist that comparative advantage may be conducive to growth in developing countries but not long term development (Thirlwall 2003.
A main area of concern is the uneven distribution of profit from trade which tends to favour developed countries Prebisch (1950) and Singer (1950). Economist feel that changes in the trade policies of developed countries could serve beneficial to developing countries (Thirlwall 2003). These issues will be further discussed in the upcoming chapter.
3.2.5 Arguments in favour of Classical and Neo-classical trade theory
Despite its many critics, there are some econonomist who support the comparative theory. Lewis (1955) asserts that trade stimulates specialisation and inspires new ideas. By introducing new products to a community, Lewis claimed that individuals were motivated to work to obtain these goods. Ultimately, this process stimulated work and producitvity.
Harberler (1959) suggest that international trade had aided in the development of underdeveloped countries. He felt that the theory of comparative advantage was crucial in understanding the international economy. In his opinion, trade paves the way for economic development through the avenues of, capital good, raw materials, the transfer of knowledge and managerial skills. In addition, it encourages competition and discourages monopolistic behavior.
3.3 Investment
As previously discussed, FDI is one of the major components of globalization, its inflows have increased significantly over the last 40 years. However, according to UNCTAD (2002), large amounts of FDI stocks tend to be found in developed countries. MNE activity has also increased as it the vehicle to FDI. We will now review several overlapping theories which have emerged on FDI and MNE.
3.3.1 Theories of FDI
Perfect competition theories
Perfect competition theories suggest that there are a large number of firms to produce homogenous products. No firm has direct control over prices in the market or the product demand (Argawal 1980). The three main theories in this group are rates of return, portfolio diversification and market size.
Imperfect competition theories
It is because of this theory that MNEs are so strong and dominant in trade. In this market, which can be monopolistic to olipoli, there are a large amount of buyers and sellers, products are differentiated and there are very little restrictions.
Dunning's OLI Theory
This theory known as the OLI or Dunning's eclectic theory is a mix of three FDI theories.
According to Dunning's eclectic OLI framework (1993), FDI firms choose to enter markets where they will be at an advantage, based on these three variables:
Ownership advantages, which considers the monopolistic advantages in the ownership of tangible and no tangible assets (benefits and risk).
Location advantages which are based on the cost of labor, trade barriers and market factors such as, size, level of development, amount of competitors and potential for future growth.
Internalization advantages which are concerned with if the cost to transfer knowledge and information into the firm from external sources is higher than realizing ownership advantages within the company (Dunning 1993, 1995; Dunning and McQueen, 1982).
In short, Dunning suggest that when OLI advantages are high, firms will prefer more integrated modes of market entry.
Product Life cycle
The Product Life Cycle suggests that international trade is influenced by product innovation. In the process of product life, countries that produce technically superior good are said to be ahead of the competition that still has to catch up, thus this creates opportunities for FDI and exportation. In most cases, developed countries are the innovators of such products which are then exported to developing countries. Products pass through three stages; the introduction stage, which involves slow growth and high cost as the product is launched into the market. The growth phase, which is all about demand and increase in profit. The maturity phase, which is when sales numbers begin to dwindle and profits decrease.
3.3.2 FDI in developed and developing countries
Developing countries have attracted high levels of FDI inflows due to its cheap labor although , Agarwal (1980) states that cheap labor should not be the only reason for FDI. However, FDI is still more dominant in developed countries (Jovanovic 2001). Markets which have high levels of FDI use advanced technology, human resources and production trends which more align with developed as opposed to developing countries.
3.4 Conclusion
This chapter considered the relevance of classical and neoclassical trade theories to the most recent period of globalisation. The theory of comparative advantage remains one of the most upheld tenets of economics and certainly the most accepted one pertaining to trade. It hasattracted considerable criticism because of its static perspective and due to the assumptions on which it is based. Criticisms have arisen since the theory was first proposed, and there have been specific criticisms pertaining to the present international economy and the implications of the theory for developing countries. In addition to the benefits of trade proposed by the theory of comparative advantage, other more dynamic benefits of trade arise, specifically relating to the expansion of production possibilities, increased competition and access to elements that can improve production but were not previously available. By and large, classical and neo-classical trade theory promote that trade has clear and obvious benefits for all countries, including developing countries. Traditional trade theory does not explain a key phenomenon of globalisation, the importance of FDI and MNE activity. This chapter reviewed the various theories that have been put forward to explain the growth in activity observed since the end of the Second World War. There are a number of theories, the majority of which focus on market imperfections and the profit motivations of firms. The reasons why firms undertake foreign investment rather than trade were also considered, and again profit motivations are important with much of the literature focusing on the attainment of cost benefits and the avoidance of barriers to trade, which add cost to production. Finally, it was discussed how FDI flows have largely occurred in developed countries, and the reasons for this, which largely relate to underdeveloped countries, in particular least developed countries like Bangladesh and Tanzania, being under equipped to deal with the technological and resource skill requirements of MNEs.
Within the next chapter, theories pertaining to disparities that have arisen within the international economy between developed and underdeveloped countries is examined. These theories largely attribute the unevenness of development to trade.
4 方法论——Methodology
4.1 Introduction
In the previous chapters a selection of literature on globalization and its components such as trade, investment, openness and how they are measured was presented.
This chapter will focus on the methods which were employed for data collection and how this data will be analyzed and assessed in relation to the purpose of this research.
4.2 Research Approach
4.2.1 Research Style
According to Aaker and Day (1990), there are three classifications of research, exploratory, descriptive or casual.
The exploratory approach aims to gather as much information on the problem in order to get a deeper understanding (Patel & Davidson 2003). Patel and Tebelius (1987) recommend interviews for this type of data collection.
Descriptive Research is used when it is necessary to provide a detailed picture of a problem, or environment. It is used when the researcher has to research data to explain how the problem or situation occurred but not why (Aaker and Day 1990; Patel & Davidson 2003).
The casual approach is used when the researcher has to show the relationship between two independent variables (Aaker and Day 1990).
As mentioned in an earlier chapter, the overall focus of this thesis is to assess how developing countries are affected by globalization; therefore, our research approach is descriptive.
4.2.1 Inductive and Deductive Methods
There are two approaches to research, inductive and deductive. In the inductive research approach, the researcher draws conclusions from empirical data by instituting theories and models based on things that happened in reality.
In the deductive research approach, the researcher investigates existing theories and models and uses them as a guideline for data collection (Patel and Davidson 1994).
As this research only uses existing theories, it is deductive in nature.
4.2.2 Qualitative or Quantative
According to Yin (1989) there are two methods used to conduct research, qualitative or quantative. Which method the researcher pursues depends on the research questions and the type of data to be collected.
Quantitative research is objective and involves large group surveys and interviews to gather opinions and then generates statistics. It focuses on numbers and hard data and quite often the response to interview questions are predetermined.
Qualitative research is more subjective and involves analyzing and collecting data based on behaviors and responses. This type of research is exploratory and refers to definitions, concepts, definitions and descriptions of things. Its data collection is not quantifiable and is often related to case studies.
For the purpose of this research, the qualitative approach will be used. As the questions regarding the impact of globalization on development in SIDS can not be answered yes or no. This approach will also present the opportunity to closely understand the situation and case involving developing countries and globalization as opposed to only focusing on figures.
4.3 Data collection
The source of the author's information is secondary data, such as book, articles, journals and published educational material. The gathering of information took place at The Department of Archives (Bahamas), Department of Statistics (Bahamas), Ministry of Education (Bahamas) and College of The Bahamas. Search engines used were Google, Emerald and Yahoo. Key words in the research include, MNE, Trade, Investment, Development, Developing countries, Openess and Globalisation.
4.4 Research Design
Taking into consideration the research questions and the qualitative research approach, the author has chosen the case study strategy as it more aligns with the needs of this research. From this strategy it is possible to make a detailed contextual analysis of various variables and their relationship. In addition to the two case studies, there will also be a cross analysis.
A Case study emphasizes detailed contextual analysis of a limited number of events or conditions and their relationships, it also helps to narrow a wide topic of research. According to Yin (1984), the case study method is an empirical study that investigates a contemporary phenomenon within its real-life context; when the boundaries between phenomenon and context are not clearly evident; and in which multiple sources of evidence are used (Yin, 1984, p. 23).
The literature review, which is also a research design, will be based on existing literature and not empirical data.
4.4.1 Country selection
Based on the conflicting views of globalization's impact on SIDS, the aim of this research is to assess two countries in the Caribbean, Haiti and the Bahamas. Thus, by comparing one of the wealthiest nations in the SIDS with one of the most impoverished, it is hope that the full impact of globalization can be assessed and how it has affected the individual populations. States. An overview of these countries is provided in chapter 5.
4.4.2 Period of study
As can be noted from the literature review, the most recent period of globalization seemed to commence during the late 1980s. There is no way; however, to accurately conclude when this period ended, although it seems that by early 2000, it was less prevalent.
Because the aim of the research is to understand the changes that globalization may have induced in SIDSspi the period of study was set to 1989-1999. In order to make a fair contrast and comparison of the periods before and after globalization, the period before globalization was set to 1960-1988. Due to the limitation of accurate date, the author considered it wise not to go beyond 1960.
4.5 Conceptual Framework
4.6 Measuring globalization
The first aspect of data collection involved determining how participation in the global economy should be measured. In selecting a measure it was paramount to bear in mind that the main economic components of globalisation are trade and investment. It was considered that participation in international economic activity should be measured by openness. Various models of openness have been developed, two commonly cited being Leamer (1988) and Syrquin and Chenery (1989). These models, however, have largely been designed to examine trade policies and the extent of protectionism, while the purpose of this research is to measure participation in the international economy. Additionally, as was discussed in Chapter 2, a significant part of globali sation is investment flows, which are excluded from measures of trade.
In light of the absence of formally developed models that suit the specific purposes of the current research, it was decided to adopt the same methodology as United Nations Conference on Trade and Development (UNCTAD) in the World Investment Report (see e.g., UNCTAD 2000). UNCTAD measures trade as the total of the values of export flows plus import flows as a percentage of GDP, and investment as the total of the values of FDI inflows plus FDI outflows as a percentage of GDP. Given that both trade and investments are components of globalisation, the total of both will be used for this research, though, analysis will be also undertaken as to how each of these changed during the globalisation period, compared to the pre-globalisation period.
Trade data was sourced from the Penn World Tables (PWT) which were originally developed by Summers and Heston (1991). The PWT is a set of national accounts economic series covering a large number of countries. Efforts on the PWT commenced in 1954 and the version utilised for this research, Version 6.1, was published in October 2002 (Heston, Summers & Aten). The PWT are "the standard database on which researchers around the world test their hypotheses concerning growth" (Dowrick 1994). By 1994 the annual citation rate for the PWT was more than one hundred and increasing on an annual basis. In addition to being utilised for measuring growth, the PWT has been adopted for similar research to the current research, for example, Dina, Coondoo, et al. (2000) utilised the PWT in their analysis of the relationship between environmental degradation and per capita real income. Investment data was sourced from the UNCTAD Foreign Direct Investment Database (UNCTAD).
Measuring the impact of lobalization on selected countries
The subject of this thesis is the impact of lobalization on human lives, or development,
in two of the world's least developed countries.
Measuring Development
While one way to measure development is to use income as a proxy, there is a vast body of knowledge referring to the inadequacy of lobaliza income to measure development, along with the construction of models that are based on more relevant data, and / or alternative measurements of development. A comprehensive literature review was undertaken, along with considerable research into the most enduring means by which to measure development, which the measure devised for this research was based on. This literature review was presented in Chapter 5. A brief synopsis of the findings is presented here, as these findings have defined the methodology for measuring development.
At the most elementary level, development could be measured by a single indicator, adjusted versions of a single indicator, a group of indicators without combining the individual indicators into a single indicator, or a composite index so that a number of indicators are brought together into a single indicator.
Development, or the improvement of people's lives, is very much a multi-faceted phenomena. Prior to the emergence of development literature in the 1940s and 1950s, it was measured with income as a proxy for advancement. As was discussed in Chapter 5, this approach has attracted much criticism because although income is a means by which the lives of people can be improved, there is not a direct correlation between income and development, as the way income is distributed and spent also determines whether or not the lives of people improve. Similarly, it is not appropriate to use one aspect of development, such as health, as a proxy, because improvements in this single factor could have been made at the expense of other factors. That there have been numerous attempts to measure development by multiple factors provides further support for measuring development by a single factor being an inferior approach. Moreover, measuring development by an adjusted version of a single indicator does not capture the multifaceted nature of development, either.
The selection of a group of indicators without combining these indicators into a single index is also problematic for measuring development. While selecting a group of indicators acknowledges the multi-faceted nature of the development process, it is not possible to determine if the population of a country is better or worse from examining a group of statistics, unless all of the statistics move in the same direction, and researchers that have adopted this approach, for example, the United Nations (1954), have not attempted to draw such conclusions. Thus such an approach is not appropriate for the current research which seeks to understand at an aggregate level if the lives of the populations of the subject countries have been made better, worse or remained the same. The third approach to measuring development is to produce a composite index, whereby a number of different components representing aspects of development are combined into a single index. Although the majority of approaches to measuring development and associated factors, such as social well-being or quality of life, over the past forty years have involved the construction of composite indices of some sort, the production of a composite index has been lobalizat for various reasons, including that too many arbitrary decisions must be made in constructing an index (for example, Gostkowski 1972). It is the approach of a composite index which will be followed in this research.
Constructing a composite index
In constructing a composite index, the first decision to make is what factors should be included to reflect the overall goal or purpose of the index. In the case of development, two of the most fundamental factors are health and education. Health may be reflected in the current state of health but also longevity of life. The UNDP use the term "to live a long and healthy life" in referring to the health component of the HDI. Some researchers have extended the number of factors to include other aspects such as political freedom, however all researchers who have constructed composite indices have included measures for both health and education. For the index constructed as part of this research, health and education will be included, along with income, as a 'catch all' for other factors that are difficult to measure. This approach is consistent with that of the UNDP in constructing the HDI.
Following selection of the components that will be included in the index is the selection of the actual indicators that will be used to measure these factors. A number of elements are influential in this selection, including, the availability of data series that most accurately reflect the purpose of the research and reliability of data in terms of consistency of definition between countries and accuracy. Clearly, data must be available - there is no point in selecting indicators for which data cannot readily be obtained for the period of the study. Further, any indicator that is included must reflect the purpose of the study. As an example, the World Development Indictors includes in the category of health the total population. It is virtually impossible to infer anything about the quality of health in a country purely by looking at changes in the number of people residing in a country. Consistency of definition between countries is also significant if the index is going to be used to compare countries, which is most relevant with education definitions and how literacy is measured in different countries with different languages and what constitutes primary and secondary education. Accuracy of data is also critical, specifically, there should be confidence that data has been properly collected and recorded and that an indicator is an accurate reflection of how a country is performing with respect to what is being measured.
In light of the factors that need to be considered in including an indicator within a composite index, it makes sense to keep the number of components to a minimum and to only include time series that are clearly indicative of a change in the level of development. For the purposes of the index used in this research, it was decided to select only one indicator for each component. This is largely consistent with the HDI approach of a small number of indicators, and also consistent with another composite indicator commonly referred to in the literature, the Physical Quality of Life (PQLI) (Morris, 1979).
In selecting each component in the composite index the factors previously referred to were considered, however, an additional element of responsiveness to change was also considered. One criticism of the HDI is that the components are slow to change over time (Doraid 1997) and given the purpose of this research is to examine the impact of lobalization which has been defined by a relatively short time period of twelve years, it was critical to review potential indicators to ascertain which were most responsive to change.
After selection of appropriate indicators, consideration was given to how the components would be represented in the index and how the index will be constructed. A fundamental, and contentious, issue that arises with respect to index construction is how each component will be weighted. In indices prior to the HDI, various weighting approaches were tried, and the equal weighting of the components of the HDI has been lobalizat for being arbitrary (for example, Chowdhury 1991). This being said, more complex models of weighting have not produced conclusively superior results. Upon review of the equal weighting of the HDI components, (Noorbakhsh 1998b) found that the equal weighting of the components were not inappropriate. As an example of an attempt to develop a more complex model of weighting, Hellwig (1972b) proposed mathematical models in constructing a composite index to measure human resource development, and after testing five different approaches to weighting concluded that weighting should be based on the purpose of the analysis being conducted, this is to say that there is no "best" approach to the issue of weighting.
Weighting comes into play for both the components of the index and the indicators used to represent these components. That is to say, for example, if there were four components, with each of these represented by four indicators, decisions would need to be made as to the weight that is assigned to each component in the overall index, and also to the weight each indicator had for its relevant component. This issue is simplified for the current research, because each component of the composite index will only be represented by a single indicator. Consistent with the approach of the HDI, each component of the modified development index produced in this research will be assigned equal weighting, which is essentially saying that the given measures of health, education and incomes are equally important.
Before each component is weighted, it is necessary to convert each component into a measure that can be encompassed within the overall index. This is necessary because different raw data series cannot be aggregated, for example, the average years of schooling for a nation cannot readily be combined with the nation's mortality rate. An approach to this issue is to establish "critical points" that represent key aspects of accomplishment or otherwise for the series, and measure where individual countries sit between these points for an indicator. The approach of critical points was pioneered by Drewnowski (1970) and has been lobaliz in the most recent HDI. Drewnowski defined critical points as representing characteristic levels of satisfaction of needs expressed by an indicator, and defined the lowest point as a level whereby the need is not satisfied at all, a middle point where the minimum accepted level is comparable to a poverty line, and finally, the full satisfaction point where the level of satisfaction is fully adequate. The HDI approach uses only two critical points of minimum and maximum levels for an indicator. For the current version of the HDI, these amounts are fixed values based on previously observed values and on values that are expected to be observed over an extended time period. The rationale for this approach is that it provides fixed goal posts to measure a country's movement between. A similar approach has been adopted for the current research, with the fixed values taken from observed values of the chosen indicators. Each country is ranked between zero and one for each component based on where it lies between the established critical points.
The most basic way to construct an index is to derive an unweighted arithmetic average, to enable each country's rating to be a value between zero and one. This approach has been lobalizat for its simplicity, and because it enables positive movement in one indicator to offset negative movement in another (for example, Kelley 1991). Despite these criticisms and attempts to develop more complex models, there is an absence of accepted alternatives. One element that is considered in the current research is the impact of constructing the composite index via geometric rather than arithmetic mean. The rationale for calculating the geometric mean is that it reduces the impact of performance in one indicator offsetting performance in another (Sagar & Najam 1998). In response to some of the criticisms of the HDI, which are explored in Chapter 7, inclusion of a measure of inequality into the index being constructed was investigated. Similarly, given that some of the lobalization arguments focus on adverse environmental impact, consideration was also given to including an environmental indicator within the composite index.
4.8 Data analysis
Following the construction of indices via both arithmetic and geometric means, the correlation coefficients between the two indices are examined to determine if it is acceptable to proceed using only one of resultant indices. If there is a high level of correlation, then only the index constructed via arithmetic mean for each country will be further analysed. Secondly, the correlation coefficients between the components of the index and the index itself are calculated to ascertain the correlation between components, and the correlation of the components to the overall index. The rationale for this analysis, firstly, is to understand how the components have moved in relation to each other, and secondly, because the components of the HDI are highly correlated with the composite index (Chowdhury 1991) and it will be interesting to establish if the same trend exists with the composite index that has been produced within this research. This analysis will be further broken down to ascertain if different trends were observed during the globalisation period, to what was observed within the globalisation period.
Following the analysis of the structure of the resultant development index, analysis will be undertaken as to how the index moves over time in comparison with the measure of openness for each country. Widely utilised econometric techniques will be utilised in the analysis, including tests for cointegration and Granger causality. The purpose of this analysis is to ascertain, firstly, if there is any relationship between openness and development, and secondly, if a relationship exists, the nature of the relationship, and more specifically whether openness precedes development. This will shed light on whether the impact of participating in a globalised economy has been positive or negative for development, while consideration of openness will shed light on whether the two countries that are the subject of this research have been impacted or by-passed by the most recent period of globalisation.
4.9 Conclusion
This chapter has presented the methodology for this research. It has explained the relevance of the literature reviewed in the past three chapters and provided an understanding of the analysis which will be undertaken and discussed within the remaining chapters. In summary, the design of this research has encompassed selection of how globalisation will be measured and the time period over which globalisation will be measured. It has also involved establishing a period of time prior to globalisation so that what is observed during the globalisation period can be better understood as either being distinct or a continuation of earlier trends. A second aspect of the research design has been the selection of subject countries. Haiti and the Bahmas have been chosen, largely because of the regions that these two countries are located in, and because both countries are recognised as being amongst the world's poorest countries. Finally, a major component of this research is the generation of a
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