GLOBALIZATION
- and sovereignty

last updated 2010 Feb 24
see witiger.com/internationalbusiness/globalizationSustainableDevelopment.htm
see witiger.com/internationalbusiness/globalization.htm
including material from
Global Business Today, 2nd Ed.
Hill, McKaig ... and Richardson

ISBN-10: 0-07-098411-5

.... online learning centre of the publisher
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Globalization and National Soverignty
 
 

Chpt 1
Globalization and Sovereignty

page 29
"...today's increasingly interdependent global economy shifts economic power away from national governments and towards suprnational organizations such as the World Trade Organization (WTO), the European Union, and the United Nations... unelected bureaucrats now impose policies on democratically elected governments ... thereby undermining the soverignty of those states..."

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Trans-national companies growing more powerful than some countries
- The top economies compared to the top companies
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KEY
POINTS
The idea for this chart comes from an article in Fortune magazine in July 2000. The article in Fortune in turn was derived from statistics gathered by World Bank, World Development Report 2000.
WTGR
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2010 Update MGTC46 student Angelica C. in Jan 2010 updated the Top 100 Economies chart with figures from the Fortune 500 companies list for 2009
 http://money.cnn.com/magazines/fortune/global500/2009/full_list/
and the 2008 GDP figures from the CIA Factbook  www.cia.gov/library/publications/the-world-factbook.....
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Top Economies(2008) VS Annual Sales of leading companies
Country/ coporations GDP/Sales($BIL)
United States 13,820
China 6,473
Japan 4,262
India 2,816
Germany 2,816
United Kingdom 2,154
France 2,074
Russia 1,985
Italy 1,814
Brazil 1,794
Mexico 1,494
Spain 1,337
Canada 1,263
South Korea 1,243
Turkey 854
Indonesia 811
Australia 752
Iran 733
Taiwan 673
Netherlands 636
Poland 597
Wal-Mart Stores 379
ExxonMobil 359
Royal Dutch Shell 356
BP 281
Chevron 204
Toyota Motors 204
ING Group 197
General Motors 181
General Electric 173
Ford Motors 172
ConocoPhillips 172
Citigroup 159
AXA group 152
Volkswagen Group 149
HSBC Holding 147
Daimler 145
Dexia 141
Allianz 139
Sinopec-China Petroleum 134

 
 
 
Top 100 Economies (1999) versus Annual Sales of leading companies
(Corporations in bold)
  Country/Corporation GDP/sales
($mil)
  Country/Corporation GDP/sales
($mil)
1 United States 8,708,870.0 51 Colombia 88,596.0
2 Japan 4,395,083.0 52 AXA 87,645.7
3 Germany 2,081,202.0 53 IBM 87,548.0
4 France 1,410,262.0 54 Singapore 84,945.0
5 United Kingdom 1,373,612.0 55 Ireland 84,861.0
6 Italy 1,149,958.0 56 BP Amoco 83,556.0
7 China 1,149,814.0 57 Citigroup 82,005.0
8 Brazil 760,345.0 58 Volkswagen 80,072.7
9 Canada 612,049.0 59 Nippon Life Insurance 78,515.1
10 Spain 562,245.0 60 Philippines 75,350.0
11 Mexico 474,951.0 61 Siemens 75,337.0
12 India 459,765.0 62 Malaysia 74,634.0
13 Korea, Rep. 406,940.0 63 Allianz 74,178.2
14 Australia 389,691.0 64 Hitachi 71,858.5
15 Netherlands 384,766.0 65 Chile 71,092.0
16 Russian Federation 375,345.0 66 Matsushita Electric Ind. 65,555.6
17 Argentina 281,942.0 67 Nissho Iwai 65,393.2
18 Switzerland 260,299.0 68 ING Group 62,492.4
19 Belgium 245,706.0 69 AT&T 62,391.0
20 Sweden 226,388.0 70 Philip Morris 61,751.0
21 Austria 208,949.0 71 Sony 60,052.7
22 Turkey 188,374.0 72 Pakistan 59,880.0
23 General Motors 176,558.0 73 Deutsche Bank 58,585.1
24 Denmark 174,363.0 74 Boeing 57,993.0
25 Wal-Mart 166,809.0 75 Peru 57,318.0
26 Exxon Mobil 163,881.0 76 Czech Republic 56.379.0
27 Ford Motor 162,558.0 77 Dai-Ichi Mutual Life Ins. 55,104.7
28 Daimler Chrysler 159,985.7 78 Honda Motor 54,773.5
29 Poland 154,146.0 79 Assicurezioni Generali 53,723.2
30 Norway 145,449.0 80 Nissan Motor 53,679.9
31 Indonesia 140,964.0 81 New Zealand 53,622.0
32 South Africa 131,127.0 82 E.On 52,227.7
33 Saudi Arabia 128,892.0 83 Toshiba 51,634.9
34 Finland 126,130.0 84 Bank of America 51,392.0
35 Greece 123,934.0 85 Fiat 51,331.7
36 Thailand 123,887.0 86 Nestlé 49,694.1
37 Mitsui 118,555.2 87 SBC Communications 49,489.0
38 Mitsubishi 117,765.6 88 Credit Suisse 49,362.0
39 Toyota Motor 115,670.9 89 Hungary 48,355.0
40 General Electric 111,630.0 90 Hewlett-Packard 48,253.0
41 Itochu 109,068.9 91 Fujitsu 47,195.9
42 Portugal 107,716.0 92 Algeria 47,015.0
43 Royal Dutch/Shell 105,366.0 93 Metro 46,663.6
44 Venezuala 103,918.0 94 Sumitomo Life Insur. 46,445.1
45 Iran, Islamic Rep. 101,073.0 95 Bangladesh 45,779.0
46 Israel 99,068.0 96 Tokyo Electric Power 45,727.7
47 Sumitomo 95,701.6 97 Kroger 45,351.6
48 Nippon Tel & Tel 93,591.7 98 Total Fina Elf 44,990.3
49 Egypt, Arab Republic 92,413.0 99 NEC 44,828.0
50 Marubeni 91,907.4 100 State Farm Insurance 44,637.2
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Globalization, international companies growing more powerful than some countries
- How the actions of a large company can effect the sovereignty of a country

To demonstrate the power that a large company can have over a medium sized country, we searched the newspapers for a story reflecting how a transnational corporation may deal with a contentious issue that negatively effects the sovereignty of a country.
..gn. sfn
This Oct 2003 story tells how Ford is planning to cut jobs at a plant in a European country. The President of that country has met with Ford officials but the cuts are going to take place anyway.

Belgium is upset that they previously gave concessions to Ford in order that Ford would do business in the country and employee lots of people, but this has not been reciprocated as much as Belgium would have liked.

WTGR

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Globalization, some specific examples of the consequences

U.S. company in Mexico
 
In Mexico, a U.S. waste disposal company, Metalclad, was awarded $16.7 million in damages after the state of San Luis Potosi blocked its waste site in the village of Guadalcazar. Local residents complained the Mexican government was not enforcing environmental standards and that the project threatened their water supply. Metalclad's victory established that NAFTA's dispute mechanism reaches to subnational governments, including municipalities."

"... in a small town in the  Mexican state of San Luis Potosi, a California firm -- Metalclad -- a commercial purveyor of hazardous wastes, bought an abandoned dump site nearby. It proposed to expand on the dumpsite and to haul toxic waste material and other hazardous stuff and dump it in San Luis Potosi. The people in the neighbourhood of the dump site protested. The municipality, using powers delegated to it by the state, rezoned the site and forbid Metalclad to extend its land holdings.Concerned about the potential hazards of the reopened dump to  the local water supply, the state conducted an environmental impact study. As a result, it rezoned the property and forbid any extension of Metalclad's land holdings. Metalclad, under Chapter 11 of the NAFTA, then sued the Mexican  government for damage to its profit margins and balance sheet as  a result of being treated unequally by the people of San Luis Potosi. A trade panel, convened in Washington, agreed with the company."
 http://www.canadiandimension.mb.ca/extra/x0421dc.htm

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Japanese company in Canada, moving to Mexico

In the 1980's, a Japanese subsidiary of the Mitsubishi Electronics group bought the RCA TV plant in Midland, Ontario. Mitsubishi operated the plant successfully for some time until they suffered price competition from other picture tube makers who had operations in areas with lower employment costs. In the mid-1990's, in consideration of the NAFTA opportunities, Mitsubishi closed down the plant in Ontario, and moved operations to Mexico.

Russia cuts off natural gas to Bulgaria
 
click to enlarge UTSC MGTC46 student  Venelina G., in January 2009, emailed to say

I have some thoughts on globalization. Yesterday we mentioned quite a few things about globalization and some were cons, but we never discussed how reliable we have become on globalization. I have a particular example in mind.

pic provided by Veneline from her facebook page

Veneline says

"I am from Bulgarian background and my grandparents still live in Bulgaria. Recently (Dec 31, 2008) Russia stopped all export of natural gas to the European countries over a price dispute and the issue has not been
resolved to this day. This does not really affect us here in Canada, but I have spoken to my grandparents recently. In accordance with a Russian model, Bulgaria uses an interesting heating model for buildings. Water is heated in specific buildings around each city using natural gas. Then the boiling hot water is passed into pipes under ground, and using pressure the hot water is lead to neighborhoods, buildings, and houses around the cities. Of course,
with the recent absence of natural gas the whole country is left freezing during the winter, as there has been no natural gas to heat the water and there has been no heating in buildings for just about a week.

I can't help but wonder how in the 21st century, with so much trade around the world, it is possible for this to happen. As important and positive globalization and international trade have been, countries have become way too reliable on each other and have lost self sufficiency on all levels. I think this is just about another negative side of globalization, as with the uncertain political nature in the recent years countries should at least make certain that if anything was to happen with them they should have a way to cope with it, even
if it was a short term solution."

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Russia cuts off natural gas to Bulgaria - PART II !
 
UTSC MGTC46 student  Wendy L, in January 2009, emailed to say

"In the news today [2009 Jan 19] , I found an article, "Russia, Ukraine sign gas deal" which relates to the news that our classmate, Venelina, has pointed out earlier for globalization."

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click Wendy says

"Russia and Ukraine has signed a deal today to restore natural gas shipments to Ukraine after 2-weeks of freezing Europe! http://www.thestar.com/business/article/573410 I just wanted to point out that although this dispute has been resolved. 

However, in the article, it has also stated that this is "further complicated by geopolitical struggles over Ukraine's future and over lucrative export route for energy riches...". Indeed, because of globalization, nations may have relied on each other too much but because of globalization as well, technology  has allowed information to be so widely spread that we all know what’s happening on the other side of the world and that, it can greatly impact one’s reputation.

Also, in a similar article from Yahoo News – it stated that European Union is now questioning the credibility of Russia and Ukraine as gas suppliers to Europe. I think it is time for European governments to come up with a contingency plan and be a bit more independent so that a similar case will not occur in the future again."

WTGR says "yes Wendy, the 'technological environement' (web based info) has resulted in a situation where the customer can be very much aware of what is happening, at the same time, people in the Ukranian diaspora can be made aware of the problems 'back home'.

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U.S. company closes Cdn subsidiary - job losses result "Moores plant closing costs 600 jobs"
Moores, a Canadian company operating more than 100 retail stores, was bought out by American firm "Men's Wearhouse Inc." in 1998.

Moores had done well as a Canadian company and became the largest retailer of men's suits and sport coats in Canada.

When they were bought out by the Americans in 1998, Moores had 115 stores and the American buyer had 414 stores.

In March 2008, reporter Dana Flavelle with the Toronto Star wrote a story about how the U.S. parent of Moores was cutting back and announced closing Moore's clothing plant in Quebec. Citing "Canada's rising dollar", the U.S. company said "the plant was no longer competitive with lower-cost rivals".

students of international business in Canada might know that Montreal used to be the centre of the "made in Canada" clothing business and this recent situation of the Moores factory shutting is yet another example of how globalization has effected an industry sector that previously was a significant employer. 

In 2005 (The Toronto Star reported) the Moores plant employed 1,000 people, by early 2008 the U.S. parent had cut that back to 600, and in March 2008 the remaining 600 lost their jobs too.

The U.S. parent, "Men's Wearhouse" (in 2008) imports made in Korea for $99 as well as manufacturing in Mexico and Eastern Europe.
(Jules Abend)

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