IN-CLASS ASSIGNMENT #4 - GLOBALISATION

NOVEMBER 8TH 2022

CAPE PAPER 1 MAY/JUNE 2008

SECTION A - QUESTION 1

In light of recent moves towards trade liberalisation and globalisation, many Caribbean

businesses have been forced to adjust their operations in order to remain competitive. 

 (a) Identify THREE disadvantages associated with trade liberalisation and outline
TWO ways in which EACH disadvantage can negatively affect the operations of
Caribbean businesses. [15 marks] 

Three disadvantages associated with trade liberalisation are:

1. It can lead to exploitation of the environment and workers.

2. It increases the level of dependency on other countries.
3. Trade liberalization can prevent development of infant industries.

Two ways in which each disadvantage can negatively affect the operations of Caribbean
businesses are:

1. It can lead to exploitation of the environment and workers.

(a)This is so because the exploitation of natural resources can lead to the increase
of environmental degradation and damage of the environment which can
negatively affect our living standards. Since there is a lack of environmental
protection within most Caribbean businesses there is depletion of the
environment due to the competition and shallow environmental policies in these
countries. (b) Also, trade liberalization can cause exploitation of workers because
persons are working for long hours with low wage rates or even in poor or
hazardous working conditions.

2. It increases the level of dependence on other countries.

(a)Due to trade liberalisation there will be an increased dependence on other
countries for foreign exchange, technology and so on. This is so because, there
will be a destabilisation of the economy resulting in the country having to depend
on another country. (b) Also, there is a chance of there being an increase in new
technologies that will result in industries being forced to adapt to changes or
having to depend on other countries for help with those same technologies.

3. Trade liberalization can prevent development of infant industries.

(a)This is so because since infant industries are new industries in developing
countries, they need protection against competitive pressures until they mature.
As barriers are reduced and businesses are deregulated, they can enter markets
 that were once difficult to get into. Globalisation also paved the way for new and
innovative firms to enter markets and compete with existing firms. This may be
detrimental for some small domestic firms which are not able to compete with
large multinationals. The Caribbean is characterised by small entities that are
sometimes undercapitalised and therefore they may not be competitive. (b)Also,
these can be easily destroyed because they are simply new to the market. They
are not be properly protected and most times are forced to compete in the same
market as stronger economies which can stifle or result in the failure of these
newly developed industries due to losses or stagnant economic position.

 (b) Discuss TWO benefits of globalization to Caribbean countries. [6 marks] 

Two benefits of globalization to Caribbean countries are:

1. There is a possibility for economic expansion. Local businesses can trade as a

result of trade liberalization and there are global markets opening. As commerce
grows, the nation’s foreign exchange reserves and company revenues will both
rise. The local economy can thrive by using this money to invest in it again.
Additionally, as foreign companies try to enter all local markets, local industries
might profit from foreign direct
2. Companies will be able to disperse their activities to locations around the world
that are low cost or high quality producers of a particular good. This is so because
liberalisation as a result of globalization, allows companies to be able to move
nearer to suppliers which leads to cheaper labour also resulting in the decreasing
of cost in goods, reduced cost of production and increased profits, which are all
beneficial to these countries.

(c) Justify ONE action that a business can take in order to remain competitive.
[4 marks]  

One action that a business can take in order to remain competitive is to keep up with the
developments in the industry or sector by having a competitive strategy. If a business
has a competitive strategy they will more likely be a successful business. They will know
how the other competitors work and be able to be different or improve on what they
already work along with. Working in a strategic way allows the business to find out how
other competitors work, what they are offering, and what their strengths and weaknesses
are. This will identify the specific areas your business needs to compete in more or
improve on and give you a platform for differentiating your business form other
businesses, allowing your business to remain competitive.

 Total 25 marks