With the fast development of the society and economy, there is no doubt that globalization is coming increasingly popular than ever before since 1980s, whether in international economy or international political affairs, and it will be more popular in the future (Aydin, 2010). Now all kinds of the information can be transformed in a short second with a large amount. Therefore, as a result of globalization, all over the world are linked together and they depend on each other (Skoufiasa, 2010). With the globalization, the world has been developing much faster as well.
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In this essay, it is to have a short description of the background and the fundamental theories of globalization, after that, a case study, Taiwan Banana industry, will be placed out to analysis the effects of the globalization to the banana industry. Before analyzing the specific effects, there will be a brief introduction of Taiwan Banana industry, including nature, culture and the government role in the banana market, and then the reasons to choose Taiwan Banana industry as a case study will be demonstrated as well. With the globalization, competition in the banana industry is of quite sharp, thus comparison with the Philippine would be taken. Soon afterwards, the strategies for improving the Taiwan Banana industry competition will be further illustrated. Finally, a conclusion will be drawn.
Description of the theory of globalization
Since the 1980s, globalization has been becoming an increasingly new phenomenon in the world, the basic characteristics of our times. However, there is no uniform definition of globalization. From the material form, globalization refers to the cross-border flows of goods and capital, through a transnational and local internationalization and globalization these stages of development (Fratzscher, 2007). Cross-border flows of goods and capital is the first form of globalization. In this process, by a corresponding regional, it arouse international economic management organizations and economic entities, and culture, lifestyle, values, ideologies and other spiritual forces of transnational exchange, collision, conflict and integration (Braslavsky, 2003). Overall, globalization is a core of economic globalization, including the countries and peoples of various regions in the political, cultural, technological, military, security, ideology, lifestyle, values, multi-layered, multi-area interconnected, the impact of multiple constraints of the concept. “Globalization” can be summarized as technology, economy, politics, law, management, organizational, cultural, ideological, interpersonal communication, the globalization of international relations in ten areas. And globalization has many advantages and disadvantages.
First, globalization allows worldwide capital, technology, products, and markets, resources to be relocated effectively and rationally(Anwar, 2007). Globalization not only prompts in effective international cooperation, but also intensifies the competition among countries. From a country perspective, local companies will exceed their resources and limited domestic market, the global search for the optimal allocation of resources and effective use.
Second, globalization provides good opportunities and challenges for developing countries (Manzey, 2009). First, it helps developing countries to use foreign capital and foreign investment. Second, it promotes structural optimization of the exports of developing countries. As the capital inflows, direct investment activities of transnational corporations and domestic industrial restructuring have improved the structure of developing country exports. Third, it forces developed countries to deal with the problems faced by developing countries. Developed countries increasingly recognize that economic globalization, their economic stability and development depend on developing countries (Gomory, 2009).
Third, with the globalization, it provides peoples of the world for a good opportunity to select goods and services (Ge, 2009). With the market globalization, international trade logistics will become the main form of peoples of the world according to their own preferences and consumption needs, to choose their products (Farazmand, 2005).
Fourth, globalization will promote culture development. Economic globalization will not only affect the global economic structure and order, but also it brings different cultures to varying degrees (Arndt, 2009; Polivka, 2001).
Fifth, globalization will promote trade and investment liberalization (Grieben, 2009). Trade and investment liberalization are the products of economic globalization and it is a powerful driving force of globalization. Trade and investment liberalization are accelerating the development of advanced process of economic globalization. Investment liberalization, has become the mainstream of development, in not only developed countries, but a growing number of developing countries actively take investment liberalization measures. On the one hand, a large number of foreign investment, on the other hand actively engaging in overseas investment, so that the world direct investment increased rapidly, investment activities worldwide, the global regulatory framework and rules of investment have begun to form.
Sixth, globalization accelerates the process of technology transfer and industrial structure adjustment (Rugman, 2005). Globalization has brought great development of the international division of labor, industry, the big transfer and capital, technology and other production factors of large flows, which make up the domestic capital for developing countries, technology and other elements of the gap.
On the contrary, globalization has its negative effects.
First, globalization has exacerbated the imbalance in the world economy, so that the wealth gap (Gindlinga, 2010). Globalization has not only brought the impact on the national economy of developing countries, but it also affects the basis of unequal relations.
Second, globalization has strengthened the instability of the world economy (Czinkota, 2005). Globalization ties with the world economy more closely, thus, each country’s economic stability will depend not only on their domestic factors, but also, largely, by the tremendous international impact. As international trade continues to expand, other countries, particularly major trading partners’ economic situation, such as inflation, the financial crisis, and it will affects their own (Knight, 1998).
Third, the current global economic rules of operation are not quite reasonable, developed countries benefit more (Zhu, 2004). With the development of economic globalization, the objective needs to be regulated with the rules, constraints, the behavior of participants, while the rule-making is a strength-based.
Fouth, globalization can also lead to the destruction of the ecological environment in developing countries (Aggarwal, 2006). For example, the increasing spread of desertification, land erosion, the extinction of plant and animal species, marine and river Road pollution.
A brief introduction of Taiwan nature, culture
Taiwan is located on the southeast coast of the continental shelf, located between longitude 119°18’03 and 124 °34’30â€³, latitude 20°45’25 to 25°56’30â€³. It has a sea area of 36,000 square kilometers, including Taiwan Island (an area of 35,801 square kilometers), the Penghu Islands, Green Island, Diaoyu Island, Orchid Island, Lantau Peng Gui, Chiwei. The province is also is divided in 7 cities and 16 counties. Taiwan faces the Pacific, the Northeast neighborhood Ryukyu Islands, about 600 km apart; the southern boundary is the Bashi Channel, and the Philippines, about 300 km apart; west boundary is the Taiwan Strait, Fujian, narrowest point to 130 kilometers. Taiwan, the center channel briefly the Western Pacific, is the Pacific region’s major transport hub at sea links. In addition, it is an important part of China. (http://en.wikipedia.org/wiki/Taiwan).
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Taiwan has a population of 21.86 million, including Kinmen, Matsupopulation growth rate is about 7.31%. Population is mainly concentrated in the western plains, the eastern population of only 4% of the total population. The average population density is 568.83 people per square kilometer. Political, economic and cultural center and largest city of Taipei’s population density has reached 1 million per square kilometer. The Han nationality accounts for about 98% of the total Taiwan residents, minority 2%, about 38 million people. According to the language and customs of different ethnic minorities of Taiwan into the Ami, Atayal, Paiwan, Bunun, Puyuma, Rukai, Cao, Yami and the other 9 Saisiyat family, separation across the province. And now it has a mixture culture including traditional Chinese culture,Japanese culture, traditional Confucianist beliefs, and increasingly Western values (http://en.wikipedia.org/wiki/Taiwan) .
The island of Taiwan is mountainous, mountains and hills occupy more than two-thirds of the total area. Taiwan’s mountains and the island’s northeast – southwest direction parallel to the vertical Woyu east central island location, the island formed over the eastern mountains, hilly central and western plains of topographical features. Taiwan has warm climate in winter, hot in summer, rainfall, typhoons and heavy rain over the summer and fall. Tropic of Cancer passing through the central island, north to subtropical climate, the south has a tropical climate, the average temperature (except mountains) is 22 â„ƒ, annual precipitation over 2000 mm. Abundant rainfall creates favorable conditions island’s rivers, crops and fruits, particular Taiwan banana (http://en.wikipedia.org/wiki/Taiwan).
The reason for selecting banana industry
Banana is one of Taiwan’s major economic fruits for export-oriented, and now banana is still the largest export of Taiwan fruit. Compared with other crops, bananas, due to higher yield, extensive management, labor saving, still has a comparative advantage. In short, the banana production in Taiwan for several years shows the phenomenon of growth, decline and stability. So the expansion of Taiwan’s banana industry has also emerged, and the steady state of contraction. It also has a long history of exporting to other countries. Taking Japan for example, it has been decades of exporting banana to Japan since 1963. Taiwan’s banana industry developed during the period of Japanese occupation, and Taiwan bananas monopolized the Japanese market until banana importation was liberalized in 1963 (Yoshiyuki, 2006). Taiwan has very good light and heat conditions with the largest banana development, the highest yield, and it is one of the regions with best quality. In addition, Taiwan banana is of good quality and convenient transportation, because is the Pacific region’s major transport hub. So Taiwan banana is chosen as a case study in this essay.
The effects of transnational corporations on banana market
With the development of economy, the five large transnational corporations monopolize the whole banana market now. It is undeniable that transnational corporations are an important driving force of economic globalization. Multinationals’ global business strategy is an important foundation to speed up the process of economic globalization (Matowe, 2002). The competitiveness of enterprises is the industrial competitiveness as well as an important manifestation of national competitiveness. TNC is the main force of the modern enterprise, and is an important part of the world’s overall national strength and competitiveness of countries. Multinational firms’ international investment accelerates the process of economic globalization. International investment is the international economic and technological cooperation (Cerny,1994). With the accelerated development of the world economy, multinational corporations have become the main carrier of international investment. Multinational international investment is showed in the global expansion of finance capital, monopolizing in the world market. Therefore, the five large transnational corporations have great impact on the global banana market and the main producing countries, Taiwan included, although banana is an exporting industry with a long history. For example, transnational corporation will affect government policy (Roberts, 2005). On the other hand, to large multinational companies, they have the finance strength to repel their rivals out of the market. Because of the market operation in many countries at the same time, they would use lower prices exclude local competitors. With incomplete information, they often have local aggressive behavior to establish their credibility, or potential competition to the world market for the issuing of false signals, to reduce the overall competition (Globalization and global change research 2004, p. 280). In all, they benefit more for themselves. What’s more, Philippine now is becoming the fourth largest exporter that it might put great affect on the Taiwan banana. If the situation continues, the large transnational corporation will operate in Taiwan, thus the Taiwan banana industries should find a way out.
The strategy to compete with Philippine
In recent years, many problems appear in the banana industry. First, the quality of banana changes because of the bad weather like typhoon, many banana trees are destroyed by typhoon, but the remaining trees are also seriously hurt. In addition, diseases are wide spreaded as well, so that the quality is reduced. According to the news, because of the low quality of banana, Japan almost refuses a large number of the bananas every year. On the other hand, the big rival-Philippine, is developing fast in the recent years. Now the Philippine is the world fourth largest banana country. What’s more, Philippine has low price bananas and now it holds almost seven tenths of the Japan banana market. Therefore, it is a real rival to Taiwan banana industry. However, since the Taiwan has become a member of WTO, changes will take place to compete with the low price Philippine banana if effective measures are taken.
First and for the most, the quality of the Taiwan bananas should be improved. In order to reduce the disease attack, new and anti-disease species would be cultivated. Then putting more emphasis on the producing technology, producing technology is of important in banana producing, such as keeping fresh. Now people pay more attention to health food than ever before that Green food is every popular. Therefore, if after years of hard working, Taiwan banana is much healthier than other counties, it will have a larger market again. However, so as to realize the goal, much money should input to research. Government departments should be targeted to organize the implementation of major research projects! These projects should be borne by research institutions and integrated production enterprises.
Second, improve the banana farmers’ positive. As a result of the bad performance of Taiwan banana exporting market, the farmers’ positives been seriously hurt. Therefore, in order to improve the banana farmers’ positive, the government should stabilize banana prices, and then improve the banana prices step by step and more privilege would be enacted to give more profits to the banana farmers.
Third, the government should have a clear understanding of its responsibility in the modem society, especially as a member of WTO. In personal, compared with Taiwan nature and culture characters, the role of government is of much more importance. Further more, government’s a particular policy will promote, draw back, or stabilize the banana market, especially after Taiwan entered into WTO.
With globalization, the governments’ main responsibilities are following. First, the government plays a critical role in the development of economy (Moshirian, 2008). Government should use the various legal, economic and other macro-control means to maintain the economic order and the sustainable and healthy economic development. In this aspect, the focus of government economic policy is to create the state-efficient market environment, especially a good investment environment to attract capital, technology and professionals to improve the country’s competitiveness. As the global economy and national development strategies important changes take place under the new situation, governments, especially governments of developing countries should transform its role in enhancing economic competitiveness imperative way. On the one hand, trade and investment liberalization require developing countries to adopt effective policies to ensure fair competition; on the other hand, cross-border movement substantially eliminates barriers for developing countries to use global resources to develop its economy. More and more governments realize that creating and maintaining an efficient market is more important than industrial policy. The government plays the role in basically allocation of resources to improve the efficiency of resource allocation, enhancing its economic competitiveness. Government can not intervene the market excessively to avoid distortion and damage the market mechanism. Second, the government also plays a great role in governing the society. In the era of economic globalization, with the internationalization of social life, domestic content and manner of administration will inevitably encounter problems of internationalization (Aguayo-Télleza, 2010). Such as the emergence of transnational corporations, the increasing number of international organizations and transnational institutions, enhancing mobility, all that requires government to develop administration function, as immigration authorities, foreign tax administration, international liaison and cooperation agencies, etc., to deal with economic globalization.
Since 1980, globalization, which means the cross-border flows of goods and capital, through a transnational and local internationalization and globalization these stages of development, has been quite popular, and contain many advantages as following. Globalization allows many resources, including world capital, technology, products, etc., to be relocated effectively. However, the developing countries are faced both good opportunities and challenges before globalization, mainly because it can both help the developing counties to develop structural optimization of the exports and handle with the problems brought by the globalization. To the consumers, they have more opportunities to select goods and services and it promotes culture communication. In addition, globalization still brings trade and investment liberalization as well. On the other hand, many problems appear with globalization. Globalization has exacerbated the imbalance in the world economy and the gap between the wealth and poor. It also has strengthened the instability of the world economy. To developed countries, through the globalization, they benefit more than the developing countries and they might destroy ecological environment in developing countries.
Taiwan, which has good nature and culture characters, is fit for grow banana. Now it is the largest export of Taiwan fruit. In addition, Taiwan also has a long history of exporting banana with high yield that why the Taiwan banana is chose as a case study in this essay. However, Taiwan banana also face challenges, such as the quality declining, the growing competitor like Philippine. However, since the Taiwan has become a member of WTO, the situation will change if effective measures are taken. First, the banana quality should be improved. New anti-disease species with good quality banana should be cultivated. Second, the government should encourage the banana farmers’ positive through effective measures, such as improving the banana price and more privileges.
With the globalization, the government plays a key role and the government should have a clear understanding of its responsibility in the modem society, especially as a member of WTO. The government plays a critical role in the development of economy and the government should create and maintain sustainable and healthy economic development. Government is of importance in governing the society. Creating and maintaining an efficient market is more important than industrial policy to the government. In all, with the efforts of all the Taiwan people and Taiwan government, Taiwan will have a bright and sustainable banana market.