Impact of Globalisation and Innovation on the Business Operating Coursework

Impact of Globalisation and Innovation on the Business Operating Strategies of International Financial Institutions and Systems- - Coursework mannikinThis has not only increased international trade but has also nurtured human resource development. Thus, the globalization theories set perfect on the principles of Ricardos relative Theory. Although, globalization has revolutionized todays realness, there exist opponents of this trend. This includes aid organization such as Oxfam and the G77 countries (Investor Words). History of Globalization The Industrial Revolution seemed to sow the seeds of the globalization that was to come years later. The concept of globalization has gone through several ups and downs. The globalization came to an end after the World War 1 when much countries aforethought(ip) on practicing isolationism (Globalization, Encyclopedia of Business). There were several rules and regulations imposed regarding foreign trade and so treaties were signed that assured barriers to foreign trade in the form of duties and tariffs. The unruffled Hawley Tariffs of 1930 is a famous one (Globalization, Encyclopedia of Business). However, after World War II, Bretton Woods resulted in the formation of World Bank, International Monetary Fund and widely distributed Agreements on Tariffs and Trade (Globalization, Encyclopedia of Business). This was the beginning of a new phase of globalization. Later in 1995, GATT was replaced by World Trade Organization that has the main spring of globalization and inculcates in trade in goods, services with the added benefit of an efficient dispute settlement system (Globalization, Encyclopedia of Business). Other trade blocs such as EU, SAARC and agreements such as NAFTA have come into the scene. Financial Globalization and Innovation Over the past two decades some very pronounced changes in the world financial system have been witnessed. All the financial markets of the world have become a complex network woven in a good knitted canopy. The liberalization policy has increased opportunities and varieties all over the globe. Privatization has been on an increase. Additionally, new hedging tools such as derivative instruments have been introduced against markets and credit relate risks (Chernobai, Rachev & Fabozzi , 2007). Securitization has been adopted as pith of trading as well (Chernobai, Rachev & Fabozzi , 2007). The most prominent example of trade liberalization is the European Union. The adoption of a whizz currency Euro and the inter bloc tariff free trade has empowered the position of the bloc and the currency as well. Financial integration is a analogous process by which a strong integrated complex network of financial markets is developed. However, the rule of one price should prevail in these kinds of market which means that the risk-adjusted real return should equalize (Gudmundsson, 2007). The manifestation of globalization is the elimination of concentration of a particular/own c ountry and an increase in cross-border activities. This would include majuscule investment in cross border projects, investment in assets and liabilities as well as an increase in banking and FDI (Gudmundsson, 2007). There have been certain implications well. gibe to Gudmundsson (2007), the global integration of the financial markets has not provided insurance against idiosyncratic shocks. Moreover, it has been concluded that due to the volatile nature of the capital stock due to asymmetric information, it has been more a source of shock rather than smoothing. There remain many repercussions of these integrated markets. Due to this increased trend outsourcing, expansion of