Era Of Rapid Globalization Animation Essay

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In Era of rapid Globalization, there has always been a much talked about issue Poverty which is indeed optimal globally. My essay work consists all possible collection such as concepts, statistics, facts, causes, reasons, opinion etc. on topics related to the question, been answered here. What factors exactly contributes towards the reduction of World Poverty & development in Countries? How does it make changes to world crisis? What changes does it make? The notion is to draw the conclusion while looking at all the aspects simultaneously.

At my best, I have composed the coursework with a consideration on all the important points.

Why & How the one I made a strong choice to favour, can be the more exerting force to combat in improving of developing countries? Putting my point forward, I potentially see Foreign Direct Investment (FDI) as the one main factor or strategy over Corporate Social Responsibility (CSR) in way to reduce World Poverty and a lot many other regards. With the concrete reasons ahead, I have compiled my Essay work on the path to conclude the same. A vast range of information concerning the FDI & CSR has been reviewed widely in the context of global poverty.

The provided facts, reliable sources and data have been a great assistance to look upon in terms to lead successfully & confidentially to a conclusion that FDI (maximizing benefits, minimizing costs) makes a greatest contribution to the developing countries and simultaneously battling with the Global poverty. FDI's never ending contribution, distribution, conduction and management etc. provides with the strong ground to the take it in consideration firmly in further discussion on improving Poverty in world. Whereas, CSR makes its own contribution likewise FDI in development of countries' economy in plethora of ways. On the contrary, it is on the same mission to provide the developing & developed countries with benefits on economy growth & other aspects too.CSR is broadly based on voluntary initiatives which depends on, whether to regularize the process of contributating towards the world or not.

"As one more year of poor agricultural production has left millions in urgent quest for food"- It is one of the captions that are normally seen in the last updates on the condition in "developing" countries. The crunch, which the countries see themselves in, seems to be never-stopping and only accumulating from year to year with rarest of reformations.

There are number of indications to secure a notion on what works better in terms of improvement globally in every respect. On the basis of strong analysis & facts available, I have drawn my conclusion and with an immense study on the structure. I have been able to come to the decision to support FDI over CSR for many of logics.

WORLD POVERTY -- At a Glance

A Proverb says -"The poverty of the poor is their ruin"

Poverty is an issue, encountered by a hasty percentage of civilization globally. World Poverty is something that all grown up people around the world must have thought about it at least once. World Poverty is an issue that has been for many decades now. It's true that all humans have been sent to the planet equal, but after human began to civilize, people got optimally divided into three groups as poor people, middle class, and rich people.

Poverty Facts & Statistics --

Almost half the world - over 3 billion people's survival is on less than $2.50 a day.

By World Bank Development {USD dollars a day at 2005 Power Purchase Point (PPP)}

At least 80% of world population survives on less than $10 a day. More than 80 % of global population survives in countries where income transmissions are expanding. Poorest 40 % of global population interests for 5% of worldly income. The richest 20% interests for three-quarters of global income.

UNICEF stated, 25 thousand children die every single day due to poverty. And they "die silently in some of the poorest villages on planet, far removed from the analysis and the sense of the world. Being meek and weak in life makes these dying altitudes even more deceptive in death."

Children around 27 - 28% in developing countries are counted to be malnourished. The two prominent regions that estimate for the bulk of the inadequate are South Asia and sub-Saharan Africa.

Based on a school enrolment data, 72 million children of elementary school age in the developing world were not in school in year 2005; 57% of them were girls (source: World Bank Development indicators 2008). About, a billion people have arrived in the 21st century incapable of reading a book or signing their names. Less than 1% of what the human race spent single year on arms was required to admit every child into school by the year 2000 and yet it did not happen. Fatal and Infectious diseases carry on to disaster the lives of the poor all across the global. Estimated, 40 million people surviving with HIV/AIDS, with 3 million deaths in year 2004. Each year there are 350-500 million instances of malaria, with 1 million losses of lives. Africa accounts for 90% of deaths from malaria and African children account for over 80% of malaria sufferers universally.

Poverty is a condition when one cannot fulfill basic human needs like food, water, clothing and shelter. Why is it so? Will it be right to blame on poor people for their own predicament? Were they lazy, made poor decisions, and been responsible for their condition? What about their Managements? Did they resume policies that really harm successful development? These causes of poverty and inequality are undoubtedly true; any which ways the deepest causes of poverty are never discussed. Behind the increase of interconnected promises by globalization are global decisions, global practices & global policies. They are classically affected and motivated by the rich and dominant people. These can be the main economy running people of rich nations or other global players as multinational corporations and institutions. With such massive external control, the government and general public of these poor countries are often powerless and of poor nations and their people are often powerless. Hence resulting in rich people getting richer and the poor section becoming more weak and poor.

Foreign Direct Investment

The last decades of the twentieth century was marked by increasing globalization that spurs up the economic growth and thus considered a integral part of the economy. Foreign direct investment (FDI) is a form of investment that earns interest or income which is not from the home country of the investor but any other geographical area outside. It is termed as direct investments it might even involve setting up the infrastructure like factories and facilities in the foreign land. The main purpose of foreign direct investment is that it supports the economic development of the country where the investment is being made.

Foreign direct investment requires business relationships between the parent company and its foreign subsidiary and thus it gives rise to multinational companies. A investment can be termed as FDI either the parent company hold 10 % of ordinary shares in the subsidiary or it has the voting rights in the subsidiary it owns in foreign land.

FDI is generally applicable for economically developing countries, it seems to be the major source of external financing for these countries, and it has also helped countries at the time of their economic crisis, a example of this is when east Asian countries had a financial turmoil in 1997 - 98 , they were able to survive just because of substantial amount of foreign investments was there which steadied them .

Over the years this rapid growth and changes in the way the businesses are run FDI has broadened the acquisitions and take over outside the home country, it also includes any strategic alliances, mergers or joint ventures .it provides companies with new markets that they can explore, get cheaper facilities and skills , thus generating more profits and revenues and the host country get the benefit of investments, capital, new technological and management skills, this in fact also spurs up the competition in the local markets. It also increases the job opportunities and also helps in increasing the salaries of the workers, which increases the general lifestyle of the people. FDI also acts as a catalyst and helps in brining the interest rates down in the developing countries, which makes it much easier to borrow money and helps small and medium sized businesses.

Types of Foreign Direct Investments

  • Outward Bound FDI -
  • This type FDI is supported by the government against all types of risks , this form of FDI gets tax incentives on various forms.

  • Inwards Bound FDI-
  • This type of FDI is supported by the parent company, it brings in all the capital needed from its home country , it gets all grants and subsidies

  • Vertical FDI -
  • It takes place when a multinational owns some shares in the foreign company and the output is used by the parent company

  • Horizontal FDI -

It takes place when a multinational company carries out the same business they do in the home country in its outside subsidiaries

Corporate Social Responsibility (CSR)

What or what not - CSR (UN org, Department of Economic & Social Affairs, Issue 1, February 2007, &

CSR can be explained as the overall contribution of business to sustaina­ble development. Defining corporate social respon­sibility in more detail than this remains a vexed issue.

Over the past decade, more and more organizations have got engaged in the concept of corporate social responsibility. It talks about how do organisations distribute their moral and ethical responsibilities in today's global environment. Business doesn't exist in isolation , there are stakeholders , customers , suppliers who all gets affected a what and how organizations do work , it reflects how the business impacts on the wider world , its not just doing the right thing but also behaving responsibly.

Corporate social responsibility, designed specifically by corporations, is rooted in the principles of voluntary compliance and self-regulation. Despite repeated calls for greater public sector involvement, corporations insist that governmental regulation of CSR would stifle progress, quash innovation, and siphon funds from social and environmental programs. Polarizing the options of self regulation and government regulation denies the discovery of other models that may better meet the collective goals of business, public agencies, and NGOs. Until such a compromise is reached, it appears that we are left with the flawed CSR patchwork of non-regulatory codes of conduct, voluntary standards, and social audits.

Last few years have witnessed rising significance on corporate social responsibility, mainly as concerns aboutclimate changeare becoming usual. There have been criticisms of CSR from free trade capitalists and anti globalization environmentalist. The capitalists usually feels that anything hurdling the way of profits is not good and the activist feels that corporations are using CSR to repair damaged images or else portray a good picture of the practices while not addressing fundamental issues.

Benefits of CSR
  • CSR conceals environmental and social issues, in spite of the English term corporate social responsibility.
  • CSR helps you in ensuring that you comply with regulatory requirements.
  • CSR should not be different from its business strategy.
  • Its reflects the level of interaction within internal and external stakeholders.
  • Its makes the organistaion more competitive.
Favouring FDI:

Basically, CSR being a new arrived & voluntary concept, though countries accepting it but at the same point of time they don't denying the fact that, Corporate social responsibility is viewed as a process and not as a destination. It emerged in response to public disappointment with the traditional strategy of business and continues to be driven by a combination of forces involving consumers, shareholders, and citizens. In last 5 years, efforts have been made to strengthen the CSR movement through earnest processes of standardizing, reporting, and auditing social and environmental performance. Yet, progress is limited by the reality that CSR remains absolutely voluntary, self-regulated movement. The challenges facing CSR in the global economy are reflected in its limited acceptance by the oil and gas sector. For the most part, energy companies are looking for opportunities to engage corporate social responsibility that remain within the parameters of the traditional business model.

There remains, overall, an uncertainty over corporate social responsibility and its related infrastructure. It is trite but true that CSR requires time and experience to prove whether it is more than a transitory management strategy. If the pressure from public continues to arise against companies who act with exemption and if governments are assigned a role in the controlling and administrating of corporate activity, CSR could become a escalated and maintainable movement. But, if the status quo continues, corporate social responsibility will likely be abolished as a management strategy that secures work for public relations consultants and social auditors but not much more.

Whereas FDI has always been taken into consideration being a steady flow for economy to the host countries. It generates revenues and creates infrastructure, employment with better pay scale and facilities which undoubtedly support the people of the world and provides with the opportunity. Since 1980 FDI has increased tremendously. Further to this, special tax incentives have been offered by many countries to attract capital from worldwide. Though, not uniformly but generally while microeconomic studies find negative impact of growth from foreign investments, number of macroeconomics studies find a optimistic correlations between FDI & growth.

FDI also contributes to development and growth via its impact on productivity. Foreign investment is bringing out advanced technology and ideas that enhance its direct effect on investment and growth.

With FDI, many perspectives are already in action and opening up nationally & internationally such as import & export of technology, good & services and much more. Likewise, the host country can transparently see the cash flow through Foreign Direct Investment.

Additionally, assessing FDI's impact on economic growth, economists have also evaluated its effects on employment, wages and working conditions. However, much of the empirical work that has been done in this area aims on wage inequality and the bond between FDI, wage and employment levels is less well understood.


Hence we see that in the current context of increasing globalization, there exist many arguments that it may not affect the poor.FDI is also considered an integral part of the economy. Hence to what extent FDI contributes to poverty reduction may be a relevant question to the country?

FDI influences on poverty reduction can be classified into direct and indirect impacts. The indirect impact contributes through the FDI contribution to economic growth; one of the major factors for poverty reduction. FDI also contributes to the tax income of the state budget and may thus facilitate the government led programs for the poor in the developing countries. Moreover FDI may induce host governments to invest in the infrastructure. If this investment is in the poor areas it may benefit the local poor. The direct impact on poverty is assumed to be its effects on unemployment.

CSR is more company focused and it's based on company's own strategies whereas FDI looks into a much broader picture and is a key ingredient for economic development and helping to combat poverty

According to my opinion I believe that FDI is the most effective strategy in combating the world developing poverty in comparison with corporate social responsibility


Online sources --

Books --
  1. FDI for Development: maximizing benefits & minimizing costs (OECD)
  2. International HRM; authors & editors: Anne-Wil K Harzing,Joris Van Ruysseveldt, 2004.
  3. International Human Resources Management : Authors Tony Edwards and Chris Rees , 2006
  4. Rich Country Interests and Third world development : Authors Robert Cassen , Richard jolly , john sewell and Robert wood
  5. Poverty and Aid :author JR Parkinson , 1983.
Journals (online) --
  1. Peter Utting, "CSR and equality."Third World Quarterly, Vol. 28, No. 4, 2007 (
  2. Foreign Direct Investment, Development and Gender Equity: A Review of Research and Policy, author: Elissa Braunstein, January 2006 (UNRISD)
  3. Corporate Social Responsibility: International Perspectives; Rensselaer working papers in Economics (Deptt. of Economics), Authors: Abagail McWilliams, Donald S. Siegel & Patrick M. Wright (March 2006)