20 Sep Economic integration has increased greatly in the last 30 years

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Economic integration has increased greatly in the last 30 years with the three main channels supporting this: foreign direct investment, economic globalisation, trade and international transfer of technology and knowledge (Kleinert, 2001). Multinational Enterprises are central to this development and since the early 2000s consisted of 80% of all royalties and license fees internationally (Guterres, 2020).

The primary influences on globalisation have been the swift introduction of new technology, reduction in organisation costs and cross-border communication and the liberalisation of international markets (Narula, 1998).

Narula notes the difference between MNEs and Governments is that MNEs are focussed on maximising the welfare of its owners while Governments wish to do the same for its people under its jurisdiction (Narula, 1998). The impact of globalisation differs greatly on the country and as such the pros and cons can differ greatly.

Erixon notes that globalisation has increased output in western countries where businesses have been able to specialise and increase research and development, enable competition with establish market leaders and the trade sector has seen an increase in employment from both exports and imports. In addition, it has raised household income, reduced high inflation, lowered the cost of consumption and brought down the costs of previously expensive products such as mobile phones. Globalisation has provided countries with the opportunity to develop their economies and give their people new jobs through new technology enabling increased productivity, reduced gender inequality and improved working conditions (Erixon, 2018).

In contrast, globalisation has the number of negative impacts on MNES and host countries such as the poorest countries around the world is still limited by political and social tensions which prevent access to benefits, the impact of external economic shock is far greater in an interdependent market while a race to the bottom mentality exists where businesses aim to find nations which are desperate that are willing to offer low taxes, limited welfare and no health and safety, trade imbalance can exist where developing countries are heavily impacted by the needs and wants of developed nations. Lastly, global brands are able to dominate internationally and stifle existing competition or takeover markets through superior technology, organisational knowledge and financial backing (Krylovskiy, 2020).