Research Paper on "Global Business Planning for Spain"

Research Paper 10 pages (3203 words) Sources: 10

[EXCERPT] . . . .

Global Business Planning for Spain

The development of increasingly sophisticated communication technology has created an interesting global platform for business and trade. Unfortunately, such trade does not occur on equal grounds, with some countries and entities languishing in third-world poverty, while others are increasingly prosperous. This has created "seemingly contradictory economic conditions around the world," according to Kelly (2006, p. 131). The author also notes that, while prosperity and opportunity will rise for millions over the next decade, others will be the victims of friction and economic decline.

With the current worldwide dynamic of business and global communication, the question is if the phenomena of friction and decline are in fact unavoidable. Surely, with communication technology and business prowess being at their current levels, there must be a way to manage the global economy in such a way that prosperity is possible for all.

To investigate the issues surrounding prosperity and decline, several examples of both will be considered, while also providing a model for the management of global prosperity. As such, it is suggested that entities such as the EU and NAFTA be utilized, expanded, and/or supplemented with similar institutions to target problem areas and streamline prosperity. Furthermore, the energy provider Scottish Southern Energy will be used for possible suggestions to manage prosperity across the globe.

II. ECONOMIC PROSPERITY and OPPORTUNITY

a) Spain

The recent economic recession across the globe has placed new perspective upon the concept of prosperity. As will be seen, some countries have survived the recession better than others. In Europe, two countries who have not collected too many financial scars from these difficult times are Spain and France. When these two countries are examined, factors can be identified that contribute to economic prosperity within a global perspective.

Spain's economy is the 9th largest in the world, although it does not boast membership in the Group-of-Eight (G8) industrial nations. Nevertheless, its economy appears to be thriving, with inflation rates amounting to 3.5-4% per year for the last few years. The country's economy depends upon its tourism, metal and metal manufacture, textiles, clothing and apparel, food and drink, chemicals, ship-building, machine tools, automobiles, and electronics. The country also has a thriving export market, including machinery, chemicals and electronic devices. Spain imports fuels, industrial equipment, and foodstuffs. The growth forecast for 2010 is 2.7%. Most importantly in terms of prosperity, Spain's banking system is given credit for being the most robust and well-equipped to handle the worldwide recession (Bank of Spain, 2008).

The banking system then appears to be the most important contributing factor to Spain's current prosperity. Because of its healthy banking system, Spain was able to remain fairly stable during the recession.

Further contributing to its financial wellness is Spain's diversity of industries. This diversity has provided the country with a sound basis for perpetuating its economy. If one industry for example shows decline, the others can absorb this and maintain the average health of the economy.

A further contributing factor is Spain's relationship with the foreign market. It is both an importer and exporter of goods and services, which provides a steady basis for supplementary income for both Spain and its import and export partners. The success of the country's banking system, concomitantly with its domestic and foreign business connections, has resulted in more or less stable conditions in the country.

b) France

The French economy is interesting, because it finds itself in the midst a transition. The current transition is to move the French economy from generally government owned to an economy that relies on market mechanisms (CIA 2010). For its prosperity, France relies upon its agricultural heritage, as well as industries such as machinery, chemicals, automobiles, electronics, textiles, and tourism. The country also enjoys the 19th overall rank in conducting business in the Organization for Economic Cooperation and Development (OECD) region (Doing Business -- World Bank Rankings 2010).

Like Spain, France and its economy survived well during the economic crisis, and even more so than other European Union (EU) countries. The main reasons given for this include resilient consumer and government spending, as well as less susceptibility to the global demand downturn. Although the French GDP dropped by 2.1% in 2009, the country's presence in power, pubic transport and defense remained strong, as did its tourism sector (CIA 2010).

Although not reporting the same strong banking system as Spain, France nonetheless shows a strong economy in terms of its various industries, and particularly tourism. The last-mentioned industry -- tourism -- appears to a common factor in the prosperity of both countries. Together with the industries of both countries, this factor contributed to their survival during the recession, as well as to their current prosperity. This prosperity can then be translated to the rest of the world by means of the countries' respective relationships with the foreign markets surrounding them.

c) Agents of Global Prosperity Management

In addition to specific countries, there are also agencies and paradigms that can facilitate the management of global prosperity. Two of these include the European Union (EU) and the North American Free Trade Agreement (NAFTA).

The EU consists of 27 member nations, whose membership is both economic and political in nature. Originally known as the European Economic Commission, it consisted of 5 members, including Belgium, France, Germany, Italy, Luxembourg, and the Netherlands. In order to be included as a member state, applicant countries were to accede to the treaties and submit their sovereignty to the collective representation of the EU. Furthermore, the Copenhagen criteria requires member countries to demonstrate a stable democracy, respect for human rights and the rule of law, and also a functioning and competitive market economy.

The EU is a well-organized entity, ruled by the European Council, and served by one representative from each member nation. The European Commission initiates legislation and oversees the Union's daily operations. The EU is therefore a complex system of economic and political leadership, aimed at promoting the principles of democracy and fair trade among its member states.

In terms of foreign relations, these only became formal during 1987, by means of the Single European Act. According to this Act, the EU applied itself to create a single economic market across its member countries. One manifestation of this aim is the Euro, the single currency used by 16 of the 27 member countries. As such, the primary objective of the European Union is a common market (Mirea, 2009). In general, this has been favorable not only in terms of investments among the different member notations, but also for self-employed individuals, who are allowed to move freely among the member nations and thus increase their prosperity.

In this way, the European Union provides an economic platform for the prosperity of its member states and the individuals living in these states. It is a system where goods and services can be freely offered for profit and prosperity. In times of economic hardship, such as the recent recession, member states can also rely upon each other and the business conducted within the Union to form a buffer against economic hardship. The EU is however focused only upon the prosperity of its specific concerns, which are the European countries that are its members. It is not as concerned with alleviating poverty or promoting the economy of non-member states. It does however provide a good model of the successful management as well as the creation and perpetuation of multi-state wealth.

The North American Free Trade Agreement (NAFTA) focuses upon the United States, Mexico, and Canada. In terms of its purchasing power GDP, NAFTA is the largest trade bloc in the world. Its design was aimed at eliminating any barriers that hindered trade and investment between the three member nations. In other words, NAFTA operates on much the same principle as the EU, but only on a smaller scale.

However, NAFTA is representative of the above-mentioned friction and possible concomitant economic decline that threatens in cases of such friction.

III. ECONOMIC FRICTION and DECLINE

NAFTA has for example failed to adequately address the controversy surrounding agricultural trade, or indeed the issue of poverty in Mexico. Furthermore, friction has occurred as a result of the discrepancy between agricultural trade involving Canada and the United States, and that involving Mexico and the United States. Part of the reasons for the dispute is Mexico's lack of investment in sufficient infrastructure for exports to the United States. Mexico's lack of efficient highways and railroads is for example a barrier to competition. Despite this, the country's agricultural exports increased substantially between 1994 and 2001 (Lederman, 2005).

A further problem is that, despite the increase of agricultural exports, Mexico's poverty levels were not only perpetuated, but even exacerbated during this time. As a possible remedy, one suggestion has been lower commodity prices. A further factor that plays a role is the emigration. NAFTA also does not appear to be as well organized as the EU, in that periods of phasing in and phasing out tend to be very long and extended. Also,… READ MORE

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