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Introduction
A developing country is a nation whose economy is in the process of development. This means that these countries are working to improve the living standards of their citizens and expand their economic base. In general, developing countries are characterized by low levels of income (Saner et al., 2019). They similarly tend to have less developed infrastructure and weaker institutions than developed countries. Lack of access to international markets due to trade barriers erected by developed countries and poor infrastructure in developing countries prevents them from joining global trade. Japanese firms are as well fighting to venture into the international market competitively, forcing them to find ways of minimizing their production costs. Japanese large firms are shifting production overseas to reduce labor costs and similarly venture into global markets. The two globalization problems faced by developing countries firms include lack of access and restrictions to global markets, while developed economies like Japan experience shifting production sites to overseas locations.
Causes of the Globalization Problem
There are several causes of the two globalization problems in developing countries. Developed countries impose trade barriers to prevent developing countries from accessing global markets (Berg et al., 2017). This is done to protect the interests of developed countries. Developed nations perceive that if the developing countries were given access to these markets, it would be at the expense of their businesses. Developed countries likewise argue that establishing these barriers allows them to enforce stricter regulations on products exported from developing countries (Berg et al., 2017). These restrictions are made to ensure that only high-quality products make it onto the global market and that product safety standards are upheld.
Similarly, the poor infrastructure in developing countries impedes their firms from participating in the global markets. There are many ways in which poor infrastructure can prevent firms in developing countries from accessing global markets (Panda, 2018). First, poor infrastructure can make it difficult for firms to physically get their products to market. This can be a particular problem if firms are located in remote areas or do not have access to good transportation networks. Second, poor infrastructure leads to higher production costs, making it difficult for firms to compete on price with foreign competitors, and similarly makes it hard for firms to find customers or partners (Gani, 2017). Concerning Japan, Japanese firms have been shifting production sites to overseas locations. One reason is that Japans labor cost has increased significantly in recent years, making it challenging for companies to remain competitive (Baldwin & Okubo, 2019). Finally, many companies are similarly seeking to reduce their exposure to risk by spreading their production bases around the world.
Multiple Solutions Comparison and Contrast
There are a few ways that developed nations can prevent themselves from imposing trade barriers on developing countries. Firstly, they can maintain transparency in their trade policies and avoid creating any discriminatory practices. Secondly, they can provide technical and financial assistance to help developing countries firms access the global market (Degain et al., 2017). By taking these measures, developed countries can ensure that their trade policies do not have negative impacts on the economies of developing countries. Of the two solutions, the second one is the best since it will benefit the developed countries in receiving raw materials at an affordable price, thus expanding production volume in developed countries.
Developing countries can solve poor infrastructures to ensure their firms can access global markets in two ways: first, by investing in their infrastructure, and second, by partnering with developed countries. Investing in infrastructure is key to developing a strong foundation for businesses to grow (Leigland, 2018). This can be done through public-private partnerships, where the government partners with the private sector to fund and build the necessary infrastructure. Additionally, developing countries can learn from the best practices of developed countries and adopt policies that will aid them in improving their infrastructure (Leigland, 2018). By partnering with a developed country, a developing country can gain access to that countrys technology and expertise to apply the same to its infrastructure.
There are two possible ways for Japan to solve the problem of its large firms shifting production sites overseas. The first way is by enhancing the competitive advantage of Japanese industries. The second way is by providing incentives for companies to keep their production within Japan (Head & Spencer, 2017). Enhancing the competitive advantage of Japanese industries would require measures such as improving innovation, upgrading technology, and strengthening management abilities. This would be a long-term solution that requires a great deal of effort and time. Some possible measures include tax breaks, subsidies, and low-interest loans (Head & Spencer, 2017). Providing incentives for companies to keep their production within Japan would be easier to implement but may not be as effective in solving the problem in the long run.
Best Solutions for Globalization Challenges
Among the three problems faced by developing nations and Japan, each of them has its best solution. Concerning the restriction of the developing country from participating in global markets, the best solution is for the developed nations to provide technical and financial support to developing nations. Most importantly, doing so helps to promote economic stability and growth globally (Degain et al., 2017). When developing countries have access to the capital needed to build their infrastructure and develop their businesses, they are better able to participate in the global economy. This, in turn, benefits developed economies by creating new markets for goods and services and increasing overall trade.
In solving the infrastructural challenge, the best solution is for developing countries to grow their economies by partnering with developed countries. This is because developed countries can offer much-needed infrastructure ideas that can aid developing nations in growing their economies (Leigland, 2018). In addition, developed countries can provide technical assistance and training in various sectors such as construction engineering to assist developing nations in having better roads and other transport components for the global marketplace.
There are many reasons why providing incentives for large Japanese firms is the best solution to prevent them from shifting production sites overseas. First, by providing tax breaks and other financial incentives, the government can make it more affordable for these companies to stay in Japan (Head & Spencer, 2017). Second, by maintaining a strong domestic presence, these companies can continue to contribute to the Japanese economy and create jobs for residents. Finally, by keeping these companies in Japan, the government can maintain better control over their activities and protect important national interests to enable Japan to export its products to the global market.
Conclusion
In conclusion, the participation of nations in global trade has several benefits, even though various problems impede countries from accessing global markets. Restrictions by developed countries and poor infrastructures are some of the key challenges facing developing nations in joining the global markets. The best solution to these problems is for the developed countries to technically and financially assist the developing nations in joining global trade or markets and removing trade restrictions. Partnering with developed countries is similarly a better way for these countries to improve their infrastructure to participate in global trade. Conversely, Japan needs to provide incentives to its large firms to motivate them to produce within the country and boost the Japanese economy.
References
Baldwin, R., & Okubo, T. (2019). GVC journeys: Industrialization and deindustrialisation in the age of the second unbundling. Journal of the Japanese and International Economies, 52, 53-67. Web.
Berg, C. N., Deichmann, U., Liu, Y., & Selod, H. (2017). Transport policies and development. The Journal of Development Studies, 53(4), 465-480. Web.
Degain, C., Meng, B., & Wang, Z. (2017). Recent trends in global trade and global value chains. Global Value Chain Development Report (2017). Web.
Gani, A. (2017). The logistics performance effect in international trade. The Asian Journal of Shipping and Logistics, 33(4), 279-288. Web.
Head, K., & Spencer, B. J. (2017). Oligopoly in international trade: Rise, fall and resurgence. Canadian Journal of Economics/Revue Canadienne Déconomique, 50(5), 1414-1444. Web.
Leigland, J. (2018). Public-private partnerships in developing countries: The emerging evidence-based critique. The World Bank Research Observer, 33(1), 103-134. Web.
Panda, S. (2018). Constraints faced by women entrepreneurs in developing countries: Review and ranking. Gender in Management: An International Journal. Web.
Saner, R., Yiu, L., & Filadoro, M. (2019). Tourism development in least developed countries: Challenges and opportunities. Sustainable Tourism: Breakthroughs in Research and Practice, 94-120. Web.
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