Wednesday, November 29, 2006

Global Economy

In the International Business class today, we discussed about national regulations in Global Economy. We learnt about how countries are following one of the two approaches - Race to the top or Race to the bottom to gain a competitive advantage. Read this article here.

I really like this subject. Some of the concepts are tough to understand but then I feel that this is one of the most relevant subjects for global managers. We will step into a world tomorrow where we will be utilizing the best of both worlds. It is very important for us to understand and be sensitive to certain issues.

Prof David Detomasi showed us a video on how Bangladesh is dismantling ships and generating steel out of it. There is child labor involved, unsafe practices followed and environmental degradation during this process. However, Bangladesh us doing this for its survival. Countries are entering a spiraling "race to the bottom" and this is leading to lower standards, reduced wages and cheaper resources. This will increase disparity and inequality for most people. Do check out this video.

Prof Detomasi is very knowledgeable and is one of the most approachable professors. He generates a lot of class participation in the class. For one of his classes last week, we had a guest attending his class- Nah, it was not a prospective student but was his father. It was nice to see to see a father watch his son teach a class of MBA students.

In government regulation, a race to the bottom is a theoretical phenomenon which occurs when competition between nations or states (over investment capital, for example) leads to the progressive dismantling of regulatory standards. This theory states that this reduction of regulation, welfare, taxes, and trade barriers will increase poverty, and drive the poor to the few remaining areas that retain protections.Race to the top is a process by which competition leads to the progressive improvement of goods and services provided to consumers. One example of the "race to the top" is the success of the computer industry in creating ever-faster and more powerful computers.


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