Executive Pay: The Curious Case of Carlos Ghosn’s Arrest
February 12, 2025
In any business or organization, all functions are interlinked and connected to each other and are often overlapping. Some key aspects like supply chain management, logistics and inventory form the backbone of the business delivery function. Therefore these functions are extremely important to marketing managers as well as finance controllers. Inventory management is a very […]
In the context of growing market competition, organizations are focusing more on closer partnership across supply chain. Increasing efficiency in sales and distribution process facilitates an organization to maintain its competitive edge. Best practice processes, embedded in an ERP package, are an enabler in this direction. The important components of sales modules: Sales inquiry handling. […]
Washington DC has seen several proposals for strange regulations. The latest one of these suggestions is a pollution tax. Many people believe that levying a tax may be the solution to eradicating the problem of climate change gradually. The world in general and Washington DC, in particular, wants to get rid of high levels of […]
The world seems to have turned on its head. Countries like the United States and the United Kingdom were earlier frontrunners in the race for globalization. They were increasingly pressurizing developing countries to open their markets. They thought this would allow them to have increased sales for their products. They never thought the reverse could […]
Business Process Improvement projects are undertaken by Organizations from time to time to improve their internal performance and operational efficiencies. Success of BPI project depends largely upon two factors: First and foremost, the BPI project depends upon its sponsors who should ideally be drawn from the Management and the Business Unit Heads. Sponsorship and facilitation […]
The underlying premise behind globalization is that the transfer of wealth from the developed countries to the developing countries would eventually result in a scenario where those at the bottom of the ladder in the developing countries would benefit from the wealth flowing into their economies. The theory behind this is that if a Billion Dollars were invested in a country X, it would result in setting up of a manufacturing plant or a service sector company, which in turn would create jobs for the locals. Even after assuming that the jobs would increase the opportunities for the locals, there would be trickle down effects wherein the new rise in incomes of these members of the workforce would be spent on consumer durables, houses, visits to hotels and malls, as well as employing those who are not part of the formal economy like launderers, security guards, domestic helps etc.
This is the trickle down theory, which posits the view that wealth created at the top trickles down to the bottom of the ladder. This is the theory that has been used to justify neoliberal policies and globalization and is the driving force for all entrepreneurial activities in countries like India.
For instance, the founders of the iconic Indian IT company, Infosys, believe that when jobs are created for the middle class or the educated, the process would also benefit the entire ecosystem of support services for these employees since they have to spend money on their basic necessities and everyday needs. Moreover, the creation of wealth would not be restricted to capital gains alone (which is anyway a good sign for a healthy economy) but would also benefit those who produce goods and services for consumption.
The effects of this trickle down theory can be seen in cities like Bangalore, Gurgaon, and Pune where the presence of multinationals and Indian service sector companies has led to a flourishing economy for the locals. However, this theory is now being questioned as the trickle down effects are now being held as negligible with those at the top earning more and more and those at the bottom earning less and less. Hence, there is now a tendency to question the basic tenet of globalization and neoliberalism and it remains to be seen as to which theory would ultimately stand to gain.
The point here is that the widening income inequality has led to protests from those at the bottom since they do not see any marked improvement in their lives even when they support the army of educated and skilled employees of the manufacturing and service sector companies.
However, the battle is not lost as the benefits to the local economy outside of those who actually work are huge and it is understood that trickle down economics might not have been very wrong. Instead, what is needed is a greater flow of wealth to the bottom and this can be done by equitable growth and democratic policies that strive for betterment of all. In conclusion, true growth manifests when all sections of the society benefit and not only those at the top.
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