Payment Mechanisms in International Trade
Setting up International Trade Mechanisms involves inter disciplinary processes including Finance, Logistics, Taxation and Supply Chain disciplines. Every Business Manager would need to know the nuances of the trade even though he may or may not be involved in the micro management of the processes. Any Import or Export entails commercial transaction and payment. When […]
Digital Cash: Advantages and Disadvantages
There is a proliferation of electronic payment systems in the 21st century. Debit and credit cards have become the norm, and cash has become obsolete. However, many people still prefer to use cash because of some benefits that it offers. Up until now, people have been facing a choice between using the electronic medium and […]
Inventory Control – Inventory Audits and Cycle Counts
Any inventory of Raw materials, finished goods as well as Intermediate in process inventory has an economic value and is considered an asset in the books of the company. Accordingly any asset needs to be managed to ensure it is maintained properly and is stored in secure environment to avoid pilferage, loss or thefts etc. […]
BPI Exercise – Process Walk Through on the Floor
Business Process Improvement Projects have become a way of life with every Business Organization where they initiate these projects to elevate their internal operational efficiencies to achieve higher benchmark and to help them build an edge over competition. BPI projects help not only increase the efficiency of the operations, but benefit by reducing the cost […]
A Comparison of Healthcare Systems around the World
The Importance of Healthcare and Examples from around the World Health and Education are social sectors that need governmental support and funding. This is especially the case in developing countries where a vast majority of the people do not have the means to afford expensive and prohibitive medical care. This is the reason why many […]
The previous articles in this module discussed how international businesses expand into overseas markets both for selling their products as well as to extract the resources in mineral rich countries.
We discussed how the international expansion of these businesses has to equitable and follow the rules of justice. What happens when these businesses ride roughshod over local populations and insist on carting away the resources to their native lands? The result is that the local populations would be outraged against the exploitative practices of these multinationals. This has been the case with Shell in Nigeria, Vedanta in India, BHP in Africa, and other businesses in Latin America.
The reason for this resistance is that the communities and the people surrounding the locations where these businesses have plants feel that they are being cheated of their resources and are not being adequately compensated.
Indeed, if anything can be said about global capital, the local resistance is the phenomenon that has emerged consistently across the world in the recent past. The latest of the resistances is about the POSCO steel plant in Odisha, India where the native people are protesting against land acquisition, which they allege has been done forcibly.
While not advocating that the local communities are not within their rights to protest, the point needs to be made that the international businesses can help them with in a more equitable manner by sharing some part of their profits.
Without getting into the debate as to whether resources must belong to the native country and not to a foreign country, the fact that all countries gain because of the Ricardian theory of competitive advantage wherein a country with resources can export them and import something that is not available in it.
The bone of contention here is that the price at which the resources are being exploited is not just and fair and hence, there are calls for proportional pricing and compensatory royalties.
The multinationals respond to this criticism saying that the native countries do not have the expertise in extracting and developing the resources and hence, these companies are actually helping them. Therefore, it follows from this that the best way to deal with the global capital meeting local resistance is through dialogue and the evolution of an international mechanism to deal with such cases.
The protests against global businesses are growing by the day and hence, there is an urgent need to tackle this issue before the very stakeholders in these businesses start to lose out. There is an active role for governments in this case as they are the ones who set the rules for engagement.
Therefore, along the lines of what the Supreme Court in India has done which is to throw open the question about pricing of resources (all kinds including spectrum) and how they must be managed. This is the way ahead for other countries to follow and it remains to be seen how India deals with this issue so that other countries can replicate its experience.
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Cross Border Mergers and Acquisitions and Some Recent Trends in this Field
February 12, 2025
