Agricultural Household Model Essay -- Globalization, Open Economy

Nowadays, the world is being globalized.; Globalized or open economy is the one which has liberalized the trade and capital movement (Thorbecke et al 2003, p.154). Thorbecke et al also noted that openness through trade, foreign direct investment and financial market increase the flow of good and capital across the national borders (ibid. p.156). Consequently, most countries participate in international trade as their economies are opened to compete with others. The most affected by this competition are the emergent industries. Emergent or infant industry is a nuance of industries in their earliest stage of development/growth (Tribe 2000, p.31). Emergent industries can be divided into two groups; : absolute emergent is a new industry which does not exist elsewhere, usually is technology intensive and are predominant in developed countries (Castel-Branco 2002, p.46); and relative emergent industries are often new in the countries of origin, usually developing countries, but in other countries, such as industrialized world, they are already mature or develop (Castel-Branco 2002, p.48). The termsDefinitions of developing economy, under developed or less developed are used to describe countries that are economically backward and that need enhancement of living condition (Sen 1988 p.11). The essay will analyze the challenges of emergent firms in a context of globalized and underdeveloped world. Because of the narrow scope, the essay will only be discussing three challenges, namely, technology capability, industries reputation and availability capital for investment. Firstly, it will discuss the problems related to technology capability. Secondly, it will examine the role of reputation for emergent industries in national and internati... ...ty of the firms to provide stronger credibility and the capacity of the countries to create a good environment to develop these industries throughout better infrastructures. The solution of these problems is the intervention of the State by selecting some potential infant industries to protect. This intervention is necessary because the market per se can notcannot manage to deal with these issues. This must be done by taking into account first of all the domestic market so that it may well encourage openness to foreign trade (UNIDO 1997, p.27). Therefore, the Government must formulate policies in order to protect the new industries to guide them to the right direction for competing in international market otherwise the industries alone can not achieve this stage of mature. This means the infant industries in developing countries can die before achieve its mature.