Why are many governments in todays world liberalizing crossb

Why are many governments in today’s world liberalizing cross-border movements of goods, services, and resources?

Solution

\'Globalization’ has become the buzzword that has changed human lives around the world in a variety of ways.

Globalization refers to the free cross-border movement of goods, services, capital, information, and people. It is the process of creating networks of connections among actors at multicontinental distances, mediated through a variety of flows including people, information and ideas, capital, and goods.

Growing market access and movement of capital across countries have facilitated the rapid expansion of business operations globally. Since the comparative advantages of countries strongly influence the location strategies of multinational corporations, companies tend to expand their businesses overseas with the growing economic liberalization. As a result, multinational corporations constitute the main vectors of economic globalization.

Over time most governments have lowered restrictions on trade and foreign investment in response to the expressed desires of their citizens and producers. In addition, the General Agreement on Tariffs and Trade (GATT), the development of economic blocs such as the European Union, and other such facilitating mechanisms have provided increased access to many foreign markets.

Their citizens have expressed the desire for easier access to a greater variety of goods and services at lower prices.

They reason that their domestic producers will become more efficient as a result of foreign competition.

They hope to induce other countries to reduce their barriers to international movements.

The economic liberalization across the world has paved way for FDIs even in a large number of developing countries that had a restrictive regulatory framework. This has opened up business opportunities for transnational corporations to expand their operations by way of ownership on one hand and benefited developing countries from increased flow of capital and other forms of finance on the other. Direct investment is increasingly becoming crucial to companies’ international expansion strategies.

International Business has led to the globalization of manufacturing and fragmentation of the production process into its sub-component parts in multiple countries.

The cross-border movements and meetings of people are crucial for all trade-related transactions.

The governments need cross-border movement of persons ( Human Resources) for the following reasons :-

1. Gaining access to markets abroad

2. Accessing needed skills

3. Delivering services to and interacting with customers

4. Establishing new offices abroad, and

5. Managing and developing the company and its staff

So, they are liberalizing the cross-border movements of human resources.

Lower government barriers to the movement of goods, services and resources ( financial, human, informational, physical) enable companies to take better advantage of international opportunities.