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GLOBLIZATION OF REGULATION
Globalization of regulation is the process of interaction and
integration between
multi-culture people, companies and government of different
nation worldwideon the based of such principles, rules and laws
designed to govern conduct. One
most discussed regulation topic in the current world economic
forum annual
meeting 2010 Davos was banking regulation system in US which
brought down
the global economy. The globalization of US failure banking
deregulation which
spread globally and affected the securities tied with real state
and CDS market
world wide. A video coverage between president and Senator Jim
Bunning
showed the root of this global crisis is the failure of US
regulation system
(Bunning.2008). The effect of this expansion of deregulation
causes the loss of$25 trillion to the global economy and $637
billion worth loss to the foreign
investors. (CNBC.2008). the FDIC closed down 35 banks in 2007
and witnessed 77
bank failures by 2009. (Filger.2009). the serious downside of
the US regulation
system was clearly seen with lack of regulation in the CDS
market. Because
regulation of CDS market was prohibited under the commodities
feature
moderation act of 2001.(Leah.2009). And US banking system (Wall
Street
investment bank)is the root which is linked with global banking
system. The big
picture came is sunshine when in the year 2007 US GDP was valued
$13.3 trillion
dolor. (Josh.2008) and in third quarter for the same year the
top 25 banks had
written CDS (Insurance) of $14 trillion.(Morgenson.2008). so
logic is even if US
liquidate its entire GDP than still it would not be able to
cover up its debt.
Another recent effect shown with disappointing news of 4.2
million jobs lost in
the US in 2009.(Euronews, 2010). And since beginning of 2008
about 6.7 million
people lost their jobs in US. (BLS, 2010).
Opportunities/threats for international business
On the flip side of this global crisis I believe many under
developed countries such
as India, china, Brazil and Russia can be benefited. Because
these countries run
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regular banking rather than focusing more on investment banking
so
opportunities for international business can be as.
1. It is been witnessed that about 50,000 IIT graduated from
India are workingin foreign countries.(CNBC.2008) But because of
global recession these IITgraduates are loosing their jobs and
coming back to their countries which
means Indian business industries have an opportunity to hire a
good talent
pool at lower salary scale. So companysprofitability can grow
faster with
more effective workers.
2. On the other hand this global crisis is also helping in
getting a big part ofinvestment from Middle East countries.
According to news coverage the
Middle East countries have $2000 billion of money to invest in
foreigncompanies.(CNBC.2008) but as India, china, Brazil and other
countries who
came up with a good economic condition as compare to US and
other
effected countries. Have an opportunity to get a big part of
this investment
for their business industries.
3. As far as auto mobile industry is concerned India is said to
be a global hubfor small size cars. America and other Europe
countries had witness a 40%
sales fall in the big size cars because of serious global
economic crisis.
Which in result the well-known automobile companies now focusing
on
small size cars manufacturing for making profit. Because of
rising in petrol
prices the selling of small size cars is increased and Hyundai,
Toyota, Honda
and walls wagon like big name companies are announcing to
increase their
manufacturing established plant for small cars. And it is also
anticipated
that by 2011 the export of small cars from India will go up to
300%
.(CNBC.2008)
