Course : business government and globalization .

Topic: globalization and competition policy.

Mogadishu university

• ACTIVATING YOUR COMMITMENTS

• CONNECTING ACROSS DIFFERENCE boundaries

• FOREING NEW RELATIONSHIPS

• SPREAD AND CONNECTEDNESS OF PRODUCTION, COMMUNICATION, AND TECHNOLOGIES ACROSS THE WORLD

WHAT IS GLOBALIZTION?

5 ASPECTS OF GLOBALIZATION

1. ECONOMIC2. TECHNOLOGICAL3. CULTURAL4. POLITICAL5. MILITARY

THESE ASPECTS ARE ALL INTERCONNECTED!*********************

EARLY CAPITALIST IDEAS:1. “Free Market Economy” (Adam Smith,

Wealth of Nations, 1776)Market is “free” from State control

2. Division of labor

3. Competition

1. ECONOMIC GLOBALIZATION

Little Industry and Technology Can economic globalization can help reduce poverty? “Brain Drain” Debt (IMF loans) AF countries can’t even pay back

interest 300 million people live on less than $1/day 48% people in sub-Saharan AF in extreme poverty

(less than 750 calories/day) 2001 Index for Foreign Investment in Africa was “0” Gap between rich and poor increasing

Economic Globalization in AFRICA

2. TECHNOLOGICALGLOBALIZATION

• “World Wide Web” has exploded in last 10 years

• Computers can move money around world = “finance capital”

Silicon Valley is 9th largest economy in world!Africa

Number of telephones is decreasing More computers in Manhattan than all of

Africa! Post-colonial infrastructures don’t support

technology

Cultural Imperialism = Dominance of one culture over others

Hollywood movies, Disneyland, Starbucks Dominance of the English language and invasion of

other languages Do people all over the world have the same taste?

Africa “Culture Industry” = opportunities for Africans to sell

their culture in the “global market” that values traditional culture

3. CULTURAL GLOBALIZATION

The United Nations: Global assoc. of govts. facilitating cooperation in international law, security, economic

development, and social equity• Whose interests does the UN represent? The US and the UK were the only nations in support

of going to war in Iraq Can a global politics with social values exist? Alternative political gatherings: Annual World

Social Forums since 2001, The Piece Process @ Gav!

4. POLITICAL GLOBALIZATION

Smart Bombs Sidewinder Missiles

MILITARYGLOBALIZATION

Global alliances become clear during war time Ex: Today’s US alliance with Britain in wars against

Afghanistan and Iraq What will happen with North Korea and nuclear

weapons?Africa

“Trade in Arms” = US sold $227 million in arms to AF in 1990s

US train and provide weapons for African armies on both sides of their civil wars (ex. Mobutu civil war in Zaire)

US is the #1 exporter of weapons globally US is the last on the list of exporters of non-military

aid to the developing world

MILITARY GLOBALIZATION

What is competition?

Competition

Literary meaning: a contestable situation where people fight for superiority.

In market economy, competition is a process whereby firms fight against each other for securing consumers for their products

Fair and Unfair CompetitionFair Competition Unfair Competition

Producing quality goods Becoming cost-efficient Optimizing the use of resources Adopting the best available technology Investing in research and development, etc.

Fixing prices with the rivals Setting a price which is lower than cost in order to throw out competitors from the market Advertising that belittles others’ product, etc.

Types of competition

Competition to win customers not by lowering price but by advertising, offering after-sales-service, using sales-promotion tools, etc.

Competition among suppliers to win customers by offering lower price. May not be an appropriate strategy for those loyal to a particular brand.

Price Competition Non-price Competition

Forms of Market Competition

Models ofCompetition

Number ofbuyers

Number ofsellers

Nature ofproducts

Barriers toentry andexit

Perfectcompetition Very large Very large Identical

products None

Monopoly Very large One Singleproduct Very large

Monopolisticcompetition Very large Large Minimum

differences None

Oligopoly Very large Very few Largedifferences Large

Competition policy => government measures directly affecting both Firm Behavior and Industrial structure.

A competition policy should include both:

i) Economic policies adopted by Government, that enhance competition in local and national markets, and

ii) Competition law designed to stop anti-competitive business practices.

Competition Policy /Law

Components of competition policy

Competition Policy

Competition Law Government Policies

Private Actions

Deregulation and

Privatization

Trade Policy

Industrial Policy

Regulations Governing Capital and FDI

ConsumerPolicy

Other Policies

The three stages of provisions that a competition law constitutes are:

The behavior and structure of firms in the market

Institutional and enforcement design with a competition authority, and

Competition advocacy.

A fair deal in the market place with:

The best possible choice of quality

The lowest possible prices, and

Adequate supplies of commodities.

Need for a Competition Policy

Benefits to Consumers

A safeguard against practices that could drive companies out of business.

Lower entry barriers to promote entrepreneurship and growth of business idea

Efficient allocation and utilization of resources ensures more output and employment.

Control of international unfair competition and restrictive business practices, such as international cartels

Benefits to Efficient Producers

Therefore, we need competition policy to monitor, prevent

and control anti-competitive practices.

Concentration of Market Power

Globalization and Competition

threat toOutcome of

Globalization and the need for Competition Policy

Thank you.