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About this book

The rise of globalization and heightened debate over trade, protection, competition, and the environment have created unprecedented challenges for businesses and governments worldwide. These are systematically assessed in this important new text.

Table of Contents

Chapter 1. Business, Government and Globalization

Abstract
It may be an obvious truism that business and government are the most important institutions within market economies. Business involves itself in an economic market; governments carry out their activities in response to the demands of a political market. Business and government are not separate; their spheres of activity necessarily overlap, and the relationship between these great forces is crucial to the societies in which they interact.
Owen E. Hughes, Deirdre O’Neill

Chapter 2. The Role of Business

Abstract
Business is obviously an important economic, political and societal actor. Businesses large and small employ many of the workforce and their views and attitudes about the economy and society are both influential and sought after by government. Business is accountable to its owners and shareholders, but increasingly societies and governments are demanding a wider accountability, even if quite how this is to work in practice is far from settled. Business rarely speaks with one voice as business interests are disparate and diffuse. Small business often has completely different views to big business on particular issues. Even for a single issue such as the policy response over tariffs for a single commodity, for example, steel or sugar, there is likely to be a wide range of business views. Some favour trade liberalization — importers and downstream users in these cases — while other business interests — domestic producers — might seek government protection.
Owen E. Hughes, Deirdre O’Neill

Chapter 3. The Role of Government

Abstract
The power position of government may be clearer than that of business in that governments have the legitimate use of force at their disposal; in the final analysis, the power of government may be that of the police and the army, even if these are rarely used. Government, backed by these forces, can make laws to compel anyone in the society to do what it wants, including business. Despite these undeniable powers, governments are often ineffective as they often do not know what they want, change their minds frequently and, in areas that intersect with those of business, often seem to find it hard to understand what this other party wants. Governments have their own interests as well as being the arbiter between the views of business groups, or between business groups and consumers, producers or those in the society interested in third-party effects on, for example, the environment. Governments may also run businesses themselves — public enterprises — although this sector has been greatly reduced in many countries.
Owen E. Hughes, Deirdre O’Neill

Chapter 4. Regulation

Abstract
Regulation is at the core of the relationship between business and government and is perhaps the main reason why a perpetual state of tension exists between the two. Government regulation of business activity is constantly debated in terms of purpose, scope and means. In this debate, two issues are generally prominent: first, the extent to which government should use the coercive powers of the state to regulate economic activity; and second, whether it is legitimate for regulation to have social as opposed to economic objectives. Neither of these issues is ever completely resolved.
Owen E. Hughes, Deirdre O’Neill

Chapter 5. Competition Policy

Abstract
Competition policy is an important, if contested, area of government-business interaction. At its broadest, it is the use of government laws or regulations to force or encourage competition to occur in the private marketplace. Competition policy can be defined as ‘those policies and actions of the state intended to prevent certain restraints of trade by private firms’ (Doern, 1995, p. xi). Without competition policy, its advocates argue, firms would collude; behave in a predatory manner or merge with competitors, all with the aim of reducing competition and keeping prices and profits high. Competition policy operates at the very border between government and business, with government action being intimately concerned with the operations of the market. Its role can become controversial, with businesses not always particularly happy with the way competition authorities go about their work. Not surprisingly, businesses and business groups often object to the results of particular cases and to restrictions on their freedom of action.
Owen E. Hughes, Deirdre O’Neill

Chapter 6. Competitiveness

Abstract
Each year two significant reports on international competitiveness are published. One is the World Competitiveness Yearbook released by the International Institute for Management Development (IMD), a business school based in Lausanne, Switzerland. The other is the Global Competitiveness Report, published by the World Economic Forum (WEF), a Geneva-based foundation best known for its annual meetings of the rich and powerful. Prominently featured in both reports is a competitiveness index or ‘scorecard’, ranking selected countries on the basis of criteria broadly linked to economic performance. According to one observer, the concern with competitiveness, as exemplified by the production of these and other ‘scorecards’, has ‘spawned a large industry aimed at policy makers, analysts and enterprises … feeding an insatiable appetite for benchmarking competitive performance and providing guidelines for strategy’ (Lall, 2001, p. 1501).
Owen E. Hughes, Deirdre O’Neill

Chapter 7. Trade Policy

Abstract
Trade between individuals existed even before there were organized states; before there was any meaning attached to the concept of a border between states. Once societies became in any way organized, trade occurred in ways quite recognizable as trade in more recent times. Early empires — Sumerian, Egyptian, Greek and Roman — were trading empires, precursors of the European maritime empires that date from the late fifteenth century. As Strange argues, ‘trade and war are the two oldest forms of international relations’ (1988, p. 161). And, in the present day, international trade is central to the interaction of businesses with each other and with their national governments. Trade has increased faster than the world economy, almost quadrupling between 1970 and 1997 while over this same period global production only doubled (Audretsch and Bonser, 2002, p. 5). However, the increases in trade and the integration of the international trading system have not been without controversy.
Owen E. Hughes, Deirdre O’Neill

Chapter 8. Protectionism

Abstract
At their broadest, protection and protectionism are antithetical to free trade. Protectionism involves assisting domestic industries either by imposing barriers to foreign competitors, or by subsidising or compensating domestic industries in some other way to assist them against international competition. Advocates of free trade are explicitly opposed to protectionism; advocates of protection for domestic industry do not like free trade. However, there is more to protectionism than it being merely the obverse of free trade.
Owen E. Hughes, Deirdre O’Neill

Chapter 9. The Environment

Abstract
Any economic activity must consume resources of some kind. The consequences of this consumption — small or large — can have a considerable impact upon the natural environment, resulting in pollution, despoliation and the irretrievable loss of animal and plant species. Only a few decades ago, concern for the environment in terms of government response focused mainly upon loss of biodiversity. But this is no longer the case and now the debate about what governments should address incorporates a much broader range of issues that includes climate change, sustainable development, ozone depletion and desertification. As such, the environment is now one of the most pressing and complex issues between business and government.
Owen E. Hughes, Deirdre O’Neill

Chapter 10. Globalization and Internationalization

Abstract
There is a widespread perception that we live in a period of rapid but uncertain social change through something called ‘globalization’. This can be argued to be, on the whole, a positive movement, drawing together disparate parts of the world in a way not seen before. There is greater awareness of the circumstances of other countries and their citizens; greater availability of international goods and services; and arguably a reduction in international conflict, at least between the more developed nations. On the other hand, there are negative aspects too in the eyes of some. Globalization can engender feelings of powerlessness, greater concerns about competition, and fears that global culture may subsume local or national culture. Unsurprisingly, many in societies, both developed and developing, are opposed to globalization. The only consensus about globalization is ‘that it is contested’ (Scholte, 2005, p. 46).
Owen E. Hughes, Deirdre O’Neill
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