The laconic view of this case study is to explore and explain the growth of the Reliance Industries and how a Indian Conglomerate entered United States and what are its future prospective and what are other options available at global table.
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Reliance Industries in USA (Case Study)
1. Course Code: MGN 587 Course Title: International Business Environment
Course Instructor: Dr. Sheetal
Academic Task No.: CA-3 AcademicTaskTitle: Situation Based Case Study
Date of Allotment: 15th
Aug 19 Date of submission: 15th
Sep 19
Student’s Roll no: A09 Student’s Reg. no: 11907460
Learning Outcomes: Learnt about the RIL joint venture in USA with Eagle Ford Shale and
PESTLE analysis of US and how PESTEL factor affect the operational and decision making
capability of an organization
Declaration: I declare that this Assignment is my individual work. I have not copied it from
any other student’s work or from any other source except where due acknowledgement is made
explicitly in the text, nor has any part been written for me by any other person.
Student’s Signature: Ramanjeet
Evaluator’s comments (For Instructor’s use only)
General Observations Suggestions for Improvement Best part of assignment
Evaluator’s Signature and Date:
2. CASE STUDY:
RELINACE
INDUSTRIES
IN USA
The entry
of RIL
into US
market via
Reliance
Petroleum
and Eagle
Ford Shale
Joint
Venture
and
PESTLE
analysis of
US to
determine
why RIL
choose US
as second
home for
operations
and
productio
ns of its
one of the
most
profitable
business
unit.
3. The Journey Of Reliance Industry Towards An Global Icon
The Reliance industries is the brainchild of Dhirubhai Ambani which he brought to life after
returning to India from Aden, Yemen after serving an stint with the A.Besse & Co. and worked
as an supply executive for oil and petrochemical products, Aden at that point of time was the
busiest sea port in world that connect east to west. The first business unit of Reliance was setup
in Masjid Bunder, Mumbai and traded yarns.
By the year 1977 Reliance grew and became Reliance Textiles Industry and issued its first ever
IPO in in Indian market and brought the cult culture of trading in India, the IPO was overbooked
seven times than original and provided view towards Reliance becoming the biggest company
in India.
In 2000 Reliance popped up on the world market by the introduction of petrochemical business
and setting up the Jamnagar factory that became one the Asia’s largest man made wonder with
an output of 5,80,000/- barrels per day of refined petroleum products.
Exhibit 1: Jamnagar Petroleum Refinery Township
The prime aim of Reliance Industries (Dhirubhai Ambani) was to make Reliance one of the
largest company in the world and the path towards that dream was fully planned and executed
to ensure growth in each sector of Reliance Industries is achieved that is ranging from the core
of textile to newly adopted retailing business.
The Reliance Industries became the largest conglomerate in the Indian market and by 2004
Reliance Industries was the only private firm of India that came in the Fortune 500 currently
ranked at 143/500 as per 2019.
By the year 2019 Reliance Industries became the largest company in India and for F.Y 2018-
19 RIL reported an revenue of 6.23 Lakh Crores and as per RIL data on 30th
April 2019 RIL
owns 149 subsidiaries and associates under the umbrella of Reliance Industries.
4. Reliance path towards USA: Reliance Petroleum
Mukesh Ambani soon realized that to be a global conglomerate it is necessary to be a global
company and that you cannot be a global icon if you operate from homeland. To be a global
industry star Reliance Industries chose United States of America as for Mukesh Ambani’s
thoughts USA is the second safest place for RIL to grow and expand one more step closer
towards being a global conglomerate giant.
Reliance Industries entered into the US market via its subsidiary Reliance Petroleum in a joint
venture with Atlas Energy acquiring 40% interest in the Atlas Marcellus Shale Position. The
joint venture allowed RIL to develop its petrochemical market via shale gas extraction in the
Marcellus Shale one of the largest shale gas and crude oil reserve in USA.
RIL expanded its operations in the Reliance petroleum converging on both the international
markets as well as domestic market currently RIL is in collaboration with Eagle Ford Shale in
USA and British Petroleum(BP) in Indian market covering an exponential area in securing the
energy field . RIL hold stakes in three US shale gas ventures — 45 per cent with Pioneer
Natural Resources in Eagle Ford asset, 40 per cent with Chevron and 60 per cent with Carrizo
Oil & Gas in Marcellus Shale.
Exhibit 2: Eagle Ford Shale and Marcellus Shale acreage prime extraction zones of RIL USA.
5. Why USA?
The prime reasons why RIL chose US as the prime expansion market is due to the economic
nature and factors of production that US market provides to the businesses. For Reliance
petroleum US was a viable option as US holds the 10th
largest reserves in the Shale Oil and
RIL specialized in exploration and production of Deep Core Drilling Oil and innovative and
unconventional extraction of Shale Oil and Gas.
1. The US economy stands at 7th
out 221 economies on the world in economic complexity
with the rating of 1.7 and has an average of $1.25T exports (as of 2017) in which the
refined petroleum accounts for 5.9 % ($74.5B), Petroleum gas 2.0% ($24.5B) and crude
oil 1.5% ($19.4B).
2. The business social environment of US also offers an holistic development environment
for the businesses in the economy and as per the EIA (Energy Information
Administration) data the shale oil reserves are the highest in the territory and the state
of Texas is leading the way in oil and gas production and extraction, Eagle Shale
acreage covers the largest part in the Texas Shale reserves.
3. In ease of doing business US ranks at 8th
position (1st
being most friendly), the US
economy provides a sustainable growth environment to every business around the
national territories and has a capitalistic business approach with a friendly
governmental regulations and federal regulations.
Combined with the individualistic approach and capitalistic approach of the US economy it
makes it one of the most suitable and holistic environment for any business Pan-United States.
Exhibit 3: US ranking in the ease of doing business index as per 2019 by World Bank Data.
6. What is PESTEL?
PESTEL or PEST analysis in a macro environment scanning process that provides an indexed
outcome of the political environment, economic environment, social environment, legal
environment and technological environment thus comprising the name PEST/PESTEL.
Political Analysis of United States
The United States has an relatively stable political environment with an global ranking of 75
out of 195 nations with an average political stability index of 0.50 (highest 1.08(2000) and
lowest -0.23(2004 Iraq invasion). The US has two prime political parties that govern the 50
states of US i:e Republicans and Democrats, both the political parties have a different view sets
and regulatory visions for business and economic growth.
1. The Republicans(GOP: Grand Old Party) follow an lazier-free approach in context of
business growth and believe there shall be an limited governmental regulatory control
over business and that business should be provided an free range of variables to expand
dimensions and generate revenue
2. On the other hand Democratic believe that there should be an governmental regulatory
control over business entities and economic growth and projects federal regulatory
barriers, the Democratic projects more economic control than Republicans and
prioritize wholesome growth of economy rather than general interest of profit
generation of business entities
Exhibit 4: US political stability index from 1996-2017(-2.5 Weak Stability, +2.5 High
Stability)
Source: World Bank
7. The US is not only confined to an central ruling dynamics but rather than all the 50 states of
US are semi sovereign in nature and self-governing projecting own sets of regulatory barriers
on the business and economic growth of state. In Relation of RIL prime arm in US i:e
Reliance Eagle Ford L.L.C the state of Texas plays an major roles as primary extraction
zones of shale gas are under the sovereign control of state of Texas(Lone Star State).
The current changes in the political environment of Texas the state is currently in a tidal shift
from Republican to Democratic political ruling, this tidal change in Republican powerhouse
is causing an distress chain reaction among the shale gas extraction giants as the change in
political regime from Republican to Democratic will tend to restrict the prime aim of profit
maximization of business houses and regulatory barriers will empower the extraction and
refining capabilities of shale gas giants such as Reliance Eagle Ford Shale.
Exhibit 5: Taxes Shale Gas and Oil production in trillion cubic feet
Source: United States Energy Information Administration
8. Economic Analysis of United States
The United States is the 3rd
largest economy in the world with a GDP of $20.50 as per 2017
Trillion and is the 7th
largest in economic complexity index/ country complexity rankings. The
ECI is a holistic measure used to measure the productivity of large economies the prime motive
of ECI is to determine the impact of knowledge that is accumulated in a population of a
region/nation and its conversion into economic activities, the United states ECI is 1.76 Econ
Complexity in simpler terms ECI can be defined as an matrix that connects countries with
countries and the ubiquity of the products and exports undertaken by these nation higher the
ECI higher the ubiquity and lower the ECI lesser the ubiquity.
The US is also the 3rd
largest exporter in the global economies and the 1st
in imports in global
economies. As per the data of FY 2017 the exports of US stands at $1.25 Trillion and imports
stands at $2.16 Trillion with a negative trade balance of $124 Billion.
Exhibit 6: Trade Balance of US data plotted Source: OEC United States
The US currently rules the global economies being the largest economy in the world but even
though US economy exceeded the GDP per capita 10% more than the average upper half of
OECD (Organization for Economic Co-operation and Development) nations, the US has
several flaws in its economic regime which are an adverse effect on the economy as whole the
GDP per capita of United States is approx. $62,742/- as per FY 2018.
Exhibit 7: GDP per Capita of US 2014-2018 highlighted in red Source: OECD Nations
9. The United States has a vivid economy with a diversified nature of exports and imports and
having a global integration of trades around the globe having ubiquity of its goods and services
in every major and minor economies around the world. But there are factors that are having an
adverse effect on the US economy, the critical prevailing factors are: Income inequality, Public
infrastructure insufficiency, lack of population knowledge and geopolitical trade distress.
The public infrastructure is unable to cope up with the rapid urban sprawl of the US population
and the major share of US native population lacks in the ability to adsorb and maintain the
required skill sets necessary to attain and retain satisfactory jobs that is correlated to the average
performance of students in the educational area the US even though being an beacon of
westernization has an large share of poor performing student population as of 2015 under an
survey conducted by the OECD of PISA (Program Of International Student Assessment) the
US lays to an lower end in comparison to European Union and Neighboring nation of Canada
and the equity of education is highest in case of migrant students.
Exhibit 7: Education Equity among the students in US Source: OECD PISA
The US having an ambiguous situation of Brain Drain where immigrant student are flowing
inwards for educational qualification but in economic conversion of these activities there is a
brain drain situation where these immigrants are reverting back to native nations to follow
prospective opportunities.
In the context of RIL Reliance Eagle Ford Shale these economic effects are causing an situation
of ambiguity as what are the future prospective of the US economy as the exports plays an
major role in development of economy but in the current geopolitical distress in the trade
policies of US with China are creating a decline phase of US based industries or industries that
are resourcing from US or directly/indirectly related to US economy. The RIL Shale prime
product is refined petroleum and crude oil and the refined petroleum has a significant share in
exports.
Exhibit 8: The US petroleum products export and Share of China in petroleum products import
Source: OEC World
Refined Petroleum: 5.9% $74.5 Billion
Petroleum Gas: 2.0% $24.5 Billion
Crude Petroleum: 1.5% $19.4 Billion
China is a major importer of US petroleum
products having a total share of 11%
cumulative the crude oil is having a share of
9.4% individual share having a value $ 145
Billion
10. Social Analysis of United States
The United States same as any other developed country has an vividly diversified population
with different racial and cultural background and these communities has emerged as an sub
culture of the United States and are abbreviated as Afro-Americans, Indo-American, Hispanic-
Americans etc. The diversified background of these communities and religious differences has
evolved the US population into a diversified complex being. The average life expectancy rate
in United States is 78.69 years but if compared county wise Virgin Islands, Hawaii and Puerto
Rico have the highest life expectancy of 81.3 years higher than the other major counties of US.
The females have higher life expectancy 81.3 years in comparison to men 74.7 years in United
States.
Exhibit 8: United States Life Expectancy Rate County Wise Source: Title Max
Even though the US has a high average life expectancy rate but is only ranked at 43rd
position
out of 224 nations globally, but the US population is bending towards the saturation of older
population in the society this population age shift is predicted to grow and by 2060 is predicted
to reach 25 Million of people above 65+ years in US regime. This population shift is predicted
to bring an gain into the fiscal deficit of the US as the people with age of above 65+ years grow
the higher the spending on the health and social security and is predicted to grow $ 1 Trillion.
Exhibit 9: US population Infographic Source: US Census
11. The US also has an diversified cultural and religious background generally there are no disputes
but now or then there are religious and racial disputes in several counties across US and these
racial and religious differences have given rise to mass shooting incidents across the territory
provoked by lazier free arms regulation with the state of Texas having 11 major mass shooting
incidents till 2019 especially in the territory regions of Odessa and Mainland, these incidents
are also provoked by the Texas’s cultural background of being an gun running state of United
States.
Exhibit 10: US mass shooting incidents till Aug 2019 Source: Mass Shooting Tracker
As the prime areas of operations of RIL Eagle Ford is county of Texas these incidents do induce
an feeling on insecurity in the mind of native population of the state and do have an direct and
indirect impact on the operations of an organization as it may induce forced migration of racial
communities and immigrant individuals to neighboring counties plunging the diversified
cultural workforce availability to bare minimum and can also plunge the ECI of state of Texas
to bare minimum as the major share of skilled individuals are immigrants of racial community
individuals, and several communities like White Supremacy do provoke such incident with an
political ideology of being the superior and every other being inferior, even though being
several mass critical incidents in the US the nations stills ranks at 25th
out of 146 nations in
social progress index that concludes factors such as :
1. Basic Human Needs.
a. Nutrition and basic medical care
b. Water and sanitation
c. Shelter
d. Personal safety
2. Foundations of Wellbeing
a. Access to basic knowledge/ access to basic information and communications
b. Health and Wellness
c. Environmental quality
3. Opportunity
a. Personal rights
b. Personal freedom of choice
c. Inclusiveness
d. Access to advanced education
12. Exhibit 11: United States Social Progress Source: Social Progress Imperative
13. Technological Analysis of United States
The United States is the global leader in the field of science and technology. United States have
an innovative fascination for the technology, and the companies like Apple, Microsoft, Google,
Facebook, and others tech families have entertained the technological needs of the American
society and as well as the people around the world by doing so, the United states have become
the global leaders in field of technological development and adoption.
The United states have always been of the forefront in developing technology as well as
adopting the technology into various fields from the primary industries to tertiary industries of
the nation, this adoption and development of technology has allowed US to boost their
productivity invoking an higher economic complexity and utilize the optimum output of the
industries. But in the current technological environment especially after the period of 2008 the
US is lagging behind the technological development and adoption and is receiving an severe
competition in the field by nations like South Korea, China, Japan and most recent competitor
India, the triadic patents have also fallen steadily after 2004 and the technological exports have
plunged down to the lowest level since the year 2000.
The major IT giants have shifted their factors of production (factor mobility) from the US to
developing nations or other efficient developed nations to reduce their operational cost and
improve their profitability, the developing nations such as India and China offer efficient
factors of production at an lesser relative price of US market and nations such as Japan (being
the global leader), South Korea offers effective and efficient factors of production in relative
comparison to US market.
The steady shift of factors of production from US to other nations has surged a situation of
distress in the US economy as the prime tech giants such as Apple, Google, and Microsoft are
also following the same pattern of shift to attain utmost optimum efficiency.
Exhibit 12: United States Technological Exports Source: World Bank Data
14. Exhibit 13: United States Household technology adoption Source: OurWorldInData
Exhibit 14: US, IND, JAP, SKR, HNG Triadic Patents Data 1985-2016
Source: OECD Triadic Patents Families
15. Environmental Analysis of United States
The United States have an diversified geographic and climatic conditions and the territory span
cover an area of 9.334 Million km^2 and also offers an vivid variety of wildlife and flora and
fauna, the US also receives an large inflow of travelers both for business as well as for tourism,
in 2018 the US economy gained $2.5 Trillion economic outputs from the travelers that arrived
in the US. The US offers travel destinations for every individual ranging from business
individuals to travel individuals, the prime location of tourism inflows are
Criteria/Purpose Destinations
Business Travelers California, New York, Washington
Leisure Travelers Las Vegas, Hawaii, Puerto Rico, Florida
Keys
Exhibit 15: US Travel industry revenue generation and economic impact
Source: US Travel Organization
The US does offer an vivid environmental diversification but on the other hand also has the
one of the most dangerous climatic shift seasons in the world and has an CO2 emissions of
16.53 metric tons per capita as per 2014 world bank data. The prime resources of energy
generation for the United States are Coal (27.4%), Natural Gas (35.1%) and Nuclear (19.3%)
in combine these three produce 3421 Billion kWh of electric output per year. All these have
their byproducts that affect the environmental quality of US directly, and an uncertainty of
nuclear meltdown conditions same as Three Mile Island incident that involved partial
meltdown of reactor number 2 at nuclear electric plant in 79 which invoked the ever present
dangerous byproduct of nuclear fuel and nuclear contamination under system or human flaws
16. and an seasonal climatic shift in the tornado alley that lasts from April to June every year and
has an severe effect on the operational capability of the involved states and does cause an severe
damage to personal and public properties the most severe hit to US economy was cause by
1999 Oklahoma tornado outbreak reaching category F5(302+kph Wind Speed).
Exhibit 16: United States Tornado Alley Strikes Per Year Source: NOAA Data
Exhibit 17: United States Nuclear Production Capability 2018
Source: US Energy Information Administration
17. To monitor and develop strategic measures of prevention and counter action the US developed
a federal authority known as Environment Protection Agency (EPA) which induced
environment protection acts and regulations that governs both the personal and commercial
entities across the US territory.
In relation with RIL Eagle Ford Shale the environmental regulation authority and the climatic
shift of US plays an critically major roles as these factors have an direct effect on the
productivity and operational capability of the prime extraction zones the Eagle Ford Shale
extraction zone is in Texas that is hit by an average of 7+ tornados per years that leads to
suspension of operations for an uncertain time duration. The EPA also have governing
regulations that have a direct effect on extraction methods and refining operations of RIL
industries.
There are mandatory regulations that are governing Texas oil/natural gas exploration and
production. The first prime authority is the Railroad Commission of Texas (RRC) and the
second is the Texas Commission on Environmental Quality (TCEQ) are the two state owned
agencies that are responsible for establishing the standards and enforcing the regulations for
oil/natural gas exploration and production in the state of Texas. Oil/natural gas
operators/extractors that do not follow the strict oil/gas regulations can end up losing their
permit to operate in the state of Texas. The RRC oversees all the aspects of drilling activities
such as well spacing and design including depth of casing and cement breadth, groundwater
protection mechanisms during drilling and completion, water protection, wastewater handling
and disposal. Whereas TCEQ’s primary role relates to control of the air pollutant emissions,
water quality control, and other regulations related to public health and safety
Legal Analysis of United States
Exhibit 18: US legal system hierarchy Source: Purdue University
18. The United States judiciary system and constitution applies to everyone within the territory of
the United States irrespective to their citizenship or legal and illegal immigration background.
The United States constitution commences it to be compulsory to provide basic legal rights to
every individual. The common law system is abided by a written constitution and every state
of US is allowed to have self-sovereignty in legal system allowing them to develop and rectify
legal laws and regulations as per the states diversified factors and each state has its own
constitution and state legislature abided by the Constitution of United States. The US judiciary
courts are divided into 3 major levels that are:
1. US Judiciary: The United States judiciary system is independent of the government
and consists of the US Supreme Court, the US Court of Appeals and the US District
Courts. The Supreme Court is the highest court in the United States and consists of nine
judges that are appointed for life by the President of US. Its decisions are final and
legally binding for all the parties involved in the case
2. Federal Courts: The federal courts operates separately alongside the state courts and
deals with cases arising under law or treaty. Federal courts are established to hear the
disputes involving the state governments or between citizens residing in different states.
Cases falling within federal jurisdiction are heard before a federal district judge
3. Civil and Criminal Courts: There is a clear separation between the civil courts, which
settle disputes between people and criminal courts that prosecutes those who break the
law. The crimes are categorized into two main categories that are minor offences
(‘misdemeanors’) and serious violations of the law (‘felonies’).
The strength of legal right index of US which measure the strength up to which the collateral
and bankruptcy laws protects the interest of the both the borrowers and lenders and allows to
facilitate and smooth lending process. The index ranges from 0-12 (lowest to highest) and the
current strength of US legal system in context of lenders and borrowers is at 11.
Exhibit: 19: The US legal System Compared to leading developing and developed economies
Source: World Bank
19. Conclusion
The United States offers a vivid diversified economy and a sustainable environment for
business to grow and nurture, the political system of US has always been relatively stable in
comparison to other nations around globe with some unprecedented downfalls due to societal
factors such as Iraq Invasion in 2003 did brought an political instability as the two prime ruling
parties Republicans and Democrats were divided on the output of the invasion of Iraq due to
the factor of WMD(weapons of mass destruction). The economic environment has also been
on the stable side having an ECI of 1.7 having an interconnected diversified array of goods and
services, the United States is the 3rd
largest exporter in the World and 1st
largest importer in the
World the prime downfalls sustained by US economy were the great depression of 1930s and
housing sector recession in 2008 that broke the banking system of US and brought several
lenders and borrowers procedural flaws but in consolidated approach the US has an relevantly
stable economy offering vivid factors of production and GDP per capita of 62 thousand +
(approx.) offering an customer base with high purchasing power parity.
The technological aspect of United States is also on an relatively high side but in past couple
of years the US technology development and exports pattern is under an downfall due to rise
in the competitive nations of Japan, South Kore, China and India. Currently Japan is leading
the global technology development around the world and developing nations such as China and
India are creating a severe negative impact on US technological specialization due to their
cheap factors of production. The social environment of United States is also stable in nature
having an average life expectancy of 79 years and the highest of 81 is state of Hawaii and
lowest of 74 in state of Mississippi, the other concurrent factors such as access to education,
access to health services, access to basic amenities and cultural/racial segregation are relevantly
stable but currently there has been an rise in the racial discrimination and religion based
discrimination which in duo giving rise to the events of mass shooting around the US especially
in state of Texas this factor did have created an invisible racial segregation line in the US and
racial communities such as Africans, Hawaiian etc. tend to sway away from US societal
hierarchy.
The environmental factor of United states is dynamic in nature especially in the operational
area of RIL Eagle Ford Shale, Texas the US goes through an cycle of climatic changes but the
most dynamic period lasts from April to June in the Tornado Alley of US having an average of
7 tornados per year in region of Texas, the environmental factor of US also impacts the tourism
as US offers some the most exotic destination for both business traveler and leisure traveler but
due to unpreceded weather shift US causing an loss of $81.9 Billion in personal and public
property in 2018.
The legal environment of US is strong and constitution centric, every state in US in allowed to
have a self-sovereign legal and governmental rules depending upon the nature of states for
business the legal index of US is at stronger side having an score of 11 out of 12, which protects
the interest of business as well as individuals the judiciary are divide into three prime level of
Civil/Criminal Courts, Federal Courts and Senate/Supreme Court. But even though of having
a strong legal system there have cases of materialistic gains undertaken by judges and senate
to deliver false judgments in favor or against entities or individual, the most famous example
is the Watergate scandal involving the President Richard Nixon.
20. Questions
1. In your belief what do you think was global expansion necessary for Reliance
industries? Defend your answer?
2. The Reliance Industries choose US for its expansion which other prospective nation
you believe would have been a better option for RIL explain?
3. The rise in developing of China and India are having a global effect on the productivity
and cost of production of developed nations what you think is the future scenario of US
technological development sector?
Answers
Answer 1:
Yes, the global expansion of Reliance Industries is necessary as no nation in the current world
economy is self-sufficient and an integrated economy is required to grow and develop the world
economy as whole, in context of RIL globalization was necessary and also an prime milestone
for RIL in becoming an global leading frim as global expansion brought diversifies culture into
the RIL and helped RIL to grow beyond the ethnocentricity of its domestic nation.
The global expansion also allowed RIL to adopt to the differences in the business cultures of
nations and developed a symmetrical balance in its individualist approach in US and
collectivistic approach in India. Thus global expansion is necessary for RIL to grow and have
an optimum advantage of integrated economies and integrated trade benefits to be a global
leading firm in the world economy
Answer 2:
The other prospective nation for Reliance Industries other than United States will be Canada,
as the factor mobility will be very easy from the US to Canada as both are neighboring nations
having a well-established trade routes and trade relations, as in context of Reliance Industries
core business of crude oil extraction and production Canada offers an much more easier
production process of Oil Sands which is much simpler and safer in comparison of deep core
drilling( as gas pocket hazard is avoided).
Exhibit 20: Canadian Oil Sands Deposits
And the Canada exports in crude oil products are Crude Petroleum: $54.1 Billion, Refined
Petroleum: $11.5 Billion and Petroleum Gas: $10.2 Billion, Canada also has an far ahead social
progress index in comparison to US offering an much more developed social environment with
access to basic amenities as well as advanced educations. Canada is ranked at 14th
position out
21. of 146 nations whereas US is ranked at 25th
position this depicts the difference between both
the nation’s social progresses.
Exhibit 21: Canada’s Social Progress Index Source: Social Progress Org
Answer 3:
The United States was previously a global technological leader but in the current integrated
economy the US technological ability is declining and developing nations such as India and
China are into the leading phases both these nations are able to provide cheap factors of
production with business friendly environment especially India with its FDI and FPI policies.
The US markets regulatory barriers and cost of production is inducing leading tech giants to
mobile their operations to nation such as India and China and as currently there is an
geopolitical distress between US and China, India is in lime light of being an global production
hub of technological factors and already leading tech giants such as Google, Apple, Microsoft
are shifting their operations to India to attain the utmost efficiency and lowest cost of
production possible. In the context of future US may lose its productive capability in
technological aspects and developing nations such as India and China may outpace US in
global productivity of technological factors.
