globalization and competition policy " Mogadishu university "

2. Course : business government and
globalization .
Topic: globalization and competition policy.
Mogadishu university

3. • ACTIVATING YOUR COMMITMENTS
• CONNECTING ACROSS DIFFERENCE
boundaries
• FOREING NEW RELATIONSHIPS
• SPREAD AND CONNECTEDNESS OF
PRODUCTION, COMMUNICATION, AND
TECHNOLOGIES ACROSS THE WORLD

4. 1. ECONOMIC
2. TECHNOLOGICAL
3. CULTURAL
4. POLITICAL
5. MILITARY
THESE ASPECTS ARE ALL INTERCONNECTED!
*********************

5. 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

6.  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

7. • “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

8.  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

9. 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!

10. Smart Bombs Sidewinder Missiles

11.  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

12. 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

13. Fair 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.

14. 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

15. Models of
Competition
Number of
buyers
Number of
sellers
Nature of
products
Barriers to
entry and
exit
Perfect
competition
Very large Very large
Identical
products
None
Monopoly Very large One
Single
product
Very large
Monopolistic
competition
Very large Large
Minimum
differences
None
Oligopoly Very large Very few
Large
differences
Large

16.  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.

17. Components of competition policy
Competition Policy
Competition Law Government Policies
Private Actions
Deregulation
and
Privatization
Trade Policy
Industrial
Policy
Regulations Governing
Capital and FDI
Consumer
Policy
Other
Policies

18. 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.

19.  A fair deal in the market place with:
 The best possible choice of quality
 The lowest possible prices, and
 Adequate supplies of commodities.
Benefits to Consumers

20. 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

21. 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