Abstract
Industrial ownership by nation states has been around since the 16th Century in the Western part of the world seeking protection by the Roman Empire. The significance of this act was defined at that time and even though we are in the 21st century those significances has not changed. The support for nation to own industries has made a positive impact to countries that require expansion but with benefits also comes consequences. Some of the action have prompted severe consequences for some causing economy meltdown and negative effects when in comes to global trade. The paper will look at both aspect, stating the reasons why a support the ownership and look at why nation states face opposition.
Introduction
A state is a territorial political community with an independent and organized government. A nation state is a state whose primary loyalty is to a cultural self-identity and a predominant form of the state organization. Nation states possess sovereignty and legitimacy. It aim is to enhance the growth of democracy in territories that are unable to expand. The providence of an environment that enhances growth enables the region to have the emergence of modern financial methods, technological innovation and positive growth of industries. Apart from these, it also allowed improvement of trade, agriculture, and the creation of civil society (United States, 2009).
I support the need for nation states to be able to own industries. Apart from the benefits mentioned above, the nation states have other significances that enable the region to expand and develop. The significances include enhancement of international peace that aims to ensure there is peace between countries and there are positive relations that enable partnership and economic improvement. The growth of democracy is another significance that allows governments not to derive authority to the citizens of a particular region. The third significance is that it enhances social and Economic development that creates a technologically advanced economy and an environment that empowers and supports creation and innovation.
Factors that lead to industrial ownership by nation states
The nation states first emerged in the 16th and 17th century starting in Western Europe. It began because of four main reasons, and the first was that when the Roman Empire was too weak to interfere in the Western states matters but strong enough to protect it from the invasion of the East. Two, the Western States had poor productivity when it comes to agriculture, and the Roman Empire enables its growth by engaging in long-distance trade. Third, the Roman dynasty provided stable and effective governance and finally, the states themselves undertook their long-distance trading endeavors (Kehal & Singh, 2006).
The methods used by nation States to own industries are off-shoring and outsourcing. Off-shoring is setting up a business base in another location, usually a different country to leverage cost advantages. Outsourcing is a form of off-shoring better known as offshore outsourcing which is the use of a third party to manage an organization’s activities in a base set up in a different region. It enables the organization to perform operations at low costs while taking advantage of the third party’s expertise, economies of scale and the large scalable labor pool.
There are risks that off-shoring faces, they are such as poor communication, language barriers and geopolitical risks. The process of transferring jobs to other countries also is a problem. However, it does have certain benefits that come with its use. The benefits are such as production is at lower costs, the presence of better-skilled people and the opportunity to utilize that kind of labor, a better reproductive timeline when it comes to performing organization activities.
The use of offshore outsourcing is also standard and has it own risks. The risk that this method faces are such as the misaligned interests of clients and vendors, this is due to the use of third parties leading to misinterpretation of information. The other problem is that there high reliance on third parties for the success of the company and the lack of knowledge when it comes to business operations leading to the company spending a lot of time and resources of employee training. The risk can cause problems such as loss of control of business processes, poor quality products reducing sales because issues about lingual accent variation, lower benefits and enrage the country’s employee unions (Organization for Economic Co-operation and Development & Source OECD, 2007).
The benefits of outsourcing are more than the risks encountered making it the best method used by the Nation States. The benefits are the same as that of off-shoring with added advantage of tapping into the knowledge of the new country for better innovation and reducing cash flows thus optimizing resource utilization. It also enhances positive returns when it comes to investments. Outsourcing enables a company to be able to increase service quality, drive innovation and derive lower labor costs.
The challenges that nation States face when it comes to ownership of industries
Four risks pose a threat to nation states when it comes to owning industries. The risks are global capitalism, environmental hazards, post-nuclear geopolitics and identity politics. Global capitalism undermines a nation state from industrial ownership by restructuring both internal and external factors that affect the industry. The factors are such as microeconomic planning, the sense of collective identity among citizens, the consideration of the collective welfare of the state and causes general caging of social life (United States, 2004).
Environmental hazards look at the environmental threats pose a risk to the environment and population as a whole. The threat keeps on increasing because of increase in population and lack of awareness when it comes to mitigating such a risk. Also, the measures put in place are not strong enough to mitigate all the environmental hazards. The risk is too hard and menacing to be handled only by nation states.
Post nuclear geopolitics undermines nation state by demeaning its sovereignty and legitimacy powers. The causes of hard geopolitics are the mass mobilization warfare underpinned by much of modern state expansion.
Identity politics causes increases the diversity of the identities of the transnational and local. This takes place in consideration of the national identities and the class characters that are subject to the nation state. The reason for this increase is the advance in technology.
Why there is opposition
The state-owned enterprises are a natural monopoly that promotes economic development and industrialization. However, some question the aim of such industries. Research has shown that there are over 50.0% of state-owned enterprises either owned directly or indirectly. The study also identifies that more that 10% of the world’s largest company are state-owned. The gross output of such enterprises amounts to $3.6 Trillion at the end of the year 2011. The research also identifies that the enterprises bases are in more than 37 different countries (United States, 2004).
The extent of this ownership is the reason why there are questions and its impact on business globally. The presence of the government as a regulator, regulations enforcer, and assets owner creates favorable conditions for state-owned enterprises to thrive. The conditions are such as direct subsidies, concessionary financing, state-backed guarantees, preferential regulatory treatment, and exemptions from anti-trust policies and bankruptcy rules. These conditions tend to foster domestic market but undermine international trade and investment.
Some of the examples show how the use of such conditions by nation states has lead to fall of countries. The fall of the countries is due to factors such as lack of property ownership, forced labor, greed, prohibition of technological advancement and many others. These factors have implications to the nation state leading to the lack of support for the nation states to own industries.
The first country is North Korea, which is currently facing the problem of property rights. The citizens of the region are unable to own property as the state own everything regarding land and capital. The pretense of the nation state was to improve the economy through agriculture. Today, agriculture is done through collective farms. The region would have been mush wealthier but the labor force works for the Korean Worker’s Party and the Nation State, UN, allows the farmer to have a small piece of land to cultivate and sell their produce. There is no land ownership (Oshri, Kotlarsky & Willcocks, 2009).
The other region that has been a victim is the Uzbekistan. The economy failed because of forced labor. Most of the workforce in the area is coercioned. The presence of coercion causes lack of innovation and no technological progress that can positively impact the economy. The country biggest export is Cotton and coercion is high especially when it comes to children to fill the demand for cotton in the global market. The region also faces dominance in the prominent sectors that can improve the economy, making benefits not to be communal.
Bolivian faces political exploitation when it comes to land and mining. The leader exerts their political power on the Bolivian citizens. The problem began in the 1950s where most land and mines ownership was by the leaders of the revolution who were against the political power. It led to inequality when it comes to land ownership and regarding employment. Today, the nation faces the same problem where people have to sell their votes to access land and work. The act just shows that the state-owned enterprises encourage corruption and the prominence of dictatorship (Oshri, Kotlarsky & Willcocks, 2009).
Greed is also evident in the region of Sierra Leone because prominent people are fighting over the spoils of the country. It led to the instability and failure of the economy as incentives were given to dispose of the country's spoils for elite people in the society. It all started around in the 1960s when the All People’s Congress (APC) party was in power. The party president, Siaka Stevens, encouraged this and even after the he stepped aside, the position went to an apprentice who did not stop such activities. The greed launched a war in 1991 when there was a war for control of the country’s diamond. The initiation of the war was by the Liberian leaders and the head of the Revolutionary United Front, Foday Sankoh. It caused the economy to deteriorate.
Egypt is a country that faces greed from big and prominent men. The economy is controlled to create power for monopolies and block entry of new firms. The control of the economy was by the government and military. The power was present for three decades. After liberation, there was still control which increased poverty and still blocks out opportunities for the masses. Australia also faces the some problems where prominent people prevent new technology. The elite people in the society do not see that technology is not good for the community because it’s disruptive, make old organization obsolete and redistribute wealth and political power. The reasons are why the elite people block progress (Oshri, Kotlarsky & Willcocks, 2009).
References
Kehal, H. S., & Singh, V. P. (2006). Outsourcing and off-shoring in the 21st century: A socio-economic perspective. Hershey, PA: Idea Group Pub.
Organization for Economic Co-operation and Development & Source OECD (Online service). (2007). Off-shoring and Employment: Trends and impacts. S.l.: OECD.
Oshri, I., Kotlarsky, J., & Willcocks, L. (2009). The handbook of global outsourcing and off-shoring. Basingstoke, Hampshire: New York.
United States. (2004). foreign sources of supply: Assessment of the United States defense industrial base. Washington: U.S. G.P.O.
United States. (2009). National Industrial Security Program: Addressing the implications of globalization and foreign ownership for the defense industrial base. Washington: U.S. G.P.O.
