Cooperatives and Globalization: Economic Impact and Growth

Cooperatives as Engines of Development

Cooperatives have a major presence in the agricultural sector, the financial sector, and the associated sector. They allow cooperative members to enjoy and manage productive or commercial infrastructure that they could not access individually, giving them the ability to compete under better conditions.

Advantages and Disadvantages of Cooperatives

Advantages

• The corporate structure is more participatory and democratic.
• There are several specific grants and subsidies for cooperatives.
• Fiscally, the qualification of a Protected Cooperative implies a rate of 20% in corporation tax.
• There are no limitations on the capital needed for its constitution.

Disadvantages

• Requires a high degree of understanding between the partners to adopt agreements smoothly.
• Salaries for partner-workers are not fixed.
• There is more complexity in the formalities of constitution.

Global Competition, New Technologies, and Globalization

The International Monetary Fund defines globalization as the growing economic interdependence of countries throughout the world, caused by the increased volume and variety of transactions and transfers of goods and services, as well as international capital flows, and the rapid and widespread diffusion of technology.

Factors Driving Globalization

1. Increased international trade: This is due to the perfection of the means of transport and communications.
2. High mobility of capital: Investors seek more profitable investments globally.
3. Migration of people: Movement between different parts of the world caused by large imbalances in living standards.

Effects of Globalization

1. Integration of production: Many companies have geographically dispersed production centers integrated through Information and Communication Technologies (ICT); for example, automobile manufacturers.
2. Standardization of products and services: Products are consumed in different countries without adaptation. For example: jeans and soft drinks.
3. Areas of integration: Large parts of the world have developed integrated trade areas where trade barriers are very small. Example: the European Union.
4. Economies of scale: Companies can produce very large series of products. Example: mobile phones and textiles.