Why Cooperation Is More Sensible Than Trying To Go It Alone In An Increasingly Interdependent Global Economy

Thesis 1. Cooperation between countries will make individual countries more competitive in an increasingly interdependent world.

 Example: Companies cooperating and competing in the European Union, result in higher quality, lower prices, more consistent rules and regulations making it easier and less expensive to do business, etc.

The more competitive a country is, the more likely the country will contribute to local and national economic development, increase the number and quality of jobs, and improve the quality of life.

Thesis 2: In countries where national, local and state government agencies, industry associations and chamber organizations work closely together, the country and the company in that country will be more competitive.

Example: Japan and Germany, Japanese companies, German companies tend to be more competitive in industries they compete in.

 According to my 1996 dissertation “Cooperate to Compete,” countries such as Japan and Germany have developed a much more systematic way of cooperating domestically which has helped them be more competitive. These countries do a better job of encouraging companies, business and industry organizations to work together and cooperate with government agencies to be more competitive. When the industry becomes more competitive, the company will tend to become more competitive.

In my research, I found that when national and subnational government agencies and non-profit organizations (such as chambers of commerce, industry and trade associations cooperate), cooperated domestically, that they were able to be better competitors when competing internationally. The better they cooperated, the more likely the domestic state or local economic development agencies were able to compete internationally and successfully develop their local and national economies. These organizations will be able to accomplish these objectives by cooperating to develop and implement programs designed to encourage international trade by promoting exports by local companies and by attracting foreign direct investment.

In Illinois, the Illinois Department of Commerce, International Trade Department works closely with the US Department of Commerce, International Trade Administration, and local organizations including the Will County Department of Economic Development, Sister Cities, World Trade Organization, and other private/public cooperative arrangements.

Domestically, the cooperation between national, subnational (state) government agencies, and local and statewide non-profit organizations that are designed to promote exports and attract foreign investment will contribute to local and national economic development.

Job creation and job maintenance is a basic principle of economic development. Because International economic development is about creating and maintaining jobs, it made sense for local and state governments to develop programs to encourage companies to export more and develop programs designed to attract more foreign direct investment. In the 1970s and 1980s, in America, states going global made sense to most states and countries around the world. It was believed that it was necessary to cooperate to compete, to develop economies, to survive.

It wasn’t until 1988, that the US government decided that it too should get involved in helping companies compete internationally, establishing the International Trade Administration and the Export Now initiative, setting up trade commissioners in every major city in the US and in every embassy located overseas. This is when cooperation between national, state, and local government and non-government organizations saw it necessary to cooperate to compete and to compete with other countries such as Japan and Germany

Thesis 3. Countries that cooperate by actively participating in multilateral organizations will be more competitive.

Cooperation between countries is dependent on continuing a system of multilateral agreements between countries that encourages countries to cooperate. At present, multilateral agreements between countries established after World War II established the framework within which countries can cooperate and compete. Most countries agreed to establish supranational organizations designed to facilitate trade in various ways.

For example, the World Trade Organization was established to encourage and foster trade between countries by encouraging countries to reduce tariffs and other impediments to trade such as export quotas, voluntary export restraints, administrative policies that interfere with trade, and local content requirements. The World Trade Organization also monitors the international trading system to try to ensure the rules and regulations of the system are being followed to ensure the trading is as fair as possible.

The rationale behind the World Trade Organization agreement was to encourage trade by reducing barriers to trade. The more companies could sell, could export, the more likely they would be to create jobs. Those people with jobs would be more likely and more able to buy goods, domestic and foreign, thereby encouraging more trade. As goods became more abundant, higher quality, and cheaper, trade has flourished and the quality of life has generally improved for people around the world.

Other types of agreements were designed to help countries rebuild financially after World War II. These agreements were also designed to foster cooperation between countries, discourage conflict, and encourage international trade and development.

For example, the World Bank was established as a lender to countries that needed financial assistance, usually because they could not afford major improvements that could facilitate economic development. World Bank lending has been primarily for infrastructure funding.

Another organization, the International Monetary Fund lends to countries having financial difficulties, usually due to financial mismanagement. The IMF lends to countries that agreed to follow IMF guidelines and establish a payback plan. The IMF also monitors the International Monetary System with a series of agreements between countries that established the rules and guidelines for foreign exchange transactions between countries.

About Dr. Ian Gladding

Dr. Ian V. Gladding is Director of the Lewis University International Business and Contemporary Global Studies Program

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