Discuss the Fukushima incident in the context of Globalisation

Globalisation is a continuous practice, which advances the affiliation between countries through methods such as the use of technology and the decrease in the barriers of trade, which enables financial and investment markets to operate internationally. (International business environments and operations 2011)
The Fukushima incident became an international catastrophe on March 11th 2011 when three reactors at the fifteen largest power plant the Dai-ichi nuclear power plant in north Fukushima, exploded after the back-up electrical systems were flooded; this triggered the reactors to overheat and subsequently caused the explosions. This allowed radiation to escape from the reactor chambers. Due to the explosions the plants were left unable to produce any nuclear energy, it also had an effect on a range of exports including shipping and the food industry due to the contamination of these products, causing huge problems for the Japanese economy as it was unable to export goods to other economies whose countries were unable to receive the goods. (International Financial Law Review,2011),
Countries such as the US, Hong Kong and China are amongst the most likely to be affected by the nuclear impact on Japan’s food industry as they will need to find alternative exporters of food products such as leaf vegetables, spinach and milk. This is because these products have been affected by the radiation; therefore to prevent the shortages in these goods alternative exporters will need to be found to support the high levels of demand. This shows that through the developing methods and techniques, the use of globalisation can prevent the cause of any major issues for the importing countries, if we were not actively involved in globalisation these countries may find it harder to import these products and be left facing a monopoly market, this would allow the exporting country to sell their products at higher prices as there is no competition due to the fact that the importing countries would be unable to negotiate with other countries possibly due to high barriers of trade, thus having a damaging effect on the importing countries economies. This is also going to have a negative effect on Japan’s economy, as the importing countries will be buying their goods elsewhere and therefore will prevent Japan from earning from these goods. This could also cause the price of these goods to still increase despite the fact that the use of globalisation allows the market to remain an oligopoly, this is because their will be an increased level of demand for these products, this could subsequently cause the price to rise as the exporting countries can sell their products to the highest bidders. (BBC,2011)
The Fukushima incident had a majorly destructive outcome on the worlds financial markets, this is due to globalisation, this can be proven when the financial effects of the Fukushima incident are compared to the devastating earthquake in Tokyo, Japan 1923, this caused mass destruction wrecking most of the capital and triggering an economic recession in Japan, however; it barely effected any of the financial markets around the world, this is because during this time financial markets were not closely associated and therefore would not have any major knock on effect; on the other hand nowadays the worlds currency, capital and markets are much more closely connected, for this reason the stock exchange was changed dramatically this subsequently caused a recession. A key reason that the recession began was that insurance companies within Japan were investing trillions of dollars around the world in particularly in America and were required to withdraw their capital to be able to afford to pay their customers, for this reason the selling of US treasuries was extraordinary, as so much money was needed. The selling of the treasuries happened almost instantaneously as so many treasuries were being sold this caused the bond prices to decrease and interest rates rise; another negative factor for the U.S in this situation is that all of this money will need to be exchanged to Yen and therefore will increase the Yen’s value against the dollar. This shows that in this context globalisation clearly has its pro’s and con’s as it allows Japanese businesses to invest causing their bonds to rise and their interest rates to be lowered, nevertheless; if an incident like Fukushima is to occur the U.S have no control over what these investors do and can face great problems. (Wise Wealth Books,2011)
After the Fukushima incident people expected the Japanese cars to sell much less than cars from other countries, although it was not half as bad as expected, this is once again due to globalisation. The main reason behind this is that even car manufacturing companies such as BMW and Volvo get some parts for their cars from external companies in Japan, for this reason despite the fact that most parts of their cars are made elsewhere they can not make complete cars without these parts. The reason that this has become an issue is that with companies having access to wider suppliers there is a bigger price battle, this therefore has caused companies to shop around and budget their costs lower. For this reason if BMW or Volvo are unable to get access to the same parts elsewhere their production will be forced to a halt due to an incident that happened half way around the world. (BBC,2011)
In conclusion it can be said that the Fukushima incident is a prime example of how close together globalisation can bring different countries to the rest of the world although it can be a positive effect there are negatives of how an issue that would have previously only affected Japan can now cause devastation across the world. Overall I think globalisation has been a benefit in this situation and is more of a benefit that a negative to everyone this is clear as over ninety-one countries offered Japan assistance, in my opinion this shows that the world is there for each other and globalisation should always be seen as a benefit. (Guardian, 2011)

Bibliography

DANIELS, John RADEBAUGH, Lee SULIVAN, Daniel (2011) International Business: Environments and Operations 13th ed., Pearson P72 chapter 1 summary

BBC (2011) Nuclear fears: The impact on Japan's food industry.[online]. Last accessed 21 October 2011 at: http://www.bbc.co.uk

BBC (2011) Japan supply chain fears rattle world stock markets. [online]. Last accessed 21 October 2011 at: http://www.bbc.co.uk

International Financial Law Review (2011) Financing after Fukushima. [online]. Last accessed 22 October 2011 at: http://www.iflr.com

JEFFERY, Simon (2002) What is globalisation? [online] last accessed 22 October 2011 at: http://www.guardian.co.uk

Wise Wealth Books (2011) How Japan Fukushima nuclear incidents affect the world’s financial markets. [online] Last Accessed 23 October 2011 at: http://www.wisewealthbooks.com

The Guardian (2011) Japan earthquake: Aid flows in from across the world [online] last Accessed 23 October 2011 at: http://www.guardian.co.uk/global-development/2011/mar/14/japan-earthquake-tsunami-aid-relief-world