3. CONCLUSIONS

In this chapter, we have had a look at recent changes in the business environment. Today, it is often described as being shaped by globalisation. Globalisation was defined as the integration of production and distribution processes concerning goods and services beyond the borders of nation-states. Two aspects of globalisation were reiterated: the increase in international trade and the increase in foreign direct investment.

Globalisation occurred because the benefits of international interactions increased relative to those of intranational interactions. The causes for these changes were divided into two groups: namely changes caused by policy factors and changes caused by technological and economic factors. In order to spell out the changes in international interaction costs they were divided into three cost categories having to do with international trade and three cost categories having to do with foreign direct investment.

With regard to policy changes, liberalisation in the form of deregulation and privatisation played an important role. These changes caused state-mandated barriers with regard to both international trade and foreign direct investment to shrink considerably. The liberalisation of capital markets has helped to decrease the costs of financing foreign direct investment. International interaction costs have thus been reduced due to policy changes.

The changes caused by technological and economic factors have an effect in the same direction. The secular decrease in transport costs has made international trade much more attractive compared with intranational trade. The Internet has reduced both organisation and transaction costs on a worldwide scale, it has thus also made international trade and foreign direct investment more attractive.

Some of the economic and technological changes can be expected to lead to demands for further liberalisation. As an example, the Internet that makes new kinds of border-crossing trade possible that is currently still prohibited was named. Globalisation can thus be expected to keep its pace. Firms will have to adapt their strategies in order to remain successful in a radically altered business environment.