Global Energy, Outsourcing, and Globalization
OPEC and Global Energy
The economy of the modern world stands on a foundation consisting of oil, gasoline, and hydrocarbons. The black liquid substance flowing from the Earth’s bowels is the most valuable fuel, on the price fluctuations of which states make money. At the same time, it is evident that oil is the advantage of only some countries due to the geochemical features of the territory. Such countries include Saudi Arabia and the UAE, Russia, Britain, Iran, and Iraq, Canada, Nigeria, and several other countries (Al Sabah 14). The result of leadership in the fuel industry is a kind of monopolization, perpetuating the manipulation of global economic forces by a group of political leaders.
OPEC has become an alternative solution for establishing useful and mutually beneficial ties between exporters. Today the organization includes 15 countries, mostly located in the Arabian Peninsula and Africa. This organization’s main task is to coordinate the actions of countries that supply oil to oil markets (Griffin and Teece 49). OPEC works to unify oil policy by issuing individual quotas that reduce supply and dramatically increase consumer demand. Finally, OPEC may impose embargoes on dependent countries if necessary.
OPEC is a link that implements an effective globalization process in an economic context. Thanks to the activities of a transnational company, exporting and importing countries can establish dialogue, even if they are in a state of military conflict. Nevertheless, OPEC does not always have friendly relations with the leaders of states. The historical struggle between the organization and the United States is linked to regular changes in leadership, caused by the most significant volumes of production and, consequently, the regulation of oil prices (McFarland). Today, both parties to the conflict act as if in counterbalance: whenever OPEC reduces oil prices, expecting increased demand, the U.S. dictates its own rules, limiting the right of an interstate company to regulate prices. The trend of OPEC reducing its influence in the developed world is becoming more visible, so it is likely that in the future, OPEC will cease to exist as an organization uniting the economies of the countries.
Outsourcing and Globalization
When borders between countries become smaller with globalization, competition begins to arise, not so much between companies as between people. As a result, the world becomes flat: on the one hand, it continues its downward trend and, on the other hand, there is close cooperation between people from different countries. This generates the effect of outsourcing, when economic units, as a rule, companies, enterprises, or even states, decide to move production to countries with cheaper or better-quality labor. For example, the production of Apple iPhones is a product of the U.S. and China, as the main production base for the assembly of smartphones (Xing). Another example would be hiring employees from other socio-economic and cultural models to perform specific tasks. In the case of IT start-ups, entrepreneurs may seek programmers’ services from other countries, as they may be more reliable in the tasks at hand.
Naturally, outsourcing becomes a useful tool in the hands of managers — in search of cheaper labor or to solve specialized tasks. It is fair to note that outsourcing is resorted to because of the mentioned reasons, but it is also often cheaper to hire employees on the side than to organize their production. Besides, thanks to this mechanism, it is possible to achieve various opinions and ideas that entail a critical rethinking of the product (Ikumapayi 1538). As a result, many ideas from people with different experiences and cultural backgrounds can be an advantage when developing a transnational product. Finally, outsourcing significantly reduces its social commitment to its hired employees (Mayer and Phillips 135). Typically, an outsourcing company employees do not need to pay vacations, sick leave, various benefits, or taxes, as this becomes an outsourcing obligation. As can be seen from all the above, outsourcing becomes a tool in the hands of globalization, as it simplifies the relationship between people and companies, puts them in the framework of labor agreements, and implements intercultural dialogue.
Al Sabah, Noufa Ali Salem. Economic Determinants of Public Budgets: The Case of Main
Oil Exporters. 2019, Web.
Griffin, James M., and David J. Teece. OPEC Behaviour and World Oil Prices. Routledge, 2016.
Ikumapayi, O. M., et al. Overview of Recent Advancement in Globalization and Outsourcing Initiatives in Manufacturing Systems. 2020,
Mayer, Frederick W., and Nicola Phillips. “Outsourcing governance: States and the politics of a ‘global value chain world’.” New Political Economy, vol. 22, no. 2, 2017, pp. 134-152.
McFarland, Victor. “The US response to OPEC.” Handbook of OPEC and the Global Energy Order: Past, Present and Future Challenges, edited by Dag Harald Claes and Giuliano Garavini, Routledge, 2020, n.d.
Xing, Yuqing. How the iPhone Widens the US Trade Deficit with China: The Case of the iPhone X. 2019, Web.