The Rise of Ecuador"s Rose Industry

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Assignment: 1

Submitted to:

Dr. M. Masud Rahman

Professor

Department of Finance

University of Dhaka

Submitted by:

Papia Sultana

ID# 36023

Batch no: 36

Department of Finance, EMBA

University of Dhaka

Date of Submission:  January 25, 2018

Question 1: Identify the opportunity and threat of globalization in the contest of rose industry in Ecuador?

Globalization has come as blessing for many countries. Since the countries started establishing networks and relationship with one another for another, globalization came into being. Besides, comparative advantages of nations made globalization more popular as it gives the nations opportunity to promote its unique products to other nations. Every nation is blessed with some natural comparative advantages such as oil, ore, gas, gold etc. Again, some nations are blessed with such environment that it helps them to grow particular products better than others. One such example is Ecuador’s roses, which are acknowledged to be the best in the world. They have huge heads and unusually vibrant colors, including 10 different reds, from bleeding heart crimson to a rosy lover’s blush. This uniqueness attracted people from all over the world; especially American consumers are the biggest consumers of this product. Because of globalization, all nations are introduced not only with new products and services but also with new culture. For example, Valentine’s Day, a European originated day, was also introduced in America and became popular and demand for roses on Valentine’s Day stood at 200 million. Because of this very popularity of new culture in America, New Jersey once became the rose capital of America. American’s demand for rose on Valentine’s Day was once met by domestic supply and a lot of jobs were created because of this demand. Now only 20% demand is met by domestic supply with production running only in California. A combination of high costs, lower trade barriers, and rapid intercontinental transportation led to the migration of production to countries like Ecuador. In Ecuador, the combination of intense sunlight, fertile volcanic soil, an equatorial location, and high altitude makes for ideal growing conditions, allowing roses to flower almost year-round. This natural advantage in rose production along with the migration of production from America led to the establishment of more rose production farms in Ecuador. In 1990s, the US government reduced tariffs on some South American imports, including flowers; which led to the boom of Ecuador’s Rose industry. As a result, 100,000 jobs were created. Taxes earned from rose export led to the pavement of roads, establishment of schools, and construction of sophisticated irrigation systems. Recently, the Rose industry came under criticism by scientists, International Labor Organization, doctors and various experts for the use of toxic chemicals to grow unblemished, pest-free flowers. This environment hazard is a threat for the export of rose and realizing this some Ecuadorean growers voluntary initiated the Fair Trade Certification system which will help customers identify responsible growers as well as will reduce environmental hazards.

Question 2: How do you relate similar experience of opportunity and threats in the context of Bangladesh?

Like Ecuador, Bangladesh has comparative advantage on few products. Since its birth, Bangladesh was well known for its jute production. Fertile soil along with a suitable environment for jute production helped Bangladesh to earn a lot of revenue from Jute export. One of the biggest destinations for Bangladesh’s Jute is India. However, Indian government has recently imposed anti-dumping duty on Jute import Bangladesh citing the reason that jute import from Bangladesh is deterring the growth of local Jute Industry.