Globalisation

The world in the 21st century is very different from anything we have experienced in the past. The advancements in technology and primarily the internet and the .com boom has revolutionised everything we do. While globalisation is seen by many people as an evil that allows multi nationals to take over the world, it is quite the contrary. It has enabled the small players and start ups to have access to resources that allow them to compete in the global market.

Take Amazon as an example, while it may have a significant market share for online shopping in the US and UK, what it has enabled smaller companies to do is to utilise the Amazon website to market products to a global audience and allow Amazon to worry about supply chain issues, while the retailers can focus on providing the best products to clients.

Globalisation allows for basic processes to be commoditised, outsourced and automated. If it can be done cheaper and more efficiently, it will be done. What this enables people to do is focus on the aspect of their company or work that is truly adding value. So if you are a charity trying to raise money, you focus on raising money and not how you will process the transaction – because paypal will take care of it for you.

This is what Globalisation is truly about, providing people with access to a global market at little or no cost, when doing this on their own would have made the venture too expensive to even consider. It is about creating new opportunities and being able to adapt to the rapidly changing global market.

Most people who may be against Globalisation, don’t understand it enough or fear that they may lose their jobs and they have every reason to be worried. The answer to this fear is not to resist this change, but instead embrace it and make sure you have the necessary skills to benefit from this change. Taking the mobile industry in India, for example, the cost of making a phone call is so low that the providers have very little scope to make money from it, their answer? “Value added service”, this is where they provide consumers with everything from data capabilities to special ring tones all at a small premium which people are willing to pay. Surviving in this new world is all about adaptability and innovation. There is no room for mediocrity or sitting back and hoping that what worked for you in the past will work in the future.

I am by no means saying that large corporates have sometimes exploit the advantages they have, however, the net effect in my opinion is a positive one. Even the multi-nationals however, and very quickly losing this advantage and on a level playing field with the rest of the world. They are being watched by everyone, a small mistake and the damage to their brand and reputation has a real impact on their revenues. Even if they are not driven for social reasons to be responsible they most definitely do so for economic benefit. It’s a win-win whichever way you might look at it.

Globalisation is creating a level playing, a place where it’s not about geographic locations but the quality and efficiency with which you can produce a product or provide a service. China for example exports more to the USA than Mexico, who’s right next door. We are moving towards a world where the focus of any company is on the final product rather than transport or other overheads (unless of course you are in the transport business).

A lot of the points I’ve discussed above were brought to light while I was reading the book “The World is Flat” by Thomas L. Friedman. He goes into a lot more detail on some of these points and if anyone is interested in Globalisation or anything to do with how we ended up in this complex and high-tech 21st century society, I’d strongly recommend it.

When I have more time I hope to write a better researched post on Globalisation, but for now, these are just some thoughts and my opinions…

Advertisements

One thought on “Globalisation

  1. 1) It is important to first understand what is meant by globalisation and its context before jumping to its seemingly positive or negative consequences. While the current era of globalisation has been described by many as “unprecedented” it is by no means the first. Globalisation as we know it today is the third wave of globalisation and although it is taking place at an unprecedented level, it is similar to the wave experienced between 1870-1914.

    2) The proponents of globalisation argue that increased cross-border economic activities, especially when combined with the adoption of “global standard” rules, have brought, and will bring, enormous benefits for all of us. On the other hand, many critics point out that globalisation has increased inequality, unemployment, and poverty.

    Many proponents of globalisation ignore these problems, but even when they acknowledge them, they would argue that globalisation ultimately benefits everyone, as it accelerates growth and creates more wealth, which will eventually “trickle down” to everyone.

    Despite the bad press it often gets, the “trickle down” argument has a point.
    We should not judge things only in terms of their immediate effects. If the American auto workers who have lost their jobs because their factories moved to Mexico can find better-paying jobs in, say, the computer industry because the USA now exports more computers to Mexico, the temporary cost from unemployment for the auto workers may be a price worth paying for.

    Of course, the problem is that things do not exactly happen this way – it is costly to re-train workers for new skills and relocate them to areas where new industries are developing – in technical terms, labour mobility is limited – and therefore only a small number of people will get new jobs that are better paid than their old jobs.

    In the absence of full trickle-down, the result of globalisation has been rising inequality.

    3) The main problem with globalisation is that institutions which govern this process – whether they regard international finance or global trade are biased in favour of developed countries due to the nature of the Bretton Woods institutions. Globalisation does not create a level playing field – take a simple example of global trade rules in the WTO – since in the trading system players are not equal, the idea of ‘levelling the playing field’ becomes absurd – it would be like 13-yr-olds playing football against the Brazilian national team – whereas in most sports, unequal players are not even allowed to compete against each other!

    4) And if you are an out and out proponent of globalisation then maybe you would like to refer to back to Friedman himself who despite praising its merits referred caution in “The Lexus and the Olive Tree” – where he urges societies to strive for material luxury symbolised by the Lexus car while recognising the need for the olive tree, symbol of individual and communal roots. The challenge is to find a healthy balance between preserving a sense of identity, home and community and doing what it takes to survive within the globalisation system.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s