Globalization is a Good Thing (Isn't It?)
Ralph Peters, writing in the Sept. 4 issue of The Weekly Standard said something provocative:
“Globalization is real, but its power to improve the lot of humankind has been madly oversold. Globalization enthralls and binds together a new aristocracy--the golden crust on the human loaf--but the remaining billions, who lack the culture and confidence to benefit from "one world," have begun to erect barricades against the internationalization of their affairs. And, from Peshawar to Paris, those manning the barricades increasingly turn violent over perceived threats to their accustomed patterns of life. If globalization represents a liberal worldview, renewed localism is a manifestation of reactionary fears, resurgent faiths, and the iron grip of tradition.”
Though I’m an affirmed globalist (for the simple reason that technological advance has clobbered time, distance and national boundaries) , I must concede that Peters has a point. For the individual firm, the potentials of global connectivity in developing expanded information, new customers, dynamic partnerships, research and development breakthroughs, and cost efficiencies is immense. Proctor and Gamble is successfully partnering with R & D talent abroad and anticipates that 50% of its new product development will come from outside the U.S. by 2010. Public Financial Management, with under $100 million in revenues, is offshoring a lot of routine financial data entry work to free up resources that can be applied to the company's customers. I recently gave a speech to 400 small business owners and entrepreneurs, and one of my main points was that with the availability of new technologies and strategic alliance opportunities, every company ought to consider itself a global company and look beyond domestic borders for growth potential.. Any company that doesn’t, by the way, will be fodder for firms outside the U.S. who do. Globalization is inevitable, and the savvy leader will seek to capitalize on it, not pretend it doesn’t exist.
And yet, when it comes to nations themselves, the reality is more complex. In the long run, the impact of globalization is solidly beneficial. Empirical economic data are unequivocal about this point. In fact, countries that have attempted to put a brake on this process with tariffs, quotas, trade barriers and other forms of protectionism have consistently generated economic stagnation.
But on the flip side, the “trickle-down” benefits of globalization might indeed, in the short run, be just a trickle.. In both rich and poor countries (including the U.S.), local traditions and habits might be threatened; local businesses might be decimated; local people might lose jobs which are farmed abroad and not have the skill sets to seek something better.
Politicians and business executives must recognize this complex fact of life. They shouldn’t adopt simplistic “let the global marketplace prevail, even if it’s painful” (for others, of course) or simplistic “let’s ‘protect’ our businesses and workers from foreign competition”. Neither black-white alternative will work in the long haul.
Globalization is a good thing. It spurs efficiency. It spurs healthy competition. It spurs agility. It offers avenues for new customers, sales, licenses, distribution channels, partnerships, and such. I always advise my clients to develop their corporate strategies with these premises in mind.
Yet for many individuals, and countries, the tough times may precede the good times. I think Ralph Peters’ words are prescient. Which means that leaders in both the private and public sector should start collaborating on ways to constructively smooth the edges and buffer some of the pain of unfettered globalization—without killing the free market goose that lays the golden eggs. It’s a conundrum: On one hand, smothering free markets with good protectionist intentions will lower the prosperity bar for everyone. On the other hand, it’s hard to sustain economic growth and prosperity in any country when its social landscape is in upheaval.
“Globalization is real, but its power to improve the lot of humankind has been madly oversold. Globalization enthralls and binds together a new aristocracy--the golden crust on the human loaf--but the remaining billions, who lack the culture and confidence to benefit from "one world," have begun to erect barricades against the internationalization of their affairs. And, from Peshawar to Paris, those manning the barricades increasingly turn violent over perceived threats to their accustomed patterns of life. If globalization represents a liberal worldview, renewed localism is a manifestation of reactionary fears, resurgent faiths, and the iron grip of tradition.”
Though I’m an affirmed globalist (for the simple reason that technological advance has clobbered time, distance and national boundaries) , I must concede that Peters has a point. For the individual firm, the potentials of global connectivity in developing expanded information, new customers, dynamic partnerships, research and development breakthroughs, and cost efficiencies is immense. Proctor and Gamble is successfully partnering with R & D talent abroad and anticipates that 50% of its new product development will come from outside the U.S. by 2010. Public Financial Management, with under $100 million in revenues, is offshoring a lot of routine financial data entry work to free up resources that can be applied to the company's customers. I recently gave a speech to 400 small business owners and entrepreneurs, and one of my main points was that with the availability of new technologies and strategic alliance opportunities, every company ought to consider itself a global company and look beyond domestic borders for growth potential.. Any company that doesn’t, by the way, will be fodder for firms outside the U.S. who do. Globalization is inevitable, and the savvy leader will seek to capitalize on it, not pretend it doesn’t exist.
And yet, when it comes to nations themselves, the reality is more complex. In the long run, the impact of globalization is solidly beneficial. Empirical economic data are unequivocal about this point. In fact, countries that have attempted to put a brake on this process with tariffs, quotas, trade barriers and other forms of protectionism have consistently generated economic stagnation.
But on the flip side, the “trickle-down” benefits of globalization might indeed, in the short run, be just a trickle.. In both rich and poor countries (including the U.S.), local traditions and habits might be threatened; local businesses might be decimated; local people might lose jobs which are farmed abroad and not have the skill sets to seek something better.
Politicians and business executives must recognize this complex fact of life. They shouldn’t adopt simplistic “let the global marketplace prevail, even if it’s painful” (for others, of course) or simplistic “let’s ‘protect’ our businesses and workers from foreign competition”. Neither black-white alternative will work in the long haul.
Globalization is a good thing. It spurs efficiency. It spurs healthy competition. It spurs agility. It offers avenues for new customers, sales, licenses, distribution channels, partnerships, and such. I always advise my clients to develop their corporate strategies with these premises in mind.
Yet for many individuals, and countries, the tough times may precede the good times. I think Ralph Peters’ words are prescient. Which means that leaders in both the private and public sector should start collaborating on ways to constructively smooth the edges and buffer some of the pain of unfettered globalization—without killing the free market goose that lays the golden eggs. It’s a conundrum: On one hand, smothering free markets with good protectionist intentions will lower the prosperity bar for everyone. On the other hand, it’s hard to sustain economic growth and prosperity in any country when its social landscape is in upheaval.
posted by Oren Harari at 10:45 AM
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