Backdrop to International Trade
Any student or professional wanting to understand more about Imports and Exports would have to understand the history and economic principles that have chartered the course of international trade to its current regime. In the backdrop of the countries economic policies and financial conditions such as its balance of payments situation, the governments formulate rules […]
Integrated Product and Process Development – Meaning, Advantages and Key Factors
Introduction Objective of any organization is to provide customer satisfaction by building product and services, which not only satisfy needs and want but also create value for them. This requires product design based on the customer feedback and production process which not only minimizes cost but also provides a competitive advantage. However, most organizations tend […]
Is Foreign Investment Beneficial to the Developing Countries ?
Types of Foreign Investment and its Implications for Developing Countries With the opening of the economies of the world, there has been a concomitant increase in the flow of investment from the west to the east. As capital from the west started flowing into the developing countries in search of better yields, these countries are […]
Role of a Process Owner in a Six Sigma Project
The process owner is the person who is supposed to be in charge of the improved Six Sigma process. Since they are the one that have to run the process after it is improved, it is essential that play a role in the Six Sigma project. Although the process owners are not involved in the […]
The Falling Fortunes of Global Aviation Industry
The Global Airline Industry and its Travails It is an open secret that airlines all over the world are bleeding due to various reasons. They range from overcapacity and the intense competition or fare wars and price cuts by lower cost airlines to the fact that operational expenses have gone up so much that profits […]
The famous author and cheerleader for globalization, Thomas Friedman, in his book The World is Flat identified some key drivers of globalization. He called these factors the flatteners to denote the premise of the book that these factors were responsible for the flattening of the world.
In other words, globalization has ensured that all countries with minimum infrastructure and educated workforces have the same entry level meaning that there are no “walls” or barriers to trade and hence the world is flat.
These flatteners or drivers of globalization include:
If we take the first driver of globalization, the integration of the global economy has mainly been due to the rapid spread of IT and communications that enabled countries like India and China to circumvent hitherto aspects that were holding them back.
In other words, the increasing interconnectedness was driven by real time communication between the West and the East which enabled these countries to reach out to wider markets and audiences in the Western countries. The classic example in this regard is India that has managed to tap into the booming market for IT and process outsourcing. As the next paragraph points out, China leveraged the spread of IT and communications technologies in a different manner.
Further, the fact that China became a manufacturing powerhouse is largely due to the fact that though the country is still lagging behind in English speaking populace, it has been able to leverage the shift in jobs from the West to the East.
The point here is that with IT, Communications and English spreading rapidly, India was able to leapfrog the Industrialization phase of Globalization whereas China drew strength from its youthful population as well as the tendency for business leaders in the West to look for ways and means of cutting costs.
The way in which western businesses invested in physical infrastructure to support the communications revolution during the dotcom bubble made the process of integration of the world economy easier.
The point here is that after the dotcom bubble burst, there was excess capacity in the broadband infrastructure which meant that communications costs came down drastically. This is also proved by the rapid spread of mobile technologies in Africa, India and China that attests to the trend described here.
Finally, since a major proportion of the world’s population was fluent in English, many of these countries could communicate with the West effectively as well as ensure that they understand the technical and financial aspects of the Western form of capitalism.
In the case of China, the managers and the upper levels of its industries and companies were conversant with the Western methods of doing business that helped its cause greatly.
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What the Current Wave of Protectionism and Populism mean for the Future of Globalization and Free Trade
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