Globalization: A Sweet Word Gone Bitter?
Joan Marques - Ed.D., MBA.
With the recent commotion around offshore outsourcing the word globalization has landed in a black book for many citizens of industrialized countries. This is particularly unfortunate, because the very trend of going global was initiated by these same industrialized countries at a time when they were in search for alternative markets for their massive productions of goods.
Here's the perspective that many fail to acknowledge: offshore outsourcing is definitely nothing new. It's just the same ligament on the body called globalization, but now seen from the other side. A recent Business Week article explained it outstandingly by stating that, in the past, the same corporations that are now outsourcing jobs were outsourcing products. Basically, these companies were then offshoring the "demand" for American goods and services to countries such as India, while they are now simply making the next, logical step, which is "continuing their strategy of profit maximization by outsourcing the supply of their products."
Although it is therefore understandable that the actuality of globalization is finally hitting home for a large group of U.S. workers who, up till recently, had no clue where the geographical locations of their just-lost jobs were, it remains regrettable that this had to be the way for innocent people to get confronted with reality.
Another interesting fact is emphasized by Forth in his article "the road to Bangalore" (FDM), in which he points out that it is remarkable how little uproar there was when blue-collar jobs were massively exported and the little man was left penniless, but that, now it has been demonstrated that executive positions are not abstained from this world-encompassing development, the inconvenience is vigorously being vocalized.
To shine some light on the essence of this issue for all citizens of the world, it might be useful to evaluate some recent comments from reputable news sources on globalization, and thereby list a few important facts:
Now, if you understand this simple economical principle, globalization should be easy to understand and accept. If we value the concept of complete market competition within our local economy, why should we oppose it at a global level?
References:
* Anonymous. (2004). DON'T MAKE OUTSOURCING A SCAPEGOAT FOR WESTERN WOES. Business Week(3882), 7.
* Anonymous. (2004). Evaluating Potential in Emerging Markets. World Trade, 17(6), 30.
* Drezner, D. (2004). The Outsourcing Bogeyman. Foreign Affairs, 83(3), 22.
* Forth, K. (2004). The road to Bangalore. FDM, 76(6), 4.
* Hammond, A., & Prahalad, C. K. (2004). SELLING to the POOR. Foreign Policy, 142(30), 8.
* Krauthammer, C. (2004). Where Presidents Have No Power. TIME, 163(19), 88.
* Wright, T. (2004). Opening Doors, Crossing Cultures. T+D, 58(5), 25.
* Zedillo, E. (2004). On China's Rise. Forbes, 173(11), 043.
Burbank, California1. Globalization is only bad for people who refuse to realize that they live on the globe, and that there is more to the world than their own country or workplace. The lesson to be learned from the recent offshore scares is that it is the highest time for every citizen of the world to enlarge his or her horizon by using every opportunity to familiarize him- or herself with other parts of the world. In a May, 2004 article published in Alexandria, Wright, a U.S. citizen, explains his eye opening experience while studying in Argentina for six months. He emphasizes the emergence of his current broadminded perspective through daily exchange of perceptions and ideas with locals. He then calls for American youngsters to look for ways to do the same: getting over their fear of leaving their comfort zone and their insecurity to face adventure, and finding opportunities to work and study abroad for a while in order to get a better understanding of what's out there and how to make it useful.
2. Globalization is crucial for companies, but they should realize that there are certain things to examine before deciding their next geographical location of business: the transparency of the local market is one of the main things World Trade mentions in its June, 2004 edition. Political stability is another point to ponder. However, this point should be considered along with other issues. China, for instance, is economically far less stable than India, but for some types of business China may be a better target point. Conclusion: there is a multiplicity of factors to be evaluated. Not just one.
3. Maintaining a global mindset is equal to maintaining a futuristic mindset. Globalization will not be reversed, so protectionism is silly and, on the long run, distressing for a country's economy. Drezner warns in the May/June 2004 edition of Foreign Affairs, "resorting to protectionism to halt the process [of reallocating labor and capital to more profitable sectors of the global economy], is a recipe for decline." Drezner subsequently stresses, "An open economy leads to concentrated costs (and diffuse benefits) in the short term and significant benefits in the long term. Protectionism generates pain in both the short term and the long term."
4. Globalization is more a business than a political trend. It is therefore a fact, like Krauthammer states in the May 10th edition of "TIME," that no government has the power to influence its ups and downs. It is, hence, senseless to honor administrations for job creation, as much as it is to accuse them of job losses. The article clarifies that job creation in the 90's was not President Clinton's virtue, but the result of business decisions made at that time by globally operating corporations such as Microsoft and IBM. In a similar perspective, the current job losses in the U.S. cannot be attributed to President Bush, but to the development of the Internet and the decisions of business corporations to take their outsourcing practices to the next level at this time.
5. Opening one's mind for globalization enables every individual to realize the various fascinating trends that are present in the world, and get a better understanding of the specific characteristics of the various continents: everyone has its own interesting qualities. In the May 24 edition of Forbes, for instance, China is reviewed as a country with a culture that rather focuses on challenges than achievements, which may explain their tremendous economical growth in the past 25 years. Especially when compared to Latin America, which experienced a meager fourth of China's growth, most likely because of the predominant mentality in this part of the world to blame all other nations and continents but itself for its slow growth.
6. Globalization is just the market of pure competition seen in a larger scope: there are a large number of autonomous and knowledgeable buyers and sellers of an identical product, so the performance of one player affects that of others. The May 10, 2004 edition of Business Week explains that India's IT industry grew through self development and hard work from a pool of talented people, and not through "political support or patronage." Isn't this, then, exactly what business is about? In the business world we see that one organization benchmarks in order to find out what it can learn from competitors. On basis of the findings from this process of leveling, the organization increases the quality of its products and processes. The ultimate goal of the organization is to find more customers for its products.
7. The outcome of globalization will definitely not be negative for countries that have demonstrated resilience in the past. Even while the scare for job flight is at its height, the signs of new job creations are already emerging. And, as Drezner states in the May/June 2004 edition of Foreign Affairs, "The creation of new jobs overseas will eventually lead to more jobs and higher incomes in the United States." Drezner elaborates that the lion share of jobs in the U.S. require being local by their very nature, and from those who actually lost their work to overseas competitors, the majority has been repositioned within their own company.
8. Like businesses, countries will learn to focus on their area of expertise through globalization. The perfect competitive market situation that is currently emerging will result in that. And once every link in the global production chain knows its specialty, mutual respect and acceptance will increase, as well as an improved level of organization in what currently seems chaotic.
9. Globalization offers so many opportunities that are still unexploited. People and companies in industrialized countries should, for example, learn to adapt their products and services to the great, untapped market of poor global citizens. A simple adjustment of packaging and size can do miracles. The greatest mistake any player in the global arena can make - as we have found out by now - is to underestimate the potential of any stakeholder. But if, as Hammond and Prahalad suggest in the May/June 2004 edition of Foreign Policy, "large businesses stop regarding the world's 4 billion poor people as victims and start eyeing them as consumers," globalization may truly show its exotic beauty and tremendous strength to the max.
10. The best way to handle globalization is to let it crystallize itself out. Think of a crossroads where the lights are out of order: most of the time things work out fairly well as long as the traffic participants have to look out for themselves. It's only when the hand of the law starts to interfere that long lines and aggravated drivers start developing. Governments should bring up the maturity to recognize the necessity of allowing the world to interact uninterruptedly. We initiated this trend, now the best thing we can do is to leave it alone.