Globalization -- what next?

Recently, there has been a lot of talk about globalization's bad effects. This has come into light as it has become a theme of democratic elections across the globe, including the elections in the USA. Majority in the world was surprised by the people's vote in favor of BrExit as well as for Donald Trump. In this article, Satya Kella, our Business and Executive Coach, is expressing his views on this phenomenon, based on his vast experience and observations.

System Adaptaion Happens in Waves

As most of the countries in the world moved from Royal and other types of ruling towards Democracy, trade and economy policies of countries have been trying to adapt to the globalization principles for the last many decades. In fact, the world has been 'globalizing' for centuries now. With the advent of technology, globalization has become the main theme of countries' economies. So, one may be wondering where it is going to end, watching the spurt of adaptation of globalization principles and now the push towards anti-globalization. But, we have to note that any major shifts happen in waves -- first everyone jumps onto the bandwagon quickly; but as there are two sides of a coin, there will be some negative effects also; so, the wave goes through a trough as the negatively affected people gather thus creating anti-shift movement; that results in adjusting parts of how the shift is implemented, thus creating another peak of interest in that shift; over a period of time, the negatively affected people will again gather to create the next trough of anti-shift movement thus resulting in further adjustments; and, this cycle goes on and on, until the next disrupting shift takes over. Thus, in the case of globalization also, the wave pattern can be expected. The push towards anti-globalization will lead to some adjustments in the way economic activities are operationalized. The modified globalization will attract more favor towards it until some years.

At a Point of No Reversal

When it comes to globalization, the number of beneficiaries far outweighed the negatively impacted. Thus the globalization shift has been majorly adopted by many people, driven by businesses' drive towards more efficiency. However, combined with the recent technological and geopolitical changes, the negatively impacted people have been raising their voice recently. This is evident in the USA elections, BrExit voting, demonstrations in Greece and other countries, etc. However, will that lead to the reversal of trend thus going back to the self/indigenous pattern? No, absolutely not! We are at a point of no return, because the reversal shall result in far negative consequences than positives. For example, let us take the case of manufacturing industry in the USA. Anybody can easily see how the low-cost chinese manufacturing has pushed away the local manufacturing jobs. However, if a reversal tried is by banning the imports in this manufacturing sector, there will be more negative impact (e.g., high prices leading to unaffordability of consumer) than benefits. Also, automation is another factor that has been taking away the traditional jobs. So, in stead of banning or heavily-taxing imports, policy makers have to look at how Chinese manufacturing is so effective in cost management and look at ways to improve the local cost-competitiveness. That means adapting to technological and other skill upgrades. Thus, globalization will not be reversed but competitiveness is embraced; this will automatically bring the manufacture local. Similar is the case with all industries that embraced the globalization philosophy.

Conclusion