Globalization
Globalization[1] is
the process by which the markets of different countries become increasingly
integrated thanks to the exchange of good, services, technology and capital. Exchanges
between people in countries far apart are now fast and simple, thanks to the
development of new ways of communication, both virtual and real. A very good
example is the film industry: before, films were released in the US and Europe
and then cascaded down to undeveloped countries. Today, films are released worldwide
simultaneously to avoid illegal copies to eat up a slice of the market share. Globalization
depends on economic factors and on social aspects, such as the relationship
with other cultures and the dissemination of information. Globalization has
changed the way we work. Today, people in countries cooperate to produce and
distribute the same goods of services.
What is the effect of globalization?
Globalization does not eliminate the inequalities and the distribution of
wealth, but it does encourage investments in the less developed areas of the
world, and allows poorest countries to find markets in richer ones. Globalization
is not a new thing: during the last three Industrial Revolutions, the
developments of transport and communications facilitated the launch and
integration between the countries. Today, you buy a T-Shirt designed in France
but produced in China. Since the 1960s underdeveloped countries have been
manufacturing consumer goods for domestic markets but primarily for foreign
ones.
Globalization has had positive effects on the
eradication of poverty. Extreme poverty, defined as a condition characterized
by severe deprivation of basic human needs, including food, safe drinking
water, sanitation facilities, health, shelter, education and information, has
been reduced by half in the last 15 years!!! By the year 2030, people living in
extreme poverty will drop to less than 400 million. Since the end of WW2, Free
Trade agreements and technological advancements mean good and services move
around the world more easily than ever. The Mobile Phone, sponsored by our
genius Steve Jobs, are the most transformative technology when it comes to the
developing world. Phones give people access to banking, and payment systems,
better access to education and information. In some places, mobile phones help
farmers get information and get the best price for stuff they are producing. International
Trade has also created new opportunities for people to sell their products and
labor in a global market place.
In a globalized world, the low end jobs are
being outsourced to countries where labor is cheap and regulations are weak (workers rights). In developed
nations, consumers get good products at a cheaper price and stockholder get
value for their money, but the workers that had those jobs lose them towards
jobs overseas. Globalization has fans and detractors. Those who are positive
towards it mean that it helps economy to grow by offering more opportunities to
workers, which in time puts upward pressure on wages. Those who are negative
think that it is not sustainable and has adverse effects on global climate.
According to Swedish economist Hans Rosling[2]:
the way globalization is occurring could be much better, but the worst thing is
not being part of it. In a fantastic documentary, Hans Rosling shows the
advances in life expectancy, income, etc., in the last 200 years. Check it out:
The first 3 Industrial Revolutions made
countries in Europe move away from the rest. The countries in the West developed more rapidly, while other countries were hindered in their
development. Two World Wars had catastrophic effects but also contributed to
technological development. Notice however how from the 1970s strong growth in
South East Asia (Rise of China), and Latin-America (Brasil), meant accelerated
development for developing nations.
Rosling addresses the fact that developing
nations have been rapidly catching up with developed nations the last 40 years
at a fast and steady pace. He addresses the differences in inequality between
nations, but also within Nations!!! He remarks regional inequalities showing
the case of China, where Shanghai produces as much as Italy, but Guizhou
produces the same as Pakistan, not to mention differences in social classes. We
have seen 200 years of remarkable progress, where that huge gap between Western
countries and the rest of the world is shortening. Hans Rosling is optimistic
and sees a bright future with aid, trade, green technology and peace where it
is fully possible that anyone can make it to the wealthier corner.
In developed nations, where people have the
luxury of functioning healthcare and education systems, Revolution 4.0, or the
Knowledge Based Economy, will offer possibilities for people from lower and
middle classes to fight inequality by becoming knowledge experts in their field
and turning that into a products or services. Whereas Europe took the lead in
the last 3 industrial revolutions, free access to education and resources will shorten the gap even more. Hans Rosling is right in naming that Nations
will eventually converge in a long term perspective. He is also right in being
optimistic about the future. After all, we are reaching an era of balance and
prosperity for the people of Earth.
Cristian Bøhnsdalen
CMO/CFO
& Co-Founder @ITRevolusjonen
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