Login or signup
36
STRATEGY

The Challenges -- and the Promise -- of Globalization

Advertisement

It was a small country with few natural resources. The leader knew he had to establish trading relationships with nearby countries in order to ensure prosperity for his people. He traded food for timber with the country to the north. He identified strong interest in his country's intellectual property from a nation to the southwest. Given that his country's port cities were already active hubs for ships arriving from distant lands, the leader actively encouraged global trade.

A visionary leader in the 21st century? No, King Solomon ruled Israel some 3,000 years ago. But as Economist writers John Micklethwait and Adrian Wooldridge stress in their insightful new book, A Future Perfect, global trade is nothing new. So, they ask, why has there been such a fuss from various groups about the alleged dangers of globalization? The vehemence of the demonstrators who disrupted last year's meeting of the World Trade Organization in Seattle left many observers scratching their heads over the reasons for the protest.

Micklethwait and Wooldridge take it upon themselves to examine the impact that globalization has had on businesses large and small in countries rich and poor. The path to globalization is not easy, the authors note, but the benefits both for individuals and society are great. More important, globalization is not something that has a positive impact only on the wealthier countries in the west. In fact, the authors argue, it is in the less developed economies where individuals stand to benefit the most from globalization.

The book is filled with examples that range from the predictable to the unique. In one of their more amusing case studies, the authors develop a solid argument for why the pornography industry in southern California is the ideal archetype for globalization. In the process, they give the term "international relations" a whole new spin.

Micklethwait and Wooldridge meticulously lay before the reader the various arguments that opponents make for why globalization is a harmful thing, and then neatly and effectively dismantle each argument. One such example is the contention that the process is necessarily a zero-sum game: Jobs that spring up in a less developed economy come at the expense of workers in a more developed nation. Who can forget Ross Perot's dire warning a few years back about the "giant sucking sound" we would hear in the U.S. if the American government signed the NAFTA agreement with Mexico? Of course, some jobs did go to Mexico, but the sound we heard was never that of a Hoover. And many companies that did rush to Mexico found that while labor costs were lower, other costs were high enough to render the savings on labor negligible.

Those who are against globalization have shifted their sights from protectionism to the quality of workers' lives. Here the authors acknowledge that globalization can cause changes that may in fact harm individuals. The Chinese laborer who sits in a poorly ventilated room assembling shoes using a noxious glue may be blind to the health risks because of the higher wages. But when the worker contracts emphysema, lung cancer, or some other disease as a result of the plant's working conditions, even the most confirmed free trader would agree that certain minimal health and safety standards must be met.

The authors do not dispute that globalization can wreak havoc in communities and countries. But they argue that while "globalization can be a savage process, it is frequently not the cause of the harm that it spreads." More often than not, bad management or corrupt government officials are the real villains in globalization gone bad. As the authors observe with acute insight, "globalization causes damage only because of bad decisions or weaknesses that nobody has ever sought to fix. Look behind any 'global' disaster story, and you tend to find a trail of woeful mistakes or willful crimes by governments, companies, and individuals." As with all such claims, Micklethwait and Wooldridge provide examples to support their arguments.

The pair plead for reason and an avoidance of histrionics. "There is a need to wrench globalization from all the dry talk of markets penetrated, currencies depreciated, and GDPs accelerated and to place the process in its proper political context -- as an extension of the idea of liberty and as a chance to renew the fundamental rights of the individual." Globalization can bring new opportunities, better education, improved health care, and an overall better standard of living. But companies and governments must understand that they have a responsibility that goes beyond pumping up the bottom line or fattening top management's collective wallet.

Globalism does not threaten us with a world dominated by huge, powerful corporations. On the contrary, they argue, globalization opens up new opportunities for the entrepreneur from any village, any country, and any culture to engage in business across town or across the world. Globalization is filled with promises for all, but especially for those living in countries or regions that have been bottled up by old ways of doing things. Globalization is not something to fight; rather, it is something to embrace. Channel the process to ensure the most good, conclude Micklethwait and Wooldridge, but don't block it.

All materials copyright © 2000 of the Wharton School of the University of Pennsylvania.

logo

Last updated: Jul 4, 2000




Register on Inc.com today to get full access to:
All articles  |  Magazine archives | Comment and share features
EMAIL
PASSWORD
EMAIL
FIRST NAME
LAST NAME
EMAIL
PASSWORD

Or sign up using: