Tag Archives: index of globalization

Digital Globalization– New Era Of Global Flows: Changing Rules– Rise of Connectivity, Decline of Cross-Border Trade…

Globalization is the ever-increasing integration of– people, cultures, business interests, innovation, governments… But its a contentious issue with people on one side, arguing that globalization is changing the world for better– propagating a heightened level of economic growth, improving human rights, improving access to technology, goods and services… On other side, critics argue– its destroying indigenous cultures, increasing inequality, deteriorating interests of workers, diminishing sovereignty of countries, exploiting under-developed countries to further the interests of the few developed countries…

The world is in midst of a rise in protectionism– anti-trade policies are at highest point since 2008 financial crisis. According to Fabrizio Minei; in recent years, the amounts of money that are flowing across-borders has drastically decreased, which represents drastic shift from international commerce, with localized markets more dependent on domestic consumption for growth… There is a global trend towards– regionalism, with like-minded nations banding together in a club of traders, or mini-lateral groups operating as most favored-trading partners. According to Joshua Cooper Ramo; localism is on the rise– local banking, local production, local sourcing for food, restaurants… 

However others take different view; they say rather than signaling the death of globalization, the decline in traditional metrics signals birth of a new digital globalization– one that is re-balancing geopolitics with geoeconomics… To succeed in the digital era, companies need to think about globalization in a different way, using different metrics, devise new frameworks to develop winning strategies… According to Jeff Immelt; it’s time for bold pivot, developing  strategy that focus on localization… but localism combined within a global footprint…

In the article Digital Globalization by James Manyika writes: The conventional wisdom says globalization has stalled, but even though the global goods trade has flattened and cross-border capital flows have declined sharply since 2008, globalization as world connection is not in decline; rather it’s entering a new phase defined by soaring digital flows of data, information… Remarkably digital flows that were practically nonexistent just 15 years ago, now exert a larger impact on GDP growth than centuries-old trade in goods. And this shift makes it possible for many organizations to reach global markets with less capital-intensive business models… Although it too poses new risks and policy challenges as well…

The world is digitally connected more than ever and it has changed globalization in fundamental ways… The amount of cross-border bandwidth has grown 45 times larger since 2005, and it’s projected to increase by additional nine times over next five years… as digital flows of information, searches, communication, video, transactions, intra-company traffic continue to surge… In addition to streams of data, information, ideas… these digital flows enable movement of goods, services, finance, people… Virtually every type of cross-border transaction now has a digital component…

International trade was largely confined to developed nations and large multinational companies… Today a digital form of globalization has opened the door to developing nations, small companies, start-ups, billions of individuals… Tens of millions of small, midsize enterprises, worldwide have embraced the digital economy and developed global e-commerce markets… Approximately 12% of the global goods trade is conducted via digital e-commerce. Even the smallest enterprises are digital global via the internet; 86% of tech-based start-ups report some type of cross-border activity…

Even individuals use global digital platforms to– learn, find work, showcase talent, build personal networks… Over a billion people have international connections on social media, and over 500 million take part in some type of cross-border e-commerce. In this increasingly digital era of globalization, companies can better manage cross-border operations in– leaner, more efficient ways… Using digital platforms organizations can sell into growing global markets, while keeping virtual teams connected in real-time…

Researcher find that over a decade, all types of digital flows acting together have raised world GDP by 10.1% over what would have resulted in world without cross-border flows. This value amounted to about $7.8 trillion in 2014 alone with digital data flows accounting for about $2.8 trillion of this impact. These digital flows are key for growth, as they expose economies to– ideas, research, technologies, talent, best practices from around the world…

In the article New Era of Globalization by ING writes: Globalization is like a fault line on the world’s ideological map: Most people are either passionate supporters or violent opponents of globalization–there is virtually no middle ground. According to Mauro Guillen; globalization is not a feeble phenomenon, it’s changes how world works– it’s neither civilizing or destructive, it’s neither monolithic or inevitable… but it does requires open-mind to understand it. The world has under-gone historic developments in last few decades; internet, smartphones, social media, rise of China, emerging markets, fast cheap travel. But the notion that globalization is a uniting and unifying force that eliminates nations’ physical borders is diminishing…

However there are many tricky issues and popular disenchantment with the concept of globalization. There is need for new (different) approach on how globalization economic and political policy impact working people, e.g.; economic equality of opportunity for middle class workers, more responsive governance to empower individuals at the local levels… without sacrificing the benefits of globalization. According to Lael Brainard; globalization is not a choice; it’s a force– driven by logic of markets and technology. It’s not product or service but process– it transforms the way people work and live and the very map of the world: You can’t stop it but you can shape it…

 

Rise of Globaphobia– Decay of Globalization to De-Globalization: World Intent on Re-Segregating Itself…

The word globaphobia means the irrational fear of economic globalization, which seems to haunt the popular psyche in most industrial countries… According to Reginald Dale; it’s a horrible mongrel of a word but it serves a useful purpose… It suggests that opposition to globalization is often based on emotion and wrong intuitive assumptions, rather than on reasoned analysis…

According to Lael Brainard; globalization is not a choice; it’s a force, driven by logic of the market and technological advance. It’s not a product but a process and it’s transforming the way people work and live, and the very map of the world. You cannot stop it but you can– shape it, manage it, derive many benefits from it…

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It’s hard to think of any aspect of modern life that globalization does not influence or touch in some way. The rising tide of globalization plays a growing role in– business, culture, environment, human migration patterns, international development, politics and science and technology… But not is all well with globalization, according to Fabrizio Minei; in recent years, the amount of money flowing across borders has drastically decreased… this represents a drastic shift away from international commerce… local markets are now more dependent on domestic consumption for growth and this trend could mark the end of modern globalization… But historically globalization is not new, during several decades there have been periods of shifts in global interdependence from globalization to de-globalization…

De-globalization is the process of diminishing interdependence and integration between nations. It’s widely used to describe the periods of history when economic trade and investment between countries decline… This decline occurs when individual national economies become less integrated with the rest of the world economies in spite of the deepening scope of economic globalization… Periods of de-globalization are seen as interesting comparators to other periods when globalization is the norm for many nations, such as, during years– 1850–1914 and 1950–2007…

However, even periods of stagnant international interaction are often seen as periods of de-globalization. The ‘KOF Index of Globalization’ shows a clear break of economic globalization in 2009… Even during the burst of the ‘dot com’ bubble and the events of 9/11 merely slowed down the pace of globalization, but there was no appreciable de-globalization effect. Whereas, the latest economic financial crisis created severe global impact, and a setback for globalization.

The KOF Index of Globalization 2014: The Index measures the three main dimensions of globalization: economic, social, political… In addition, it calculates an overall index of globalization and sub-indices referring to parameters such as: actual economic flows, economic restrictions, data on information flow, data on personal contact, and data on cultural proximity… It records these changes in globalization for a number of countries over a period of time.

The current 2014 KOF Index of Globalization involves 23 variables and covers up to 207 countries over the period 1970 to 2011. The KOF Index measures globalization on a scale from 1 to 100. The values of underlying variables are divided into percentiles, and extreme peaks are smoothed, resulting in lower fluctuation over time. The recent rankings show– Belgium and Ireland leading the pact, followed by Netherlands, Austria, Singapore, with Sweden 6th, Denmark 7th, Hungary 8th, Portugal 9th… and the biggest jump among the most global countries was Switzerland, which dropped two places to rank 10, and gaining two places, the U.S., the world’s biggest economy ranked 32nd.

The fact that the U.S. economy is not particularly open to rest of the world stands in the way of a higher ranking. China, the second-biggest economy dropped three places to rank 72.

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In the article Is It the End of Globalization? by David Francis writes: In the three decades before the 2008 financial crisis individual national economies became increasingly global but, in recent years, amounts of money flowing across borders has drastically decreased. According to McKinsey Report, the trend represents a drastic shift away from international commerce with local markets more dependent on domestic consumption for growth, and it suggests that this could mark the end of modern globalization…

The McKinsey Global Institute Report; measures how much money was removed from the global financial system in the wake of the financial crisis and the worldwide economic slowdown… The results are staggering; in 2007, $11.8 trillion in capital in form of investments, loans moved internationally… But in 2012, only $5 trillion crossed international boundaries, which is back to the level it was in 2000.

McKinsey hedges the report by saying that some of the capital removed from the system was part of a necessary global correction. But it also warns that global growth would be extremely difficult without more money in the system. For three decades, capital markets and banking systems rapidly expanded, diversified, but now that process called ‘financial deepening’ has largely grounded to a halt. Although global financial assets have surpassed the pre-crisis totals, growth has hit a plateau.

According to McKinsey; the global economy is at a crossroads: One path leads to regulatory integration on a global scale, creating national economies with extremely close ties. The second path leads to a world where national economies are more isolated and rely on domestic consumption for growth: It remains to be seen which way we’re headed…

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In the article Have we reached the end of globalization? by globalpublicsquarestaff write: Globalization impacts every single thing around us. So here’s the big question: Have we reached the end of globalization? For much of the last thirty years there has been a steady trend in commerce; global trade has expanded at about twice the pace of the global economy, for example, between 1988 and 2007, global trade grew on average by 6.2% a year according to the World Trade Organization. During the same period, the world’s GDP was growing at nearly half that pace: 3.7%…

But a strange thing has taken place in the last few years. Growth in global trade has dropped dramatically, to even less than GDP growth. The change leaves one wondering: Has the transfer of goods around the world reached a pinnacle? Has the world exhausted the drive for ever-more-globalization?

The world has undergone historic developments in the last few decades: Internet, China’s opening up, rise of emerging markets, fast and cheap travel… all of these trends led to a massive acceleration in global trade. But have those trends peaked? Are people getting more interested in local products compared to global brands?

According to Joshua Cooper Ramo; localism is on the rise– local banking, local manufacturing, local sourcing for food and restaurants… Is this simply a pause or could it be more than that? According to Global Trade Alert, we are in the midst of a great rise in protectionism, for example; in the 12 months preceding May 2013, governments around the world imposed three times as many protectionist measures than moves to open up. Anti-trade policies are at their highest point since the 2008 financial crisis.

According to the Petersen Institute; the rise of these measures cost global trade 93 billion dollars in 2010… Globalization and trade have produced huge benefits for people, especially the poor, who have been able to make their way out of poverty in a faster growing, more connected global economy. But globalization won’t continue by accident or stealth– politicians must help make it happen…

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In the article The End of Globalism by John Ralston Saul writes: Grand economic theories rarely last more than few decades. Some, if they are particularly in tune with technological or political events, may make it to half a century… Thousands of people have done well out of their belief in globalization, and their professional survival is dependent on our continued shared devotion to the cause. However we have scarcely noticed this collapse, because globalization has been asserted by its believers to be inevitable– an all-powerful god; a holy trinity of burgeoning markets, sleepless technology, borderless managers…

Opposition or criticism are treated as little more than romantic paganism… Inevitability is the traditional final justification for failing ideologies. Less traditional– and a sign of inherent weakness– is the extent to which globalization was conceived as old-fashioned religiosity. Perhaps the economists and other believers who launched globalization were instinctively concerned that people would notice this new theories was oddly similar to the trade theories of the mid-19th Century, or the unregulated market models that had been discredited in 1929… So do they threat these intervening 40 years as an accidental interval, and began again where their predecessors left off…

Is globalization truly come to the end? It’s debatable, but globalization does provides both opportunity and challenge, for example; financial system globalization is inevitable to avoid… more nations will choose to gain common development opportunity through global– partnership, sponsorship, joint-ventures…

According to Hussein Shobokshi; the main idea behind globalization is the entire world would benefit from a closer exchange of ideas, technology, experience… But, many nations’ reaction to the financial crisis was that they turned inwards, erecting barriers and imposing restrictions in order to ‘protect’ national economies. Furthermore, countries gave priority to national industries. As a result of this, the idea of globalization being a uniting and unifying force that does away with borders has proven false…

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According to Mark Leonard; there is a global trend of competing mini-lateral friendship organizations, for example; on one hand, there is the ‘world without the West’, which encompasses the BRICs (Brazil, Russia, India and China), and the Shanghai Cooperation Organization, and a host of sub-regional bodies… On other hand, the West is creating new groupings outside the universal institutions, such as; Trans-Pacific Partnership, Transatlantic Trade and Investment Partnership… But, the interdependence that formed the foundation for major economic growth has now become a threat…

Most major countries are not willing to lose out on the great benefits of a global economy, but all these countries are also thinking about how to protect themselves from its risks… Hence there is movement that undermining globalization in the form of de-globalization, for example; China is moving toward domestic consumption… U.S. is moving toward energy independence… Russia is trying to build a Eurasian Union… And even Germany is trying to change the EU so that its fellow member states are bound into German-style policies.

Since the Cold War interdependence has been a force for ending conflict, but now it’s creating it. After 25 years of being bound together ever more tightly, the world seems intent on re-segregating itself…