Globalisation or Anti-Globalisation?

The foundation of this post has been laid in the afternoon after there has been a forward on one of the bakar threads and it has been satirically replied by Rajiv. The forward was regarding support to Indian goods and boycott foreign products and unusually, a non-sense thread got some good view points.

Globalisation has been mostly hated in developing nations on the notion that rich nations and companies are spreading a colonial regime, utilizing poor nation’s resources, manpower and buying power (countries like India/China). There are lot of pamphlet circulations, e-Mail chains to support these causes with examples like Coke price being of 60P while its being sold at Rs. 9 etc. I agree, but would you wonder if i say that Coke is the dream marketing company of world’s best B grade student? Here product is secondary and how’s that being sold is more important and this conundrum reflects in the cost too. Some pretty basic Business funda. A very layman’s example to perhaps make it more understanable to junta: In my native place, Sand is mixed with cement in some proportion while building houses etc. That sand is free of cost and is being brought from the bank of Ganges river, but still you have to pay couple of hundred bucks to get that trolley in ur doorsteps because it involves the transportation cost, driver’s services and other labor. There is a price for free product !!!

This globalisation becomes more hated in turbulent times like present. USA is falling apart and nations are/might try to follow protectionism approach. There has been statements from PSU banks after ICICI reported big losses sometime back that they are safe as they have been wise enough not to expose themselves to US derivates. Good to hear but how many of them share the same pace of growth as ICICI? Even now, ICICI is the biggest bank while it was formally founded somewhere in 90s. No marks for guessing higher the risk, higher the reward theory.

This globalisation is not nothing new, nor it’s flaws and threats. It has been feared in different countries in different ways in different times. In 80s, Japan threatened world especially US with its superior technology, financial acumen and innovative practices. Toyota, Canon, Sony has been on buying spree and it was then thought that whole of US would be working somewhere under Japanese companies. All these companies have gone global by keeping their base in Japan, but still US survived and companies like GE not only thrived but fastly thrived.

And where’s the silver line in all this phenomenon? It helped in International trade and global economic integration resulting from it has led to raise of standard of living in developed and developing nations, facilitated the flow of ideas and people, strengthend the international laws and helped millions of people to come out of poverty. There is very dangerous tendency to curse globalisation during recession time and follow a protective economic approach (like debate going on in US to cut short H1 B, keep jobs inside etc) but it does more long term losses than short term benefits.

Every positive article covering recession quotes that recession is an opportunity and all the big companies like GE, Coca-Cola are borne out of big recession and that’s true too. It’s not the time to be protective, infact every government and its citizens should make meaningful contribution to the International trade. Banning Chinese toys or Indian outsourcing contracts would lead to an isolated world where trade would not be transparent, foreign participants would be deterred in the domestic markets, hampering innovation, raising the cost of the consumer products, limiting growth and ultimately leading to low level of living.

Regionalism, protectism, nepotism of any kind should not be promoted. If you hate globalisation, then you can’t condemn what Marathis are doing in Maharashtra with North Indians, or what Tamils are doing in Srilanka or what terrorists are doing in Kashmir. If Indian people should boycott foreign goods, then why not UP should bycott Maharashtra products and Kanpur should boycott Agra caricatures and then Sarvodya Nagar should boycott Saket Nagar’s maid and auto-walahs. The world would be restrcited to fences and all the international trade laws which has been set up after years of refinement would prove to be failure. Let’s not create more problems to this world which is already having enough of it’s issues.

Final word: Capitalism with all its flaws is the best way to prosper. However, describing this line would require another blog.

Goodbye,
Pawan