Globalization is the process of international integration arising from the interchange of world views, products, ideas and mutual sharing, and other aspects of culture. Advances in transportation, such as the steam locomotive, steamship, jet engine, container ships, and in telecommunications infrastructure, including the rise of the telegraph and its modern offspring, the Internet, and mobile phones, have been major factors in globalization, generating further interdependence of economic and cultural activities.
Though scholars place the origins of globalization in modern times, others trace its history long before the European Age of Discovery and voyages to the New World. Some even trace the origins to the third millennium BCE. Large-scale globalization began in the 19th century. In the late 19th century and early 20th century, the connectivity of the world’s economies and cultures grew very quickly.
The concept of globalization is a very recent term, only establishing its current meaning in the 1970s, which ’emerged from the intersection of four interrelated sets of “communities of practice”: academics, journalists, publishers/editors, and librarians. In 2000, the International Monetary Fund (IMF) identified four basic aspects of globalization: trade and transactions, capital and investment movements, migration and movement of people, and the dissemination of knowledge. Further, environmental challenges such as global warming, cross-boundary water and air pollution, and over-fishing of the ocean are linked with globalization. Globalizing processes affect and are affected by business and work organization, economics, socio-cultural resources, and the natural environment.
The world is becoming ungovernable. Kleptocrats have found themselves unemployed, because the economy has become global while governments remain national. Transnational companies reduce racism, because you cannot be global and racist, and encourage anarchy, because national governments become powerless.
The current resurgence of populist nationalism in the United States and Europe reflects the pushback against these long-held dogmas of transnationalism, and resistance to the denigration of national identities. Populist nationalism has deep and wide support. Resistance is very widespread and vigorous. Facing global threats from rivals and enemies passionate about their own national identities, the interests and security of Occident will be better protected if its citizens are allowed to express without recriminations their autonomy.
Globalization has fallen into disrepute. More and more people are rejecting it outright as unfair and as a source of all sorts of evil — including economic crises and migration.
This kind of blanket condemnation of globalization however is a huge problem. The reason for this becomes apparent if one considers the fact that globalization has two dimensions, an economic and a political one.
Economic globalization is synonymous with the cross-border division of labor. Today, no country produces solely to satisfy its own needs, but instead also for producers and consumers in other countries. And each country makes what it knows best, relatively speaking.
Economic globalization, with free trade being a natural component, increases productivity. Without it, the poverty on this planet would not have been reduced to the extent it has been over the past decades.
From the very outset, political globalization has nothing to do with economic globalization. It aims to direct and determine all relations between people on the various continents by way of authoritarian rule. The decision about what is being produced and consumed as well as where and at what time isn’t to be found by the free market, the division of labor and free trade, but instead by an ideological-political creative force.
The core argument of political globalization is that coping with ever more complex problems of this world — ranging from economic crises to the protection of the environment — requires a central decision-making process. The nation state — as a sovereign representative of people — has become obsolete and needs to be replaced by a globally active political power.
Of course, the thinking behind this opinion is purely socialist-collectivist.
It is also the basis of the European Union (EU). Ultimately, it aims to create a European super state, in which nation states will dissolve like sugar cubes in a hot cup of tea.
For the foreseeable future, this dream has come to an end. The desire to realize uniformity has foundered amid hard political and economic realities. The EU is undergoing radical change — at the very last following the British decision to leave the EU — and may even be about to break up.
With Donald J. Trump taking over as president of the US there is no longer any intellectual support by the US for the European unification project. The change of power and direction in Washington has ousted the political globalizers — which gives hope that the future US foreign policy will be less aggressive in military terms. President Trump — unlike his predecessors — doesn’t strive to enforce a new world order. But at the same time, it is the economic globalizers who are concerned.
And that’s understandable. The Trump administration fancies the use of protectionist measures — be it in the shape of import duties or tax discrimination — to boost production and employment in the US, to the detriment of other countries if need be.
Such an interference with economic globalization and the turning back of the clock wouldn’t just infringe on prosperity. It would probably also rekindle old and new political conflicts. But, it doesn’t have to be that way.
With the gigantic easing of the tax burden — to the tune of $9.5 trillion — President Trump may be able to generate such a positive economic dynamic that all the backward-looking protectionist electoral promises will disappear in a drawer. And that would be most desirable: Globalization — the voluntary division of labor and free trade — promotes a productive and, what’s more, peaceful cooperation across borders. And that’s why it is important to preserve economic globalization.
We see four major geopolitical shifts underway.
First, protectionism is growing. The US, Russia, and India have each introduced more than 500 discriminatory trade measures since 2009. Global Trade Alert reports that in 2016 alone more than 500 discriminatory measures and only 300 liberalizing measures were introduced worldwide.
Second, the ability of multilateral institutions to establish and enforce shared rules seems to be weakening. Bilateral agreements based on national interests are taking precedence over multilateralism.
Third, the dominant role of Western countries in the multilateral financial institutions that have provided global capital appears to be receding as new financial institutions emerge, such as the China- backed Asian Infrastructure Investment Bank and the New Development Bank.
Fourth, state capitalism is on the rise: examples include the growing economic role of state-owned enterprises and sovereign wealth funds and the increased direct government support of domestic industries. Sovereign wealth funds now manage portfolios valued at $7.3 trillion, compared with the $4.2 trillion in assets under management by closed-end private funds, according to the financial market research firm Preqin.
Equally profound are the structural shifts in the world economy that have been set in motion by digitalization. We see three forces at work:
- Industry 4.0. In addition to boosting productivity by as much as 30% and reducing labor costs, advanced digital manufacturing systems let businesses alter their global production and delivery footprints by making it feasible to operate smaller, more flexible facilities closer to customers around the world instead of concentrating production in large plants in countries with low labor costs.
- Digital Platforms. Both traditional companies such as General Electric, with its Predix platform, and relative newcomers such as Uber, Airbnb, and India’s Flipkart are gaining access to borderless global markets through their information technology platforms and ecosystems of local partners. In the period from 2012 to 2015, some platform-based companies grew at a rate in excess of 100%, compared with single-digit growth at established multinational companies.
- Digital Services. Advances in digital technologies and platforms are enabling the rapid growth of cross-border digital services such as online travel booking, entertainment sites, and asset performance improvement services. New value-added services are becoming a key generator of value and revenue growth for traditional businesses.
Together, these geopolitical and digital shifts are redefining the economic, business, and political models of the old globalization framework, giving rise to a very different paradigm.
- The New Economic Model. The global economy is becoming fragmented and multipolar, with more countries driving global growth. In emerging markets, economic growth rates, development models, and the chief sources of growth—such as manufacturing, services, and consumption—are diverging. Flatter growth in merchandise trade will continue to translate into lower growth in global GDP, at least in the short to medium term.
- The New Business Model. Because growth in trade, especially merchandise trade, and in cross-border investment is slowing as a result of rising protectionism, shifts in global manufacturing costs, and the economics of Industry 4.0 technologies, companies must find new drivers of global growth. These forces are also decentralizing global supply chains, while growth in digital services and platforms is integrating many parts of businesses and the ecosystems in which they operate.
- The New Political Model. As the influence of the world’s biggest economic powers wanes, nationalism and political interests are taking precedence over globally shared economic goals. Sudden changes in policy and regulation are becoming the new normal. There is still potential, however, for countries to collaborate to address cross-border issues such as cybersecurity, international terrorism, and tax havens.
Sharpen the focus on customers. As companies offer more and more services and solutions to more and more digitally connected buyers, relationships with customers will need to be more than transactional. As the chief strategy officer of a global industrial goods company noted, to make the transition from selling transportation equipment to providing mobility solutions, “our entire sales organization will need to become more customer centric and understand customers’ needs—not just for equipment and upgrades but also for real-time maintenance and platform solutions.” As many global firms set up services and solutions businesses that cut across products, responsibility for profit and loss could shift from product business units to those that own customer relationships.
Decentralize operations and decision rights. The traditional matrix model of overarching tiers of global and regional management control over function areas and product groups is being replaced by more flexible and decentralized structures that empower management teams in individual markets. The need to serve local customers, respond to growing regulation and economic nationalism, and take advantage of local capital will require companies to strengthen their local operations. Decision rights will likely have to decentralize as well. In this environment, global organizations will increasingly achieve scale by using digital technology to exchange information and maintain global standards. “Technology is now enabling real-time data collection at the local level, removing the need for layers of regional and matrix oversight,” explained the chief operating officer of a global consumer goods company.
Centralize select global functions. Greater connectivity and advances in computing and digital technologies are also enabling companies to centralize some critical functions in one location run by a single global team. These teams could be located at headquarters or wherever the company has the greatest capabilities. An example is clinical diagnostics. The global analytics team of a leading medical provider we spoke with uses its access to vast amounts of data to provide diagnoses of tomography scans that are more accurate than those of most physicians in the field. Product design and marketing are other functions that could become more centralized as data is collected locally and then sent via a digital platform for analysis at one location by a team that then uses the insights to develop solutions.
Globalization renders global employees into expats while living and working in their own country. This is an important point because when you’re dealing with globalization, people have to detach from their native languages and cultures in order to move into this third space, so to speak. The expat perspective is the experience that says, “You cannot hold on to your identity. You need to migrate to a global identity, whether you’re an expat in your own country linguistically, culturally, or both.” Detachment and adaptation is why the expat perspective is crucial for global organizations. In a sense, what this book shows us is that for a company to be truly global, it has to become an expat corporation with employees who are able to walk into their native country sites and operate as if they’re expats in their own country.
A language strategy is a full-in, full-on undertaking that should be regarded as a radical change. Overlooking the change management work that is required—like encouraging buy-in and sustaining employees’ belief in their capacity to acquire the new language, culture, or both—is crucial. Tactics that help people feel more confident and motivated include continual messaging, internal marketing, and branding the organization as global. Finally, this type of globalization work is a multi-year journey. A one-language culture is increasingly a must for some or all parts of globalizing firms.
Developing language or cross-cultural fluency in the course of globalization is difficult. Employees have to climb steep learning curves. They will also be exposed to differences at work, an inevitable outgrowth that comes with globalization.
The most successful global employees in climbing the learning and culture curve exhibited Global Work Orientation, which consists of five attitudes and behaviors:
- Positive indifference is the ability to overlook cultural differences as being not especially important or worthy of attention, while remaining optimistic about the process of engaging the culture seen as foreign.
- Seeking commonality between cultures enables employees to draw closer to a foreign culture and become receptive to its differences.
- Identifying with the global organization’s values and goals, rather than those of a local office.
- Initiating cross-border interactions as much as possible develops trust and shared vision among international coworkers. Interactions are also vital for sharing knowledge across sites.
- Aspiring for a global career is also important, because people who envision a globally expansive professional advancement make decisions that reinforce their competencies.
Economic cluster theory has been used to describe the growth of many industries, including the automotive business around Detroit, high tech in Silicon Valley, and digital media in Seoul. These regions benefit by a concentration of complementary resources that might include leading research universities, low cost or highly trained labor, and geographic bounty. Understanding how clusters work can help governments develop effective policies for creating them, as well as direct entrepreneurs to the best locations to build their businesses.
Economic clusters have had a much wider impact on world economics than generally recognized. Clusters are the building blocks of the global economy. Clusters have been around long before they had a name, showing up in the development of colonial-era industries and earlier. We are proposing a longer broader view of clusters and the role they play in developing economies and globalization at large.
The cluster concept is often used to consider local factor, but there’s a growing awareness that many clusters are also driven by external forces, such as foreign direct investment and multinational corporations, which results in a connection that occurs through knowledge exchange on the local level or across wider cluster networks. In that sense, clusters become platforms for development, which has present-day implications for corporations, governments, and individual actors, especially in emerging economies.
As an exploitative plantation industry, the rubber and palm oil industries in Indonesia and Malaysia couldn’t be considered a civilizing force, at least initially. Yet, after rubber clusters based on foreign-invested estates had developed in the region, entrepreneurial smallholder farmers capitalized on existing infrastructure to farm rubber around the edges of established groves, creating a rubber supply parallel to that produced by the foreign direct-invested estates. This increase in supply drove down prices on the international markets, eventually leading multinationals to move into palm oil—a much more capital intensive crop to process, with higher barriers to entry for small farmers.
Geopolitical forces also played a part in the palm oil industry’s development. After World War II, Indonesia’s Communist-backed government cracked down on colonial business interests, while Malaysia’s government took a softer approach, allowing companies to continue operations in exchange for training and development programs that helped smallholder farmers switch from rubber—which, with the introduction of synthetics, was no longer as profitable and secure an investment as it once was—to palm oil. Unilever, the largest private holder and buyer of palm oil (an ingredient used in its famous “Sunlight Soap” and other products), diversified its holdings from the crop’s native West Africa to the Malaysian cluster.
In the 1950s and 1960s,the two locations shared knowledge of palm oil production even as they competed for market share—a contest that Malaysia eventually won thanks to its more stable political climate and higher quality of institutions. Because the Malaysian government was good at creating policies that fostered the transition from the rubber to the palm oil industry, the local population was able to take advantage of a situation that initially wasn’t so positive.
It can be argued that the palm oil industry today is a major source of deforestation in Southeast Asia, and not always at the forefront of sustainability practices. It can take a while to improve these processes, and he industry is moving in that direction. But, during the 1960s and 70s, the palm oil cluster was a huge engine of growth and infrastructure for rural areas. There are ways to change an industry that starts as extractive to producing externalities that foster development.
Educational institutions gathered and disseminated knowledge about the country’s biodiversity, an effort that, with government support, led to the creation of national reserves and parks.
As with Malaysia, Costa Rica’s relative political stability, compared to neighboring Guatemala and Nicaragua, created competitive business conditions. Foreign tourists from Europe and North America, drawn by the promise of a pristine environment, relocated to Costa Rica and launched startups offering lodging and guided tours in protected areas, an effort that was so successful it created a detrimental snowball effect.
This movement built a reputation for Costa Rica as a natural paradise and conservation hub. At the same time, local actors took advantage of this brand identity to build mainstream tourist facilities that weren’t in line with conservation and sustainability efforts. Some of those businesses diluted the concept of sustainability that created the cluster in the first place.
The historical perspective is important, because you rarely have a linear story. It’s never a one stakeholder story. Taking this longer view, makes it easier to see beyond clusters as self-contained and localized to their more nuanced role as interactive spaces that foster communication and collaboration between foreign and local organizations and individuals and enable the integration of developing countries into the global economy. It’s an understanding that can be useful in the here and now, too.
This could be a good way for multinational corporations and business practitioners to consider the relative merits of competing cluster locations. If I’m an organic wine producer with available resources and people, where is the best place to set up production? Where will the political risk be lowest in terms of regulations for that specific enterprise and industry? Which locations will allow more possibilities to introduce innovative practices or foster sustainability?
Most of the world’s lithium—now in high demand because it’s used in so many electronic products and electric car batteries—is mined in Bolivia and Chile. That’s a concentration not available anywhere else. And those particular conditions—of government, industry, corporations, and the local populations—will no doubt yield new perspectives on the very old reality of clusters. Clusters have been there forever. This is just a way of thinking glocally about a concept that’s everywhere.
Europe continues to descend into lawlessness and dhimmitude. Migrants who travel through a number of countries in order to find the most generous hosts are not refugees, but invaders.
Migration is more than just another issue. It touches upon fundamental aspects of citizenship, community, and identity of our countries. Especially the issue of citizenship is crucial. Citizenship reflects that one belongs to a particular political community. I strongly disagreed with a well-known and often quoted President Obama´s statement when he famously (or perhaps rather infamously) announced that he is a citizen of the world. He was not alone in accepting and promoting this fallacy. European political elites similarly keep saying that they are citizens of Europe. Yet, it is impossible to be a citizen of Europe. Europe is not a political community. One can only be an inhabitant of Europe.
European political communities are the nation states. We are Czechs, Austrians, Germans, Greeks. We speak Czech, Polish, Italian, Hungarian, Greek, not a European Esperanto. We don’t want to erase our borders and to get rid of the distinction between citizen and foreigner. Due to it, we have a strong view about mass migration and refuse the cosmopolitan stances of European political elites and their fellow-travelers.
The misinterpretations of the European migration crisis are based on an aprioristic, progressivist, politically correct assumption of the European political and intellectual elites that migration is a positive social phenomenon, They try to convince us that it is normal to migrate. We strongly disagree, we are convinced that it is normal not to migrate. We find it normal to accept the country one was born in, to identify oneself with it and to take it as a highly respected homeland.
We don’t speak about individual migration, about the slow, non-disruptive, sufficiently humble and non-aggressive procedure known for centuries and millennia. We speak about the issue of mass migration, to the movements of hundreds of thousands or millions of people, to the unnatural processes that are artificially provoked and stimulated. What we see in Europe now is not a spontaneous activity of individuals, it is an organized process.
It has mostly negative consequences. Mass migration necessarily leads to substantial cultural, social and political conflicts, shocks and tensions. It undermines the – for centuries and millennia gradually developed – structure of society in individual countries, their culture, habits, customs, behavioral patterns, ways of life. All that is – by European political elites – highly underestimated. Perhaps not underestimated, they don´t want to see it. They have different aims and ambitions. We should make them explicit.
The current political conflict about migration shouldn’t be misinterpreted as a conflict between humanism and xenophobia, or between solidarity and egoism as they try to present it. It is about something else. It is a conflict between those who believe in freedom and in a nation state and those who don’t share such a belief. It is an ideological conflict.
Mass migration has been justified and defended by means of the failed doctrine of multiculturalism. To herald (if not to worship) this approach is wrong. For countries to function, they need a minimum (which is not low) degree of homogeneity and unity, not a maximum of heterogeneity and diversity, but the ideology of multiculturalism tries to deny this. History teaches us that fragmented and borderless societies can’t exist. Certainly not for a long time. Borders are important. The current migration wave to Europe has been made possible by the fact that the EU borders have been open and unprotected for a long time and remain open even after all that has been happening since 2015.
We challenge the often repeated errors and misunderstandings and especially the claim that we in Europe need mass migration because there are not enough people here to work. It is not true.
Any reasonably thinking person must admit that – in absolute terms – the available labor force in the EU is sufficient. The unemployment figures are high and they are high in spite of the fact that many Europeans voluntarily step out of the unemployment statistics… The spoiled, overeschooled labor force refuses to take up certain jobs. The current pseudohumanistic ideologies offer these people a tempting possibility to leave the labor force, claiming there is in fact no obligation to work. Instead, they are offered financial means from sources other than actual work.
There are two dimensions to this issue – the would-be absolute shortage of people and the structural discrepancy caused by the fact that Europeans don’t want to do low-skilled, dirty, tough, dangerous, non-pleasant, physically demanding jobs, or they don’t want to be the people who work with their hands and on their feet.
The European political elites try to convince us that we need a steady supply of cheap unskilled labor because there are jobs no Europeans want to do. We disagree. This is a high-brow position of our political elites, which is insulting to millions of Czechs, Austrians, Germans, Greeks who do these jobs. This is the arrogance of our governing class, of our political, academic, cultural, journalist celebrities.
This is also an uneconomic or even anti-economic argumentation. Such attitude has no proper basis in economics. If particular jobs are left unfilled for any lengthy period, it is because the price on offer is too low. This most particularly applies to jobs requiring little knowledge or skill. Such jobs can be filled without too much difficulty if the price is right. If a municipality has difficulty in finding street sweepers, it is because the wage they are offering is too low. There is nothing more to it. Market economy itself is a very powerful mechanism, which provides a solution to shortages of whatever kind. We understood that price movements are able to fix such problems.
We have market economy now, heavily constrained and weakened, but we have in our countries strong and very powerful business lobby groups as well which try to suppress this irreplaceable mechanism. They don´t want the spontaneous adjustments and restructurings. They favor the import of cheap foreign labor instead. This is or may be good for them, not for us, not for unskilled or low-skilled workers in our countries, not for our already overburdened social welfare systems, not for our state budgets and financial systems, not for the efficiency of the economy, not for the health of the whole society. Those who understand it, should help to reject this very one-sided lobbying.
We are very much against the globalist and Europeist mind-set. Our countries are not only a part of the world, they are real entities with real borders and with real people. The citizens of our countries don’t feel they are citizens of the world. We are not morally obliged to treat everyone like us, especially if he doesn´t play by our rules. This should be our very strong point.
While we wish our fellow men in other countries well, it is only our fellow citizens to whom we have a duty and whose rights our government was created to protect. This is not a nationalism, not a xenophobia. This is just a rational thinking.
The West-European countries opened their doors to mass migration of unskilled and low-skilled workers, even though not all of them have come here to work. The political leaders of these countries are aware of this fact. It was a tragic mistake which should be corrected as soon as possible. It is long overdue.
- What is globalization?
- Why economic globalization is good?
- Why political globalization is bad?
- Why mass migration is bad?
- Is Islamization of Europe possible?