Globalization in Transition - Research Paper Example

? Business, Research Paper Topic: Globalization in Transition Introduction Globalization is not a new development. It has been happening since centuries. With the rapid pace of industrialization, humankind adopting materialistic values all over the world, and with the internet revolution, we have entered into an age of transition. The economic and political developments that have taken place during the last fifty years and rapid increase in the migrating population have contributed to globalization. The existing political and economic systems are threatened with critical tests to retain their present structure. It is in the interest of the welfare of humankind to allow a new system to emerge. What has happened about globalization so far, challenges the imagination of all concerned. It is impossible to predetermine or predict the outcomes and the shape of things to come. Human intervention and creativity have reached new zeniths and the developments that have taken place in various segments of globalization do not fall within the definitions of Capitalism, Communism, Socialism or Theocracy. Spread of democracy in the hardcore communist countries, which resulted in liberalization of trade relations, is also an important factor in hastening up the process of globalization. Narrow perspectives of nationalism have failed to check the economic reforms that are part of the process that accelerates the pace of development. The discussion is no more about whether there should be reforms to facilitate the march of globalization; it is about the strategy to implement reforms. The importance of transition economics is an accepted fact. The tug of war of votaries of globalization and the local manufacturing and local food markets will continue and the ultimate gainer is the consumer, as he has the choice. Globalization—its reach Is it possible to reconstitute local manufacturing and local food markets, or has globalization ultimately made this impossible? A straight forward answer to this question is impossibility. It is an admitted fact that the narrow domestic walls have crumbled. Firstly, let us try to understand the institution of market. The complex market institutions cannot develop in a theoretical or laboratory setting and then transplant them to economy. For the markets, transition to the ground realities is a complicated exercise. Institutions will take a long time to reshape and attain perfection. Globalization has challenged and will continue to challenge many of the old social and economic norms. Many such norms will die and many will need complete rejuvenation. Getting the reforms off from the national to the international ground calls for tough choices. One has to be realistic about the possible achievements, while giving up the existing set up in favor of the new one. Advantage Globalization Countries need an active domestic agenda and remain ready to follow the path of economic reforms well in time, to challenge the environment of integrated world economy. The domestic front needs to develop the fine sense of anticipation to capture the gains of globalization. Globalization is multi-dimensional. Global trade volumes are on the increase for more than one reason. Every country would like to take advantage of the technological breakthroughs and no one minds from which country it originates. Technological innovations have boosted immensely the quality of life in many countries of the world, but at the same time this has benefited the rich section of the society and the poor have no means to share the benefits. Volatile capital markets do not go well with the economy of the developing countries. The experts in the field of economics and commerce are not sure about the contribution of trade to the superior growth performance of the votaries who followed globalization. A country opens up trade channels and many domestic policy changes go in tandem with it. So it is difficult to assess the contribution of globalization towards the overall growth. But it is also absurd to argue that more trade leads to lower growth, as is articulated by the anti-globalizers. The goal should be to drink the waters from the river of globalization, without getting drowned in it. Globalization is unstoppable Whether globalization is challenged or bemoaned, it will continue to offer stiff challenges to reconstitute local manufacturing and local food markets. The era of globalization has come to stay. The transition to globalization is an ongoing process, and no force can perhaps check it. The basic nature of the consumer is to go for cheap and quality products. With no fixed formula to reconstitute local manufacturing and local food markets, it has to move on the parallel tracks of globalization. Competition is coming forth for every item, so policy framers have limited role to play. A single important political/social development taking place in a country may topple the apple cart of a market that depends on globalization. Thus it is not possible for the products of a particular country to dominate the world market. Immanuel Wallerstein (1999) argues, “The capitalist world-economy has long maintained itself, as any system does, by mechanisms that restore equilibrium every time its processes move away from it. The equilibrium is never restored immediately, but only after a sufficient deviation from the norm occurs, and of course it never is restored perfectly. Because it requires that deviations go a certain distance before they trigger counter movements, the result is that the capitalist world-economy, like any other system, has cyclical rhythms of multiple kinds.” (www2.binghamton.edu)For the local manufacturing and local food markets, survival is the first priority. Towards this end, to maintain the equilibrium is the first step. This can never be a constant equilibrium, it will be the moving one, depending upon the market forces, and export/import policies of the governments involved. As already stated, a system may get into trouble, for reasons that are beyond the control of the system. When there is a crisis, the question is, how long it will take to bring back the system to equilibrium and what are the choices to achieve it. Immanuel Wallerstein (1999) further argues, “No individual or group has the power to make the necessary decisions alone. And the very fact that these decisions are being made by a large number of actors, operating separately and each in his/her own immediate interests, virtually ensures that the car(of globalization) will not slow down. Probably, it will start to go faster and faster.”(www2.binghamton.edu) Fluctuations may get wider with greater rapidity. Analyses will be on an ongoing process and its predicted results may get nullified by any abrupt social/political/policy developments. When national interests are involved economic interests and calculations may be sidetracked in favor of political victory. The limitations of local manufacturing and local food markets Is it possible to reconstitute local manufacturing and local food markets, or has globalization ultimately made this impossible? A tangible answer to this question will never be found. The edifice of globalization has several supporting pillars. Social identities are equally important than the economic identities. Alex MacGillivray (2006) argues, “How much further globalization goes? It can’t go all the way. There are logistical, commercial and environmental limits to globalization.”(p.284) Globalization poses threat to material interests of a particular nation. This is an accepted fact. In addition the threats to identities, cultures and values are real. The political context is also important, and the domestic coalition balances will have to be considered. Alex MacGillivray further strengthens his arguments and writes, “But history has limits. There is no template as to where the next galvanizing even will come from, and what form it will take. Is globalization a good thing?”(p.285)An important aspect governing the local manufacturing and local food markets is the volume of local consumption. Whether the local units and the food market are able to meet the demand with the reasonable cost to the consumer? In the first flush of enthusiasm, a section of the consumer may go for the imported products from the global markets but when they are assured of the quality products locally, the cost factor will play the decisive role. Notwithstanding the onslaught of globalization, if the local manufacturers and local food markets, through their local associations, make concerted efforts to improve the quality of their goods and services, they will be the victors. These are the two important aspects from the point of view of the consumer, price and the quality. Small is Beautiful Just as the top economists differ on the merits of globalization, the top business magnets and political leaders give varied assessment. Pietra Rivoli (2009) in his book “The Travels of a T-Shirt in the Global Economy,” quotes, “For Bill Clinton globalization was the ‘world without walls.’ Tony Blair says it is ‘inevitable and irresistible.’ George Bush calls it the ‘ties of the trade and trust.’ For George Manliot, globalization allows companies to hold ‘a gun to government’s head.’ Political leaders and polemicists alike thrive on such alliterations.” (p.4) These observations are like the proverbial assertions of 4 blind men describing the shape of the elephant, but no one can give its full description, as each one of them has touched only a part of the elephant’s body and believe that it is the whole elephant! Pietra Rivoli gives two appropriate examples, one not related to the market forces and the other related to it. About the former he argues, “In short, My T-shirt’s story turned out to be less about markets than I would have predicted, and more about the historical and political webs intrigue in which the markets are embedded” (p.xii). About the later he writes, “Nelson and Ruth….they take on the world markets, in which they compete with cotton farmers from over 70 countries.”(p.4)One small item like T-Shirt has a giant impact on the global economy. Conclusion Economic and societal forces affect globalization and this is an ongoing process. The truth is a popular product today, may become outdated and obsolete tomorrow. So, no final answer can be given to this question, “Is it possible to reconstitute local manufacturing and local food markets, or has Globalization ultimately made this impossible?” It can only be explained as per the contingencies of the situation of a particular nation, and the geographical area within the nation. Markets, power and politics of the world trade will exert pressure and the outcomes can be experienced, and not predicted even by the best of the brains. Globalization is like the octopus. It is growing in all the directions and its complexities are unpredictable. Market forces do play their role, but other factors pose a stiff challenge. Some of the major factors are politics, history and creative strategies of market avoidance. Globalization creates worldwide links and global economy has become refreshingly broad and has led to new strategies in production, manufacturing, selling, distribution and redistribution. Apart from the political connections between the nations, it has resulted in a parallel connectivity that baffles definition and scope. The tug of war between the local markets and the votaries of globalization will continue and the end-results are hopefully for the betterment of the consumers. For, both the market-partners know that the consumer has the final choice and they will be interested in delivering the best to him to get his permanent support. References MacGillivray, Alex. (2006).A Brief History of Globalization: The Untold Story of our Incredible Shrinking Planet: Running Press Rivoli, Pietra. (2009)The Travels of a T-Shirt in the Global Economy: An Economist Examines the Markets, Power, and Politics of World Trade : John Wiley & Sons Wallerstein, Immanuel. (1999)"Globalization or The Age of Transition? A Long-Term View of the Trajectory of the World-System Retrieved on August 11, 2012 Read More