Another Look at Globalization

There are 27 stars on the Brazilian flag and Brazilian workers with large sewing machine produce one for $30. When the Chinese people in their patchy workshop sewed the Brazilian flag, it had 23 stars and it now sells for $3. This shifting pattern as we know it is proven among us that from far spaces, people can seize opportunities that lie around us. Fela was all along a hero but while we enjoyed his rhythm in car stereos and local bars, JayZ and Will Smith saw a business opportunity to chronicle the dance of a legend.  So, we await the day a Lebanese guy will be here to teach us how to tap palm wine, weave our baskets or new stories about the tortoise and its wife.  Its globalization and how it comes with creative destruction.

Emerging powers are rising and it’s all about the power of the people. Large populations and ensuing social unrest have always a burden but with fact that 40% of the global growth in last 10 years have come from the BRIC (mostly populated countries) tells us a lot. There is massive upward scale of people to the middle class and it lies on country that is using its population strength to produce competitively. Years back many people said Chinese people were duplicating Western innovation for the mass markets but as they accepted to be copycats, it is now fine tuned and now shipped to the advanced economies.  The Chinese are the leading green technology country and it’s because that if they did not produce Facebook, Twitter, Google or Apple of this age, they should lead the next wave of global innovation.

Rather than sit in slush offices and give $40m to hedge fund manager in US to handle complex transaction and disrupt the whole financial market, there is an emerging strive in the East to push the millions in the middle set of the economy. This comes from lean production, frugal economics and distinct economic policies. The emerging powers are improving human development index with rural-urban migration and giving best sets of education for their people.

As Brazil has leaped over France and UK to be the fifth largest economy, the next threatened economy in advanced economy is America. America is yearly losing its share of the World GDP and people are postulating the end of its reign. But America has learnt how to reinvent itself to start afloat. The question is of, when it will lose its place is of time but we can never be too sure. Many were too sure in 1980s as Japan was leaping ahead. Wrong policies, asset bubble and weak government policies stagnated Japan for a decade and now with the massive earthquake and declining population, it looks the only way for Japan is to spiral down.

Two events of the Chilean miners and Osama Bin Laden mastered kill keep endearing me to the continued promise the US hold. Imagine four helicopters flew over the Pakistani airspace and the radar failed to detect it! What a nation that rewrites the rules of technology! But the future is of twists and a turn, that’s why we need to tamper this Chinese boom optimism and tell them to seek growth by expanding their middle class through domestic consumption. If the West retreats to itself and cut back its imports from Asia, then their growth might be counterproductive.

The only clear scenario might just the gradual elitist elevation of the America society.  With the factories that employs critical mass going to Asia, the puzzle will be where will the average American with low level education work?  Will everyone in US transit to that knowledge economy class? With the differential of technology thinning out among nations, how close will the Chinese and other developing countries be to advanced economies in a sophisticated future? Don’t forget that the world fastest computer, biggest casino, green industry and fastest train is in China, so they can only be closer.

US will keep growing but it clearly showing a society that might grapple with inequality with high-end innovation driven economy.  The Chinese and rest of developing countries might surge ahead with the middle class expanding and taking the jobs the Americans feels they have outgrown. Lest we forget, US has a public debt of $14trn and owes the Chinese $1trn. China also has a huge reserve of $3 trillion and it might jokingly wake up one day to spend $1trn to buy Apple, Microsoft, IBM and Google or buy the properties of Washington, DC valued at a $232 billion or America’s entire Department of Defense, with assets of $1.9 trillion. It is a future given to surprises but the debt of the West and Europe, resource struggle for Africa, bottom pyramid opportunities in developing world, imploding surplus of the East and how leaders will shape these themes might be our guide.

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One thought on “Another Look at Globalization

  1. Well written blog! So much going on in the world, new economic powers coming alive.
    I just wonder that’s going to happen to the African continent, I see an ECONOMIC COLONISATION ahead.

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