Future of Globalization in the Aftermath of the Crisis
The ongoing economic crisis spread across the world mainly due to the tight integration of the global economy. Hence, many commentators were quick to point out that globalization is to blame for the contagion that many countries in the world experienced as a fallout of the subprime crisis in the United States.
Indeed, many experts wrote off globalization in the aftermath of the crisis saying that what we are now witnessing is a collapse of globalism. However, before writing the obituary of globalization, we need to consider some aspects that work in favor of globalization.
To start with, globalization provided the platform through which the principle of competitive advantage came to be actualized. This theory proposed by David Ricardo holds that countries benefit when they trade with each other rather than when they are isolated.
Next, the fact that innovation and inventiveness increased in the global economy because of globalization cannot be written off.
The point here is that the freeing up of scarce resources to be employed for high-end innovation and invention in the West was mainly because the low end work and lesser value adding work was being done in the East.
Further, the shift of manufacturing to China meant that American companies could concentrate on higher value adding activities as well as invest in high end product design, research, and development. On the other hand, the economies in Asia saw their living standards rise because of globalization, which a very welcome development is considering the humungous numbers of people who live in poverty in these countries.
Having said that, the way out of the crisis would be for countries to practice sustainable development and invest in alternative sources of energy as well as reduce consumption to as much as needed.
The point here is that globalization must not become an excuse for rampant consumption and materialism where the availability of cheap goods means that consumers waste much of their money. In this respect, globalization can indeed be a boon as countries around the world can trade their best practices to improve the lot of the people around the world.
For this to happen, there needs to be a concentrated effort by the business leaders and governmental leaders to address the fundamental issues of overcapacity, overconsumption, and risky capitalist practices including banking.
Once these issues are addressed, the world would be ready for the next wave of globalization that would bring together the businesses in a unified effort to solve the intractable problems in the world. It is with this optimism that many experts have called upon countries to desist from raising their protectionist walls and have stressed the need for greater togetherness instead of isolation from one another.
Finally, globalization has the potential to be a game changer if it is viewed as a win-win situation rather than a zero sum game. As a previous article pointed out, the focus must be on increasing efficiencies instead of profits alone at the expense of everything else. The point should be noted that once efficiencies are increased, profits and profitability increase as well.
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