Article # 9 STRAND: The Global Environment and Factors influencing Success in International Markets

CHRYSTIA FREELAND

Globalization and the need to plug in

CHRYSTIA FREELAND

From Friday's Globe and Mail

Published Friday, Oct. 08, 2010 6:00AM EDT

Last updated Friday, Oct. 08, 2010 6:34AM EDT

For most of the past century, the big global narrative has been the clash of rival paradigms: Nazism versus liberal democracy, communism versus free market democracy, and, more recently, fundamentalist Islamic states versus the secular, democratic West. When the cold war ended, Francis Fukuyama predicted that this clash of paradigms would end. He was right, but not for the reason he thought.

The battle of rival ideologies has ended not because, as Mr. Fukuyama foresaw, the triumph of capitalist democracy has been universally acclaimed. Instead, it is because all of us have realized we face a new challenge – how to thrive in the high-tech, global economy – and no one country or single ideology is yet certain of getting this exactly right. This isn’t the cold war, or the clash of civilizations, or even the end of history – it is the age of uncertainty, as the entire world struggles to understand and keep up with the biggest economic transformation since the industrial revolution.

I was persuaded that this single, uncertain global effort to keep pace is our new overarching challenge at a venue that was the setting for one of the seminal decisions in the age of rival paradigms: the Livadia Palace in Yalta. In this cream-coloured villa a comfortable lawn’s distance away from a rocky cliff that drops to the Black Sea, Churchill, Roosevelt and Stalin made their infamous pact to divide Europe between the communist East and the democratic West.

Today, Yalta is again at the crossroads of democracy and authoritarianism as Ukraine, the country to which it now belongs, wavers between integration with Europe and integration with Russia. But when I spent two days there early this month moderating a conference on geopolitics, the most important takeaway was that this old dilemma was the wrong one for Ukraine – and everyone else – to focus on.

The most articulate expression of the new paradigm came from Carl Bildt, the former Swedish prime minister, who was reappointed Foreign Minister last month after the election victory of his centre-right party.

“The mega-trend of our age is globalization,” Mr. Bildt said. “That process of globalization has shown remarkable resilience over the last 10 to 15 years. In one crisis after another, globalization comes back and is stronger each time. The success or failure of nations is, really, are you able to plug into and be successful in globalization or not.”

One thing that’s interesting about Mr. Bildt’s remarks is that they could be made in any city anywhere on the planet and be as relevant as they were in Yalta – one aspect of the economic revolution we are living through, and one sign that it truly is global, is the fact that the whole world, from London to Lagos, and from Silicon Valley to Shanghai, is going through the same transformation at the same time.

Another thing that’s interesting about what Mr. Bildt identified as the challenge of “plugging in,” and what makes it very different from the ideological clashes of the past 100 years, is that no one country and no single ideology has yet claimed to have it all figured out.

China’s state capitalist model, with its repressed citizens and efficient government, is delivering high growth, but so is India’s flourishing democracy and chaotic government, while neo-authoritarian Russia struggles to become more than a petro-power. The welfare states of southern Europe are among the most troubled economies in the developed world; the Nordic welfare states among the most vibrant. Success and failure co-exist even within a single country or even a single region – consider the miracle of Silicon Valley and the failed state of California.

Mr. Bildt alluded to the diverse models of success by pointing to the wildly contrasting examples of his native Sweden and China. “We had a global age that ended in August of 1914 and then it took us a long time to recover,” he said. “It was only in 1990 that Sweden was back [on a global integration basis] where we were in 1914.”

But between 1990 and today, he said, Sweden’s integration with the global economy doubled. “We’ve gone through an enormous process of globalization just in two decades,” Mr. Bildt said. “But we are not as successful as China, which has gone from being one of the most closed economies in the world 30 years ago to an even more integrated global economy than Sweden today, and accordingly has growth figures that are fairly impressive, to put it mildly.”

Tolstoy wrote that happy families are all alike and unhappy families are unique in their unhappiness. Today, it is the unhappy countries that have a lot in common – corruption, lawlessness and autarky don’t work anywhere – and the happy countries that are a pretty diverse lot. But, for once, the whole world is grappling with the same question: how to plug in.

Chrystia Freeland is global editor at large for Reuters

ANALYSIS: Globalization and the need to plug in, Christina Freeland, Friday October 8, 2010, The Globe and Mail.

Globalization is the major trend in our age of time, and according to the former Swedish prime minister Carl Bildt the success or fail of your country during globalization depends on how well you are able to "plug in". Take China for an example, which has went from one of the most poorest economies to the one of the most stable ones. Sweden's economy too nearly doubled in two decades because of globalization. However, you have know what globalization is before a country can think about whether they can plug in or not. In Canada we live fairly well, with many of our provinces and cities consisting of both upper and middle classes. But, we only live the way we do because other countries have to work three times as hard and get paid three times as less then we do to be happy. Also, globalization brings new ideas - like changes in a country's government. Yalta is a good example of this, since it seems to be caught between democracy and authoritarianism by Ukraine who it belongs to. When a country invests its shares in a company from another country, it is adding to globalization. That means, what ever happens to the company that is invested in happens to the company that invested in it. When a country is largely involved with another one, their economies are almost linked in a way. Like Canada for an example, because we invest in a lot of foreign businesses there we are heavily influenced by the United State's economy. When the United States went into recession, Canada soon followed. Luckily, because Canada wasn't as "plugged into" the United States, the recession didn't hit as hard and not as many jobs were lost in comparison. 

Strands it relates to:

This Article relates to the "Global environment" strand because if you think of all of the world's countries in terms of weather, globalization is always causing it to change which can be good or bad for foreign businesses. It also relates to "Factors influencing success in global markets" because globalization is a broad subject, and how you plug into it will determine whether your company will benefit or be unsuccessful. If you invest too much into a foreign business that isn't successful you won't benefit. But, if you have a business that is successful in another foreign country, then you will profit. It also works if you invest in a successful foreign business, or your own business is failing in another country. Globalization makes it so that what happens in one country creates a sort of chain reaction and it affects countries that are too plugged in.

Thoughts and Opinions:

Carl Bildt's analysis of globalization in Sweden and other countries made me realize how scary it can be. Globalization is tricky because it categorizes the world into groups by how industrialized and economically fit a country is. The way we live in Canada is better then some places in China, because our "utopia" relies on their "dystopia". Many jobs are created, but people work being payed less then a dollar a day. The only reason people like in China continue working under such harsh conditions is because it's all they have to survive. Globalization connects the world, but a balance in which everyone is living like in Canada is nearly impossible to achieve.