Globalization -- this complex process of unequal relationships
has many faces.
Since last November, when the English singer Adele posted a
track from her latest album, 25, on YouTube, she has sold more than 15 million
downloads worldwide. That makes her one of the most famous beneficiaries of the
new age of digital globalization.
Even our modest effort, this webzine, can claim its origin to
this global force. Yes, globalization. For many people, that word conjures up,
at best, images of container ships moving manufactured goods from far-flung
factories. At worst, it harkens back to acrid debates about trade deficits,
currency wars and jobs moving to China. In fact, since the Great Recession of
2008, the global flow of goods and services has flattened, and cross-border
capital flows have declined sharply.
To a large degree, globalization corresponds to a secular
tendency. Understood as a deepening and an expansion of the scope of the
exchange of goods, ideas, and people, this process is almost as old as humanity
itself, dating back to the spread of homo sapiens across the globe some 50,000
years ago. In that sense, the discovery of America could also be considered a
milestone in globalization, marking an acceleration of the process as well as
the beginning of the transition to the modern age. A more immediate precedent
would be the final decades of the nineteenth century and the beginning of the
twentieth, a period of rapid expansion in global exchange that was only
temporarily slowed by the First World War and the ensuing Great Depression.
In the last three decades, globalization has emerged to be a
complex, multidimensional and characteristic phenomenon of our time. This
latest phase of globalization has winners and losers. World Bank research has
shown that, between 1988 and 2008, the biggest winners had been the upwardly
mobile middle classes of China, India, Indonesia, Brazil, and Egypt. While the
world’s poorest were locked out of growth. Then the Great Recession arrived
that nearly wiped out the middle class of the developed world.
But globalization overall isn't on the wane. Like so much in our
world today, it has reinvented itself by going digital. Just flip open your
laptop or check your smartphone and there it is, appearing as easily as Adele's
signature song, "Hello." And this 21st century globalization is
touching more people, in more places and in more ways than ever before.
Just 15 years ago, cross-border digital flows were almost
non-existent. Today, they exert a larger impact on global economic growth than
traditional flows of goods, which developed over centuries.
Digital flows are seemingly everywhere. Music downloads are just
one variant. A multinational energy company can monitor production remotely by
installing sensors on its oil wells around the world. A manufacturer in Spain
can buy components from a Chinese supplier on Alibaba -- or use 3-D printing to
produce the parts from a digital design file transmitted from Canada. A girl in
Kenya who logs on for a personalized math lesson from the California-based Khan
Academy is now part of the story, too. So are the thousands of Syrian refugees
who turn to Facebook to guide their journey to Europe.
This new age of globalization differs from the 20th century
variety in a number of important ways. It is knowledge-intensive, rather than
capital- or labor-intensive. It requires good broadband connections more than
vast shipping lanes. Much of it is intangible. Most powerfully, digital flows
open up the global economy to anyone with an Internet connection. That reduces
the barriers to entry and changes old rules about how business is done -- and
who can participate.
You no longer need to be a big, well-capitalized multinational
company to compete globally. Thanks to digital platforms such as Alibaba and
Amazon, even small-scale entrepreneurs can connect directly with customers and
suppliers around the world, transforming themselves into "micro
multinationals."
Today a weaver in Africa can find customers for her handiwork in
Europe by posting pictures on Etsy; 30 percent of sales on this online
marketplace for artwork and crafts are now cross-border. On Taiwan's Pinkoi,
20,000 independent artists and designers offer their wares online. Amazon hosts
2 million sellers and Alibaba provides a digital platform for 10 million
merchants. Facebook estimates that 50 million small businesses are on its
platform, up from 25 million in 2013; on average, 30 percent of their fans are
from other countries.
The share of U.S. trade conducted by large corporations has
already dropped from 84 percent in 1977 to about 50 percent in 2013. Meanwhile,
according to one survey, 86 percent of tech-based startups had already
conducted at least one international transaction. Overall, business-to-business
e-commerce across borders has grown to an estimated $1.8 to $2 trillion per
year.
It is not just companies who benefit; individuals everywhere do
too. Digital flows are empowering, by providing new ways to learn, collaborate
and work. An estimated 400 million people have posted their professional
profiles on LinkedIn -- showing their skills to employers in more than 200
countries. More than 40 million people around the world are registered on freelance
platforms such as Freelancer.com, Upwork and sites in other countries with
different names but similar purposes; if you're looking for a plumber in
France, frizbiz.com might be the place to look. More than 900 million people
have international connections on social media.
This 21st century globalization potentially portends some
geopolitical shifts, as countries redefine their roles in the global economy.
The U.S., long an engine of global consumer demand for imported goods, is the
world's leading producer of digital platforms and content. Even emerging
economies, which were sometimes left behind in the previous wave, are being
benefitted. Companies based in developing countries can today overcome
constraints in their local markets and connect with global customers,
suppliers, financing and talent as never before.
The winners will be the well-connected and the digitally
literate. Already the most digitally-connected countries are reaping the
greatest benefits from global flows. Thus, investments in infrastructure,
education and skill training are more important than ever. For companies,
countries and individuals everywhere -- not just Adele -- the opportunities
created by digital flows beckon, waiting to be seized.
SUBHODEV DAS
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