What is globalization?

Prof Richard Lynch

sourcehttp://www.global-strategy.net/categories/Globalization
For our purposes, we're going to adopt the definition of globalization attributed to Sir Richard Branson, chief
executive of the Virgin Group: Globalization is the process b! which geographic constraints on econo"ic, social
and cultural arrange"ents recede, thus increasing our global interdependence#
$he %e! words here are increasing our global interdependence# But are we beco"ing "ore interdependent than in
the past& So"e people have pointed out that the world was highl! interdependent at the end of the nineteenth
centur!: trade barriers were low and international goods flowed freel! around the world# But others have responded
to point out that twent!'first centur! interdependence is of a co"pletel! different "agnitude# (ultinational
co"panies, the worldwide web, satellite co""unications si"pl! did not exist )** !ears ago# $his has increased the
scope for co"panies and individuals to interact with each other in wa!s that were previousl! i"possible#
For exa"ple, sil% ties and scarves "a! be designed in +aris, the sil% sourced fro" ,hina, woven and printed in -tal!
and sold in the .S/: all these business activities are interlin%ed across the world#
But let's be clear# $here are "an! other answers to the 0uestion of '1hat is globalization&' $his website is pri"aril!
focused on a business perspective ' hence the choice of the above definition# $his does not "ean that other views are
invalid or have little "eaning# Rather that there is not the space to explore all these perspectives on this website#
o what do we !ean by interdependence?
$o understand globalization better, it is worth exploring interdependence further# $his has been explained b! 2eld
and (cGraw:
3Globalization4 suggests a growing "agnitude or intensit! of global flows such that states and societies beco"e
increasingl! en"eshed in worldwide s!ste"s and networ%s of interaction# /s a conse0uence, distant occurences and
develop"ents can co"e to have serious do"estic i"pacts while local happenings can engender significant global
repercussions# -n other words, globalization represents a significant shift in the spatial reach of social relations and
organization towards the interregional and intercontinental scale#
2eld, 5 and (cGraw, / 67**89 The Global Transformations Reader, 7nd :d, +olit! +ress, ,a"bridge, .; ' incidentall! useful reading for those who want
to delve into other aspects of the topic#


'-nterdependence' "eans "ore than flows of trade, financial "ove"ents between the world's financial centres and
travelling to new locations# -t "eans that actions in one part of the world have reactions in another part of the world#
For exa"ple, shoppers in the Raffles ,it! Shopping (all in Singapore will celebrate ,hrist"as ' hence the
decorated tree outside the "all ' alongside people in other parts of the world# Globalization helps to lin% people in
different countries around the world b! co""on interests, values and events#
-nterdependence "eans that there is increased global interaction: networ%s, cultural awareness, organisational
issues and the use of web'based networ% "essaging sites such as Faceboo% and << 6in ,hina9# =ur exchange "eans
that we co"e to interact "ore with each other than in the past# For exa"ple, this website is now viewed ever! "onth
b! people in over >* 6and rising9 countries: this would have been incredible ten !ears ago#
2ow is interdependence supported& :videntl! b! transport and co""unications# -n addition, it is also supported b!
global custo"er de"and, b! the exchange of %nowledge, b! (ulti?ational :nterprises and b! global actions and
organisations li%e the =l!"pics, the .nited ?ations, the 1orld $rade =rganisation and the "eetings of world
leaders ' the G@ and the G7*#
o!e !yths and realities of globalization
-t's a "!th to regard globalization as being the onl! consideration# -t is i"portant to be clear that national and
regional issues and decisions are still i"portant# For exa"ple, national countr! considerations still appl! with regard
to the law, defense and cultural values# :0uall!, regional organisations and agree"ents, li%e "e"bership of the
:uropean .nion and /S:/?, can still have a profound influence on ever! aspect of our lives, including those
relating to business#
But does this "ean that globalization is nothing "ore than a "ere clai" as so"e co""entators have suggested& -s
the concept so vague as to be incapable of rational anal!sis and therefore largel! useless&
-n defence of this viewpoint, there is no "eaningful global culture and no clear geographical boundar! for global
activit!# (oreover, the world econo"! still relies on individual powerful nations ' li%e the .S/, ,hina and
Ger"an! ' to provide the basis of world growth and increased wealth# Such co""entators have argued that
globalization is little "ore than international activit! redefined on a grander scale#
$his website understands this perspective and recognises that so"e business and other activities are essentiall!
international in scope, not global# $hat is wh! we "a%e the distinction used in the opening sections of the website:
the difference between international, "ultinational and global#
But the realit! is that globalization is a "eaningful concept for so"e co"panies, so"e nations and so"e strategic
situations: this website presents evidence for this where necessar!#
"s globalization #ust a way to reinforce the power of so!e nations and co!panies?
$here can be no den!ing that globalization has helped so"e nations to beco"e and re"ain powerful: the .S/ and
its possession of the ubi0uitous dollar currenc! re"ains a "aAor stregnth of that countr!# :0uall!, the do"inance of
so"e co"panies, li%e (icrosoft in +, software and ?estle in so"e food products, also "a%es the" a powerful
influence in the world#
So"e co""entators, particularl! Socialist writers, have argued that this "eans that globalization is essentiall!
concerned with the Austif!ing the concept of free "ar%et co"petition# $he! sa! that such co"petition allows the
alread! powerful "ultinational co"panies ' "ainl! fro" 1estern nations ' to "aintain their "ar%et do"inance and
%eep out new co"panies fro" developing countries# $he! suggest that globalization perpetuates the power of
1estern "ultinational enterprises# /ccording to such co""entators, globalization at a "ore general level is a wa!
for western countries to perpetuate 1estern -"perialis"#
$he proble" with this argu"ent is that it does not fit the facts#
,o"panies fro" ;orea, li%e BG and Sa"sung, have beco"e powerful in consu"er electronics despite not being
located in the 1estern he"isphere# :0uall!, countries li%e ,hina in "anfactured goods and -ndia in co"puter
services have beco"e powerful in those areas without being located in the 1est#
:ssentiall!, the evidence shows that national power has shifted towards ,hina, -ndia, Russia and Brazil over the last
five !ears# -t is continuing to "ove towards such countries, perhaps to be Aoined b! at least one /frican or (iddle
:astern countr! over ti"e ' South /frica& ?igeria& :g!pt& -ran&
1hat does this "ean for globalization& -t "eans that power is continuing to shift around the world, as it has done for
"an! centuries# Globalization adds another di"ension to such power shifts but is not exclusivel! related to one
group of countries#
$onclusions
Globalization is "ultidi"ensional: there are political, econo"ic, social, technological and financial aspects to the
concept# -t is so"eti"es used inaccuratel! and "isleadingl!# -t is an i"portant aspect of international business
strateg!# But re"ains onl! one aspect of a "uch broader approach to strateg! develop"ent#