Group 88 @ Sophia SCMP : Pros & Cons

In fact, we are divided on the issue of the Globalization. We were present for the end of the Globalization 2.0. We are actors of the Globalization 3.0, we are individually going global, and take advantage of it through our travels, studies, technologies, and consumption modes… Hence as we discussed about, Globalization offers advantages such as having access to large range of products at low prices thanks to free trade, enhancing technological innovations quickly and fairly, as well as speed, quality and quantity of information, developing international trade and companies through investment in EMCs, mixing cultures… But Globalization is the engine of some difficulties uncontrolled yet, like unemployment in OECDs because transnational firms can have best options (lower wages, les regulation…), a great dependence between countries in particular regarding the finance (when New-York sneezes, Paris blows), international companies take over governments, profits from FDI do not stay in EMCs and return to headquarters in OECDs, the increase of wealth gap, the lost of cultural identity, the global warming issue… So in the one hand we may say Globalization is needed to continue developing and increase our wealth, and in the other hand say no, Globalization is not the way to follow, it benefits to only a privileged few.

It is all the more difficult to take a stand because Globalization blinds us. According to P. Ghemawat, “the world is not flat” as opposed to what is often thought. If we look at some data that P. Ghemawat gathered, we can see that cross-border phone calls (a kind of information flow) represents only 2% of all voice calls in the world in 2011 (6% including internet telephony). Regarding immigration (flow of people), first-generation immigrants accounts for 3% of the world’s population. Concerning investment (kind of capital flow), FDI represents roughly 10% of all investment in the world in 2010: that means 90% of investments around the world is domestic. And then if we look at the export/GDP (kind of trade in products and services), this ratio should be around 20% (official statistics say 30%) if we adjust double counting (for instance an engine part bought in china, is assembled in Czech, and then the engine is sent to Germany, the Chinese engine part is counted multiple times in official statistics). So clearly we are not in a high internationalization process, and we think Globalization is overstated.

A main reason is due to all governments. Governments only look into the microscope. It means they take national and international decisions that are in line with their country’s requests (to meet their population’s requests). Instead, they should look into a telescope and think about taking decisions for the good of all, even taking national decision. Because if each country (population and government) goes well, trusts others, has no internal problem, it will be more open and let Globalization do its regulatory work naturally.

88 @ Sophia: IMF warns of new threats to global economy due to excessive risk taking

Geopolitical tensions and increased risk taking add to disruption, though world economy expected to pick up during 2015. 

 

Excessive risk taking and geopolitical hazards pose new threats to aglobal economy already experiencing an uneven and weaker than expected recovery, the International Monetary Fund has warned.

In an assessment prepared for finance ministers and central bank governors of the G20 countries, the Washington-based fund said problems in the US, the eurozone, China, Japan, Russia and Latin America meant growth would not meet the 3.6% pencilled in for 2014 in April.

The IMF said it expected the world economy to pick up speed during 2015 because long-term interest rates were low, central banks were supporting activity and share prices were rising. But it issued a warning that new threats could be building even before the global economy had recovered fully from its biggest downturn since the Great Depression of the 1930s.

“New downside risks associated with geopolitical tensions and increasing risk taking are arising,” the IMF said. It said other risks stemmed from low inflation, a permanent slowdown in growth rates in the west, lower growth in emerging economies and the possible disruption to financial markets that might be caused when the US Federal Reserve starts to raise interest rates.

“Despite setbacks this year, global recovery is proceeding but remains unbalanced,” the paper on global prospects and challenges said. “In many advanced economies legacies of the boom and subsequent crisis – including high private and public debt – still weigh on the recovery despite relaxed financial conditions.”

It added that activity had picked up after a sluggish start to 2014, “but it has been uneven and weaker than expected in the April World Economic Outlook. Growth rebounded in the US but fell short of expectations in the euro area and Japan.”

The fund expects the US to do best in 2015, with growth forecast to remain “solid” in the UK, Australia, Canada and other Asian advanced economies.

But, despite action by the European Central Bank to lift activity through cuts in interest rates and credit-boosting measures, the fund believes eurozone growth will rise “more gradually and unevenly”.

The US and the UK are predicted to be the fastest growing of the major G7 western economies in 2014 and 2015, and the fund said policymakers in Washington and London should be preparing to remove the ultra-stimulative policies in place for more than five years.

It said the main challenge in the US was to judge the appropriate speed at which monetary policy – interest rates and the asset purchase programme known as quantitative easing – should return to normal, given the state of the economy and the impact of higher interest rates on consumers and businesses.

“Current plans to end tapering later this year and increase policy rates from the middle of next year appear appropriate, given the sizable slack,” the report said.

The IMF said UK interest rates should stay at their record low of 0.5% “for now”, but borrowing costs might need to be tightened quickly if costs ran ahead of productivity growth, spare capacity was absorbed faster than expected, or if the Bank of England’s new macro-prudential tools did not cope with rising house prices.

Source: http://www.theguardian.com/business/2014/sep/17/imf-new-threats-global-economy

Group 88@ SOPHIA – Team Vision (Update)

Globalization means specialization. Jobs are outsourced in more skilled, cheaper or attractive countries for companies.

All interconnected, we live in a global competition regarding the world population. That’s why we need adaptability skills.
How to be different in the actual labor market given that all the students have similar backgrounds and that the level of education will increase? We have to build ourselves a strong particular and specialized profile.

Tomorrow will be easier to find a job; more choices and job opportunities mean that we may spend less time in the same company: we will have to be able to develop our professional and private life in a foreign country.
With this configuration, where cultural diversity is threatened, we can play our cards right. Marketing our skills, talents, ethnic backgrounds and being innovative might not be enough. But thanks to recent IT breakthroughs, new solutions exist. For instance, build a network is coming to be the cornerstone for successful careers.

Globalization won’t only affect our ability to find a job. It will also affect the way we work. More and more studies and companies are looking for new ways of working (stand-up working, work on running machines, game rooms…) in order to stimulate workers and increase the output. These methods are becoming increasingly more common. Hence today, and even more tomorrow, telecommuting provides a good compromise regarding globalized companies (time zone issue, cost-saving…) and the importance of the family.
This wouldn’t be possible without New Information and Communication Technologies (NICT). Thus travelling for our globalized job will be unnecessary. However, with the sense of duty NICTs create, we will be constantly connected, even during holidays. Finding a middle ground seems to be difficult.

To sum up, we are preparing ourselves to international careers with high mobility. The keys to success are adaptability, network and culture tolerance.