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.