Page 77 - DMGT548_GLOBAL_HRM

Global HRM

Notes 4.3 The Future of Globalisation

Like a snowball rolling down a steep mountain, globalisation seems to be gathering more and
more momentum. And the question frequently asked about globalisation is not whether it will
continue, but at what pace.
A disparate set of factors will dictate the future direction of globalisation, but one important
entity—sovereign governments—should not be overlooked. They still have the power to erect
significant obstacles to globalisation, ranging from tariffs to immigration restrictions to military
hostilities. Nearly a century ago, the global economy operated in a very open environment,
with goods, services, and people able to move across borders with little if any difficulty. That
openness began to wither away with the onset of World War I in 1914, and recovering what was
lost is a process that is still underway. Along the process, governments recognised the importance
of international cooperation and coordination, which led to the emergence of numerous
international organisations and financial institutions (among which the IMF and the World
Bank, in 1944).
Indeed, the lessons included avoiding fragmentation and the breakdown of cooperation among
nations. The world is still made up of nation states and a global marketplace. We need to get the
right rules in place so the global system is more resilient, more beneficial, and more legitimate.
International institutions have a difficult but indispensable role in helping to bring more of
globalisation’s benefits to more people throughout the world. By helping to break down barriers—
ranging from the regulatory to the cultural—more countries can be integrated into the global
economy, and more people can seize more of the benefits of globalisation.

Task Chart out the growth path followed by globalisation after the phase of liberalisation
and industrial revolution.

Notes Myths about Globalisation
No discussion of globalisation would be complete without dispelling some of the myths
that have been built up around it.
Downward pressure on wages: As more work can be mechanised, and as fewer people are
needed to do a given job than in the past, the demand for that labour will fall, and as a
result the prevailing wages for that labor will be affected as well.
The “race to the bottom”: In an open global market, while jurisdictions do compete with
each other to attract investment, this competition incorporates factors well beyond just
the hourly wage rate. According to the UN Information Service, the developed world
hosts two-thirds of the world’s inward foreign direct investment. The 49 least developed
countries—the poorest of the developing countries—account for around 2 per cent of the
total inward FDI stock of developing countries.
Globalisation is irreversible: In the long run, globalisation is likely to be an unrelenting
phenomenon. But for significant periods of time, its momentum can be hindered by a
variety of factors, ranging from political will to availability of infrastructure.
Openness to globalisation will, on its own, deliver economic growth: Integrating with the
global economy is, as economists like to say, a necessary, but not sufficient, condition for
Contd...

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