Guarded Globalization

industryweek.com

Today, globalization has greatly changed due to the recent global recession, and the new phase of globalization which we find ourselves in today is called “guarded globalization” by the article. In the past, globalization for most companies was an obvious move, and many expanded their business throughout the world. This was due to the fact that the Western World was so competitive, so they naturally wanted to expand to more developing countries so they could prosper. These developing countries prospered as a result, as their population increased and a raise in salaries. “As distances shrank because of modern transportation and communication technologies,” says the article, “chasing growth globally became universally logical, and trade and capital flows surged.” As of 2008, however, this all changed.

Many modern companies believe going global is too much of a risk, and their fears are not unfound. This is mainly because the governments of developing countries have become more wary of accepting foreign businesses, now protecting local companies from competition. They’re much more selective on the businesses they allow, choosing “the countries or regions with which they want to do business, pick[ing] the sectors in which they will allow capital investment, and select[ing] the local, often state-owned, companies they wish to promote.” As a result, foreign businesses are less likely to be accepted, and if they are, they have to go through many hurdles due to “policy makers in developing countries...intervening to create uneven playing fields that give local players an advantage.”

With the government taking a more active role in globalization, it is becoming more and more difficult for foreign interference. State capitalism is becoming popular in places such as China and Brazil, changing the rules of the free market and thus globalization itself. Because “the objective of state capitalism is to control the wealth that markets generate by allowing the government to play a dominant role through public-sector companies and politically loyal corporations,” governments are less willing to allow foreign businesses, thus further reducing globalization opportunities. The world is becoming more political and controlled, restricting the free market as a whole. My next goal is to decide if more restrictions of globalization are better for the environment and economy as a whole or not.