Tuesday, May 08, 2007

Globalization - What it is, and why it's important (part 1)

Globalization - something only of concern for international business, trade, diplomacy? Or, something that affects all of us, no matter what our profession or interest?

Several months ago, the Wilder Board asked: "What large scale trends or issues exist, which could have very profound consequences for the work of nonprofit organizations, whether local, national, or international?" This Board has always looked ahead strategically; they knew that plans within Wilder take into consideration changes in the population, the rising and falling of specific needs, and so on. In this case, however, they wanted to look beyond the obvious, to larger trends or overarching conditions that might produce the more visible trends that we readily see and understand.

Among several nominations of significant, large-scale trends, globalization percolated to the top as an important focus of attention, and we spent time discussing it. So, in a series of blogs, I'll offer my views on what globalization means and what implications it has for us.

One, simple definition of globalization: the increasing integration of societies and economies throughout the world. It means that people move more and more easily across borders, that more money and capital moves across borders, and that freer trade exists.

The International Monetary Fund defined "economic globalization" as: "a historical process, the result of human and technological progress. It refers to the increasing integration of economies around the world, particularly through trade and financial flows. The term also refers to the movement of people (labor) and knowledge (technology) across international borders."

Thomas Friedman (author of "The World is Flat", "The Lexus and the Olive Tree") asserts that "Globalization has replaced the Cold War as the defining international system." A recent headline in the New York Times strikingly confirmed this assertion. If you remember the 1950s and 1960s, your recollections of the Soviet Union probably include: Nikita Khrushchev banging his shoe on a podium; the phrase (probably mis-translated) "we will bury you"; the Iron Curtain; the "red menace"; and similar negative concepts. At that time, public service announcements attempted to reassure us by explaining that the "DEW line" would detect the launch of Soviet missiles; it seemed that the U.S. and the Soviet Union had missiles pointed at one another, ready for launch. Now, a half century later, the New York Times of April 21 stated: "Pentagon invites Kremlin to link missile systems."

Friedman asserts something else that can help us to understand the importance of globalization for all of us. As the Friedman web site states: "Globalization is the integration of capital, technology, and information across national borders, in a way that is creating a single global market and, to some degree, a global village." In The Lexus and the Olive Tree, he frames "the tension between the globalization system and ancient forces of culture, geography, tradition, and community."

Jim Steiner, of Lowry Hill and a member of the Wilder Board illustrated how capital flows in today's world and offered examples of how local decision-making is unbounded; companies look to achieve the best possible gains within an international network.

It's this blending of the local and global, this creation of the truly global village, that we need to pay attention to. Whether we realize it or not, the forces of globalization affect our personal, civic, and business lives. Decisions we make as voters, investors, leaders, community members can leverage the forces of globalization, or can passively react to those forces. "Neighborhood" decision-making and "world-wide" decision making overlap more than ever before.

Globalization has, on the one hand, increased opportunities; it has democratized communication and the way we learn about the world. However, not everyone has received benefits. Globalization has enhanced the situations of many of us, yet some of us may be much worse off as a result of globalization.

In future blogs, I'll talk about all these features of globalization and their implications.