jump to navigation

Will Glocalization kill Globalization? March 10, 2009

Posted by Bipin Agarwal in Global Economy, IT Offshoring - Future Direction, IT offshoring and Real Estate development, Politics and economy, Quality of Living, Recession.
trackback

April 30, 2009 update

Today Chrysler announced bankruptcy. I think this is a good news for America. Rather then going through the pain every day, this will help the employees and company. Shareholders and debt holders will not get much.

Is GM next? This could a warning to bond holders of GM. Unlike Chrysler, until now no body has been lined up for GM. Nissan had expressed interest.

You should expect that there will more local manufacturing of car, irrespective of the owner. This is a great day for Glocalization.

As I had predicted, Glocalization will accelerate US economic recovery.

Bipin Agarwal

March 10, 2009  update

Discussion about Glocalization is over. It is going to happen. In fact, USA will be the biggest beneficiary of this trend in the short and medium term.Long term picture is not great.

Recent article in Financial Times by Krishna Guha and others called this trend as de-globalization.Thank you for endorsing it, even though they are late in expressing opinion.

Talk is cheap, while everybody including G-20 will talk about the open trade, free trade, etc. The fact that Bank of America (so called global bank) has to withdraw the offer letter from the MBA student studying in US is the real begining of what is coming.

Currently, US will benefit if any manufacturing, or service activity shifts to US.  With government involved in financial services, health care and manufacturing, it is given that activity has to happen in US.  Risk is that US will go too far into it. Recent action by Bank of America to withdraw the job offer to MBA student studying in US, who are not citizen, is alarming. Are we going to destroy our education industry?

Long term implication of  glocalization for US are not great. At the end of the day our behavior will encourage the other countries to follow the same policy. Demographic of the  population is in the favor of China, India, and other countries.

Glocalization will accelerate the decoupling of the rest of the world economy from west.  It will be good for our economic and political leaders to discuss this topic in detail and put the right policies in place as opposed to have the policy of the day with an eye on the next election.

Feb 2009 update

Debate about the Glocalization is over. Now it is a matter of execution. How long will it take for all the countries to put the regulation to make it happen.

It is true that some industry will feel the impact more then the others. International shipping, heavy manufacturing, energy, financial services will be more local. Technology industry will continue to be more global and will not be hit as hard from glocalization.

New budget proposal from the US administration has set the foundation for glocalization war around the world.

  • Government will start taxing the earning of foreign operation of the companies. This will have far reaching effect on the corporate structure and investors sentiment.
  • We should expect that there will be lot of pressure for creating local jobs across the world, meaning more protection centric policies.
  • GM will separate the Europe operation and SABB subsidiary, eventually leading to local government bailing them out. They are going to do this just to benefit US? Not really. There will be increase in import duty for luxury items such as cars, etc.
  • All the emerging countries, African nation, Eastern Europe will start shutting out China for production outsourcing in the future.
  • Banking industry will be much government owned – net result will be local financial services industry. US will create lot of noise, but no body will care.
  • UBS is the wild card. If this financial institution is shut, there will be lot of money that will go back to poor countries. Majority of illegal money belongs to politician and business people of poor or emerging countries.
  • US dollar will de-value significantly over next decade, making much of the out-sourcing irrelevant. US and Europe will continue to prosper because the quality of life is much better there.

Jan 2009 – I had written this before Obama budget was proposed.

World Economic Forum at Davos is in full swing. Politician, executives, policy makers, bankers are busy at Davos worrying about the impact of financial meltdown and how it may change the behavior of the countries to introduce protection, regulation mostly under pressure from the population, politician worried about getting re-elected, and domestic industry.

If governments are being expected to inject substantial amount of resources (tax dollars) to resurrect their economy, their new shareholders (the taxpayers) will demand that the resources are used to create local jobs.

Glocalization will be driven by people

There has been demand in US to force the companies to use local labor and products on stimulus related projects, There are protest across UK by energy workers against TOTAL bringing the foreign labor to build and operate plan in UK, Indonesia is taking the position that if pharma companies want to sell their drugs, they have to make them locally.  China, Russia mostly do not have to worry about this, because not only nobody is allowed to migrate there, but also because of the nature of their government. In any case mostly immigration is more prominent by the people in search of better  life style. Some countries will do more explicitly, some will do it softly and still preach the others that they should not do it depending on the local economic, and political environment.

Glocalization will accelerate the maturity of decoupling

One big lesson for the countries that have benefited in the last few years from the export economy, or commodity boom have learned that while you can generate surplus by sending your stuff to west, the IOU you get in return may not worth it.  Countries need to learn that they need to balance the export and import. Economic growth is not sustainable unless there is domestic consumption.

We all know that basic necessity of life can not be centralized. Is it possible to put all the clothes in a warehouse in China and every body in the world will feel dressed? Can you put all the food in storage in US and there will be no hunger anywhere in the world? Can you put all the cellphone in Nokia headquarter and everybody will be connected? Life demands Glocalization. Does it mean the era of globalization is over and the new era of Glocalization is about to start in a big way. Question is not if it will happen, it is just how long will it take for it to happen.

I sure hope big shots spend considerable time in Davos to discuss this issue rather then just rub shoulders.

if you have a question, about Global economy, Real Estate, and Politics correlation, feel free to ask

http://www.redhawkinvestments.com

Bipin Agarwal

bipin.agarwal@redhawkinvestments.com

Advertisements

Comments»

1. cat care and safety - April 11, 2013

Hello there! I just want to offer you a big thumbs up for the excellent information you have
got right here on this post. I am coming back to
your website for more soon.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: