Economics & Social Sciences
RBI Chair in Economics
To coincide with the fifth anniversary of the Global Network for Advanced Management in April 2017,Global Network Perspectives asked faculty across the 29 schools in the network: “What do you think the future of globalization looks like? How will this affect the economy in your country or region? How is your school preparing students for this world?” On April 20, in a session at the Global Network for Advanced Management Fifth Anniversary Symposium, a panel of experts, including former U.S. Secretary of State John Kerry, will lead a discussion of the future of globalization and the implications for business and management education. Watch the discussion live.
What do you think the future of globalization looks like?
Is globalization on the retreat? Brexit, Donald Trump’s election, and the resurgence of right-wing, nationalist parties around the world have made us question our earlier optimism about the future of an open global economic order. A critical reevaluation of what globalization has delivered and how it has been managed is certainly warranted. In my view, however, globalization will endure, though at a more moderate pace and in a more uncertain and volatile manner, where we alternate between periods of globalization and de-globalization—much as in a business cycle with its peaks and troughs. The two currents may also at times run together, and the friction between growing cross-border activities which require global governance frameworks and national political systems which wish to preserve their sovereignty will only grow.
This view of an alternating and at times co-existing form of globalization is based on two factors—technology and demographics—which I believe will be the key drivers shaping our world in the future, and which are irreversible. Both these forces inherently contain within themselves the seeds of both globalization and de-globalization. While technology will continue to spur the dispersion of production of goods, services, and ideas across geographies and further the growth of global value chains, it will simultaneously also act as a disruptive force within and across countries by accelerating changes in the methods of production, delivery, ideation, and the associated distribution of economic and social benefits.
Likewise, while demographic imbalances across countries—with the associated implications for wages, production costs, and comparative advantage, will continue to spur outsourcing, foreign direct investment and the international mobility of students and workers—they will simultaneously sow the seeds of protectionism, nationalism, anti-immigration sentiments, and xenophobia, and pose threats to national security and culture. Demographics are also likely to result in a longer-term slowdown in growth and productivity in some parts of the world, thus altering the economic balance across countries and creating heighted concerns over the loss of economic and political supremacy.
How will this affect the economy in your country or region?
India stands to be adversely affected by the current wave of protectionism and anti-immigration, especially at a time when it is focusing on enhancing participation in global production networks, improving its business environment, and skilling its manpower to realize its demographic dividend and tap the opportunities thrown up by the global market. Although India is less integrated than many other countries in the region and thus may not be as adversely affected by de-globalization as others, it still needs an open global economic order in terms of movement of goods, capital, technology, ideas, and people to sustain and improve its growth prospects. Recent developments such as the stricter conditions on skilled immigration visas in the U.S. or the U.S. trade review, which targets countries like India on issues of intellectual property, state subsidies and tariff and non-tariff barriers are of concern to major sectors of the Indian economy.
Such developments may give rise to two possibilities. On one hand, they may lead Indian companies to re-examine existing strategies and consider new markets and business models and the Indian government to re-examine some of its distortive practices, focus more on competitiveness, and give a renewed thrust to multilateral, regional, and bilateral discussions. On the other hand, such global currents may lead to more calls for protectionism, retaliation, and incentive-based policy support for industry in India. Most likely, mirroring the global trends, both of these dynamics will play out in India as well, depending on the sectors and issues concerned. The challenge for Indian business and the Indian government will be to continue with recent efforts toward integration and global competitiveness, against the current headwinds of de-globalization.
How is your school preparing students for this world?
Recognizing the importance for any manager of understanding and confronting global issues and challenges, the Indian Institute of Management Bangalore has been making concerted efforts to provide its students, across all programs, with global exposure. IIMB has an exchange program that enables students to spend one term learning at foreign partner institutions in Europe and the U.S., and also brings foreign students from these partner schools to our campus. There are courses such as Business Planning for International Markets which provide IIMB students with an opportunity to spend some time in countries such as China, the UAE, Singapore, Israel, Vietnam, and Japan, and to work on projects targeted to those markets.
There are also global immersion modules with partner institutions in Asia, Europe, and the U.S., where students learn from policymakers, industry chambers, and overseas businesses. Students participate in global case and writing competitions where they confront issues of global concern. They intern with global Indian and foreign companies and get exposure to their global strategies and practices. There are courses which specifically address themes such as cross-cultural management and international business strategies, as well as courses which highlight the current economic scenario and provide perspectives on global developments and their impact on global and Indian businesses. The objective of all these efforts is to make our students capable of operating across cultural, economic, and geographic boundaries so that they can become effective and sensitive managers and global citizens.
Article Published @ Future of Globalization: Integration and Competitiveness