Rajesh: Let us start from the definition of the term "Globalization". Globalization is the increasing interdependence, integration and interaction among people, industry and government in different locations around the world. Globalization/ internationalization has actually felt with a number of trends, most of which have developed or accelerated since World War II. These include greater international movement of commodities, money, information, and people; and the development of technology, organizations, legal systems, and infrastructures to allow this movement.
Abhishek: Globalization in its economic sense refers to cross border transaction of goods and capital flows and increase of free trade between different countries across the globe. But Globalization is not limited to its Economic sense. It also means political, cultural and informational Globalization.
Tuhin: Globalization is affecting all of us irrespective of whether we like it or not. If we logically analyze it, we see that that it affects the economic, social, technological and political atmosphere of all countries. The Tata Corus deal is as much an example of Globalization as the espousal of Chicken Tikka and Yoga by westerners. Similarly, McDonalds', KFC, Giorgio Armani being present in India is also Globalization. I feel that exposure to Globalization accompanied by the preservation of national identity is a huge positive. This is because when we get to know a number of various cultures, we have the option of selecting and consolidating all the positives of these cultures and improving our national profile more.
Rajesh: Further, Globalization brings a level playing field for all the companies throughout the world. And only the fittest survives, in the process eliminating the existence of sub-standard goods. In the process of Globalization finally winner is the consumer. For e.g., Indian Govt. has put 200% excise on Scotch. Because of this general Indians cant afford it. Further the Indian Govt. is indirectly not encouraging Indian industries to explore the field of Scotch
Tuhin: Also, Globalization has the potential positive because if we analyze the technical sphere, India can obtain prodigious levels of foreign investment, technical expertise, state of the art technology which will only contribute to our own betterment. Similarly, agriculture which is a sore wound in our economic report card can be assuaged if we turn towards foreign expertise. Keeping this in mind, I feel that it is a beneficial influence.
Shilpa: Globalization means different countries can operate, buy and sell in many countries that have open market. In Indian context, it has benefited the consumers by providing them access to many options. Increased competition leads to many changes in the industry, economy and the culture.
Nilanjan: Well I admit that fact that globalization is good for corporate, but it is harmful for agro based country like us.
Shilpa: With India opening its economy in 1991, many changes have taken place. Many small industries have been wiped out. While the really competitive ones have grown by leaps and bounds, for example Tata Steel, SBI etc
Srikanth: The topic give today is a quite interesting and currently the whole world is also thinking in the same thing. Yes Globalizations is good for the common people because Globalization will increase supply more than demand leading to drop of costs. So its good for customers who need to buy the product.
Rajesh: Because of globalization, we are now able to ride luxury vehicles like Mercedes, Toyota, Honda, Or else we still would have been riding lousy models like Fiat & Ambassador
Abhishek: Let us first understand few benefits of Globalization
Greater international cultural exchange, Greater international travel and tourism, spread of local consumer products (e.g., food) to other countries, World-wide sporting events, Development of a global telecommunications infrastructure and greater transporter data flow, Promotion of free trade are some of the benefits of Globalization.
Tuhin: Globalization can also be seen from the angle of disappearing physical and geographic boundaries thanks to technological advancements. Indian call centers and BPOs are excellent examples of this idea. Today Indian BPO employees can fix a British housewife's credit card problems in an instant. Similarly, corporate can easily make high profile decisions with their foreign counterparts by means of a video conference or webinar in a jiffy. People who are friends and are living in different countries can use the web camera for the added personal touch.
Srikanth: What Rajesh said is ok but it will also leads to the fall of local brands if they are not having enough strength to compete. No, not 100 percent, it affects small scale industries in India.
Nilanjan: We are now preparing SEZ, but are it really good for our countries interest? I think NO, it is grabbing our fertile agricultural land and on another side of the coin is MNCs are here only because of the cheap labor.
Lavya: Yes it is true that Globalization is good for the world we live in. its good for the nations which belong to under developed category to make an alliance with developed nations and make financial growth
Abhishek: But all this comes at an expense too .Many countries have faced their economy slowdown because of Globalization. It leads to shutdown of national industries. Just for example many electrical appliances industries like BPL have faced tremendous competition from big MNCs like LG and Samsung.
Rajesh: Srikanth. Well you are wrong to some extent. Because of Globalization Indian comp. like Tata, Birla, UB group, Reliance, ONGC, and many others are able to expand their market.
Shilpa: Everyone here agrees that it has made consumer the king. But one aspect that needs to be taken into account is the realty bubble which is due to the sudden rush of MNCs to set up offices here. Also, with higher pay packages by MNCs, the average income of households has increased with more people going for 2nd 3rd houses contributing to the realty process soaring. This has created problems for the common man. Especially those who are about to retire and do not have skill sets that can be marketed in the free economy.
Tuhin: However, Globalization must not be such that we just adopt foreign practices and culture blindly without any forethought. We may marvel at American food, clothing and the way they do business but we may not necessarily want to marvel at their way of living which includes teenage pregnancies, single parent families, and high rates of divorce and drug abuse. This is not what a number of Indians associate with. So we may wish to filter this aspect of influence. India's tryst with Globalization has been good in the sense that FII and FDI inflows are massive and so is outsourcing. However, in the face of all this we have managed to preserve our identity.
Srikanth: Rajesh its all about big companies and MNCs. What about small scale industries?
Nilanjan: Our intelligent workforce is becoming back office collies due to Globalization, not only that MNCs are using our natural resources at very cheap rate.
Rajesh: Globalization is meant for common good. Globalization asks all countries to have same taxation on all goods, whether foreign or local. But how effectively we utilize it is the point of contention. For example, America and Western countries are giving huge unfair compensation to its agricultural industry. Because of this progress of agricultural industries in developing countries are being hampered. So no individual benefits should be entertained.
Tuhin: I think that the unfair subsidies which Mr.Rajesh mentions can be offset by having a lower import duty which will make imports more competitive. This may bring in an element of competition.
Shilpa: With increased competition, the onus is on higher productivity which is good. The banking, telecom sectors till now dominated by PSUs have become much more efficient. It can’t be said that agricultural industries are hampered. Even today the Agricultural industry in India is growing at 6% against the estimated 3.9%.
Abhishek: Economic arguments by fair trade theorists claim that unrestricted free trade benefits those with more financial leverage (i.e. the rich) at the expense of the poor. Some argue that Globalization imposes credit-based economics, resulting in unsustainable growth of debt and debt crises. Many global institutions that have a strong international influence are not democratically ruled, nor are their leaders democratically elected. Therefore they are considered by some as super national undemocratic powers. State-centric nationalists fear Globalization is displacing the role of nations in global politics and point to NGOs as encroaching upon the power of individual nations Many countries have benefited from Globalization and many have hampered their economies due to it.
Shilpa: One thing that has had negative impact is that the lure of easy money has made the youth give up on building important skills that will help in the long run. Many graduates are taking p call-centre jobs because of the money factor and neglecting higher education.
Rajesh: Abhishek. Well to some extent some countries are hampered. But it’s on short term. When we consider in long run every country is getting benefit from global. Well here we all have agreed that Globalization to some or more extent is beneficial for the World. So let us now concentrate on how to eliminate the negative impact of globalization and how to regulate it. One we have to make the regulatory body (WTO) more effective.
Two every country has to abide by the rules set by WTO.
Every contentious issue has to be set by the WTO jury.
Lavya: well the exchange of human resource is important for harmony on earth. Globalization makes world a good place to make economic progress and prosperity
Abhishek: So the world is thus divided into two groups one favoring it and another against it, because Globalization promotes overall trade/culture/technology but hampers individual growth (in some cases)
Tuhin: Countries must adapt Globalization to the extent that their local enterprises are made more efficient. By this I mean that the retail boom in India which involves the entry of Wal-Mart and Tesco must be done in a careful way. This must not leave the mom and pop stores in the cold and neglected. That will be a case of selectively pernicious Globalization. So, the local shops may also be brought in the fore.
Srikanth: Shilpa , I agree with it but 90%of the people are getting advantage from it. The poor people who can’t study due to financial problems are doing jobs and studying in distance course or some way. Any way it’s helping them.
Shilpa: Let's consider retail sector. With players like Wal-Mart coming into play, how can the small retailers (mostly unorganized) can be protected? How the consumers be protected? The average tickets at a multiplex are about Rs 150 against Rs 60 in cinema halls.
Abhishek: See we are a developing country and thus we always think for Globalization because it makes India a better place to be. But countries like US, UK who are developed see this concept as a fear. It is one of the causes of economic slowdown of US. It may have benefited some sectors of US but comparing an overall effect, in trade between India and US its India who benefits more rather than US
Lavya: Globalization is the only tool where we can jointly practice on technology and human background. Globalization promotes entrepreneurship even in developing countries
Tuhin: As far as neglecting higher education is concerned, we cannot blame the BPOs. We must look at individual profiles. A person who has a family of 4 and is the only bread winner and is an English speaking will bless the BPOs because they can they give him his daily bread. He may not even contemplate higher education.
Rajesh: Shilpa, Your worry about big player entering retail sector is not valid. Customers of retail outlets are diff, & that of general kiranis are different. For buying 2 kg of rice or dal or some other, won’t go to retail outlet.
Nilanjan: Developed countries also affected from Globalization, many of the production unites (i.e Levi jeans) have shifted from there
Abhishek: The software industry in India is on a roll. Now major Big Giants of US software industry are outsourcing their work to India (for their own profit because Indian provides them with the cheap alternative) , which should have been done by US citizens. In this case Indians are benefiting a long way as it provides employment to thousands and thousands of people in India. But in US? They are now facing problems of Unemployment
Shilpa: Agree with Tuhin. Selectivity is more important. In our country the best players in Oil are still the PSUs, which mean our government has been successful in implementing policies. About developed countries, it can have an adverse impact when trade becomes two way. When developing countries open up, the MNCs get access to new markets. But when this new markets mature, they will consider the developed countries as potential markets. Most developing countries like India and China have great operational capabilities. This prowess can be harmful to the developed countries in the long run. For Example, if Tata’s start cutting jobs in Corus it will be like the developed UK getting a dose of its own medicine.
Tuhin: Countries like US, UK also benefit from this phenomenon. The influx of yoga, Bhagvad Gita and other religious artifacts have provided them with the elusive peace of mind which unbridled capitalism and high stress work environments have taken away from them.
Nilanjan: It is shifted from there and now it’s taking advantages of the cheap labor of underdeveloped countries.
Lavya: Globalization promotes entrepreneurship and aids making progress even in developing countries Example : Bajaj - alliance , Corus Tata venture, Bharti Wal-Mart. Globalization promotes entrepreneurship and even helps existing companies to make progress eg : Tata Corus, Bharti Wal-Mart, Bajaj - Allianz , Mahindra- Renault
Abhishek: Thus the concept of Globalization is beneficial in some cases and harmful in other cases because all in all a balance is always maintained.
Shilpa: In case of outsourcing, it can still be considered as exploitation because Indians are working at a fraction of the cost that the MNC would incur at their home country. In the absence of an open economy, such staff would have been taken to the MNCs country and employed there.
Rajesh: If we think about the developed countries, they have even benefited from it. Because of globalization they have outsourced their job to labor intensive markets in developing countries. And as a result their industries are saving a lot, and in turn have become competitive.
Nilanjan: I think Indian corporate are being misguided due to Globalization , Tata paid quite a high price for Corus, if it is invested in India no doubt profitability would be greater
Tuhin: Another benefit which developed countries have obtained is that of learning better management concepts. For e.g. the Indian Dabba walas and their phenomenal efficiency in the supply chain is now at a case study at Harvard. Similarly, the JIT concept and lean manufacturing of Japanese auto industries are being studied by DC and GM after they lost out on market share.
Abhishek: Mr.Rajesh and Lavya you are only talking of companies, just see how it has created a problem of unemployment in the respective countries
Nilanjan: The tendency of buyout of large corporate may cause problems. It may cause capital scarcity for developing countries like us.
Shilpa: The impact in the cultural front is positive as it helps sharing of ideas, languages, and cuisines. The economic advantage may one day help overcome the political and religious barriers and truly the world could become on happy family.
Rajesh: Abhishek. One invests to earn. So how he earns it is a different issue. And in the due course the companies are making more profit.
Shilpa: One thing we need to consider is in pre-British times, there was trade between countries but there was no such concept of free economy. Yet the prosperity was unquestionable.
Abhishek: Just see even if these companies are making profit then why US economy is on slowdown, why so many people unemployed.
Tuhin: Another downside of the decreasing global barriers due to Globalization is the terrorist attacks.9/11,7/7, the Madrid bombings as well the Mumbai bombings were examples of this phenomenon, unfortunately.
Shilpa: One thing that Globalization has helped India is in preserving the brain-drain. Now the west is no longer the preferred destination of well qualified people.
: Request everyone to give a concluding statement.
Nilanjan: Impact of Globalization is good to some sectors, but to make a strong base economy we can’t depend on it, we have to believe on our own strength.
Abhishek: Globalization is like a pan balance which makes the balance between different countries across the world .It may help a country in one sector but may hamper in other. So the country must decide its policies for Globalization protecting its own National Interests.
Tuhin: I think that Globalization is positive when you know what positives are to gleaned from foreign influences. Everything you are exposed to is not healthy .So, if this phenomenon is welcomed selectively, it will reap rich dividends if we know what will benefit us and what will not.
Shilpa: I conclude by saying that Globalization has its pros and cons. But it cannot be denied that the impact it has had on our country has been positive. It has helped Indian companies to become more competitive and ensured survival of the fittest. Though, policies should be framed to protect the interest of consumers and there should be restraint in opening the market at least in some sectors.