Management of Globalization
Management of globalization is a timely topic and its recent applications are attracting a great deal of attention. Subscribing to a perspective that emphasizes doing things right, this essay directs attention to the dependence of desired outcomes on institutional structures and managerial processes. Those structures and processes can generate desired enhancements to the global status of developing countries and their internal standards of living. Globalization is an increase in the flows of goods, services, capital, labor, and information across the borders of nation-states. In reality, the impacts of globalization and institutions are measurable. Three international institutions hold the tasks of managing globalization. They are the World Trade Organization, the World Bank, and International Monetary Fund. Among the items of interest, the latter two institutions generate predictions suggesting that China will become the third largest economy of the world and India will become the fourth largest by 2015. The complexion of free trade is becoming more dynamic with new entrants, yet the complexities of free trade appear static and/or stagnant. Prospective managers of globalization will need to address widely held perceptions that it hinders developing countries more than it helps them. From an educational viewpoint, the case study approach can be a highly effective learning tool as a method for expanding small successes into larger ones. Drawing attention to some key assessments and critiques on the management of globalization, the author of this essay challenges readers and students alike to contemplate opportunities to make a favorable impact as they gain a better understanding of international institutions, challenges, and cultures.
Keywords Free Trade; International Monetary Fund; Outcomes; Processes; Structures; World Bank; World Trade Organization
Management: Management of Globalization
Management of globalization is a controversial and timely topic. Evidence of its growing relevance over the past 20 years is observable in the three-fold increase on the number of colleges offering international business courses. Portraying a real need for future managers to gain a better understanding of diverse cultures and business practices, that trend also signifies evolving opportunities for students to improve global standards of living and to become aware of the international institutions. Recent publications of a couple books on the management of globalization provide some critical and highly important insights into the structures, the processes, and the outcomes of those institutions.
It is evident that a valuable opportunity exists for examining alignments between managerial perspectives and institutional purposes in light of satisfying the needs of target populations. A commonality between the publications and enrollments mentioned above is their relevance to allegations that the management of globalization hurts developing countries and favors developed countries. In order to understand the substance and nature of those allegations, one must examine the roles and purposes of the World Trade Organization, the International Monetary Fund, and the World Bank. The tasks of those three international institutions vary slightly in their approaches to managing globalization and advancing developing country stature.
This essay aims to provide some breadth and depth regarding the existing state of affairs in global commerce. Most importantly, it summarizes some points of discontent and resolution regarding the management of globalization as asserted by a Nobel Prize laureate, a widely-read author, and a highly-respected former insider at the World Bank. As readers move through this essay, they will find a section for each of the following subjects: The organization and management of globalization; the need for effective institutions; and, the relevance of international expertise and education.
The KOF Index of Globalization
With few references to management and economic theories, this essay focuses mainly on applications relevant to promoting the advancement of developing countries. The general definition of globalization is an increase in the flows of goods, services, capital, labor, and information across the borders of nation-states. Furthermore, globalization is real and it is measurable. In fact, over thirty years of country specific data are available via query over the Internet in a quantitative format from the Swiss Institute for Business Cycle Research, which produces the KOF Index of Globalization (KOFIG).
At its core is a compilation of variables that generate rankings of over 100 countries by measuring the economic, the social, and the political dimensions of globalization. Its 2007 report suggested that globalization continues to rise due, in part, to increases in political and economic aspects. The 2013 report demonstrated an overall slowing in globalization which is attributed to the economic crisis. That data provide global trading partners and others with a rich source of information for evaluating local situations and trends in a global context while presenting a viable foundation for measurement and calibration.
The contents of the KOFIG become most interesting as one examines all three of its dimensions.
- First, the economic dimension summarizes variables that reflect the actual flows of goods, capital, and services and some perceptual information. It assesses data on capital and trade flow restrictions of a specific country and collects numeric measures of trade and foreign investment. This dimension constitutes 36 percent of the KOFIG.
- Second, the social dimension summarizes variables that reflect the diffusion of ideas, information, graphics, and individuals. It contains measures of personal communications, information transmissions, and cultural interactions. This dimension constitutes 37 percent of the KOFIG.
- Last, the political dimension summarizes variables that reflect the spread of government policies. It assesses data on embassy presence, international organization membership, United Nations' participation, and international treaties entered into. This last dimension constitutes 27 percent of the KOFIG.
It is apparent that globalization is forcing many current and prospective trading partners and other inhabitants of planet Earth beyond their comfort zones. As we can appreciate the healthy yet naturally unsettling tension in moving from the past toward the future, the KOFIG appears promising as a valuable resource for those who hold a genuine interest in evaluating the national and/or international context of globalization. The KOFIG can facilitate those evaluations and inform various decisions. Most importantly, managers of globalization may want to begin by focusing their attention on specific regions within Asia although there are valuable lessons that will result from examining the historical dominance of Europe and the United States in international trade along with current perspectives.
In an essay entitled "Europe at Fifty: Europe and the Management of Globalization," Jacoby suggests that many Americans think of globalization in terms of regulatory constraint removal, free exchange, and decentralized decision making processes. In contrast to these free market notions, spokespersons for the European Union are indicating their desire for new rules by which to manage globalization. Meanwhile, others tend to think more in terms of orchestrating structures and processes through which Third World countries can actually become active participants in international trade. Some may look to globalization as an opportunity while others may see it as a threat.
Managers may function in institutions and/or in organizations and need to understand their differences. In the most basic sense, organizations and institutions differ in one element: Receptiveness to change. Organizations are typically open to change and may be reactive and/or proactive in their dealings with external environments. In contrast, institutions are typically change resistant. Currently, responsibilities for the management of globalization reside with an international triad of institutions. They are the World Trade Organization, the International Monetary Fund, and the World Bank.
World Trade Organization
A brief overview of each institution in terms of its purposes, its structures, and/or its processes will provide readers with a better understanding of the organization and management of globalization. The purpose of the World Trade Organization is simply to settle disputes arising from international trade. Unlike the other two institutions listed above, it is unable to provide direct financial assistance or technical expertise to developing countries. The International Monetary Fund is a center for free access to experts on macroeconomics and it provides financial assistance to temporarily cover resource gaps resulting from an emergency.
In contrast, the World Bank issues long-term interest-free loans to developing countries for infrastructure projects that will diminish poverty. Roads, bridges, wells, and systems for irrigation, communication, and/or health care are examples of such projects. Despite its name, there are no deposits so funding for those projects comes from taxes paid by developed countries. The World Bank maintains a Web site that contains links to data on world poverty rates. It has its share of critics...
(The entire section is 4227 words.)