Current State Of Globalisation, And The Impact Of Protectionism On Its Evolvement

Globalisation is a crucial phenomenon. It is the reason that goods, services, and information can be moved seamlessly from one part of the world to another. It creates a broader marketplace, giving people access to cheaper goods, services, and valuable information, which leads to the improvement in productivity for firms, governments and small businesses. The global march towards protectionism would act to cripple globalisation, creating barriers for trade, thereby making the movement of goods and services between countries more unlikely. Therefore, less availability to cheaper services, resources, and a lack of information, which led to a shift towards localisation. Currently, the two greatest threats to globalisation are Brexit and the election of Donald Trump with their increase reinforcement of protectionism. Globalisation has enriched the world scientifically, culturally and economically. Over thousands of years, globalisation has progressed by constantly evolving and adapting to potential barriers to growth. The present rise of protectionism is just another hurdle in the way of the ever more globalised world, which will be trounced. I will analyse the effects on globalisation by the rise in protectionism, the significance of the relationship, finishing with an informative conclusion that globalisation is not in decline but rather changing and evolving. I will support this stance by referring to accredited intellects of globalisation.

Pankaj Ghemawat would argue that rather than a complete decline in globalisation or an over reliance on localisation, the rise of protectionism would lead to a ‘subtle reworking of multinational companies strategies, organisational structures, and approaches to societal engagement’. Protectionism would bring about changes in how companies do business, which we are already seeing in a plateau of the movement of people, capital and trade. This is because businesses are beginning to adapt to the changing circumstances, focusing their efforts on being more socially responsible and, offering better products and services at lower cost, rather than focusing on constant expansion into non-profitable markets. Companies will now have to organise themselves in these changing times to remain successful. They will have to be more focused and attractive in the communities they operate in and, adapt by tailoring products and services to suit local tastes and needs. Wholly, Pankaj believes the depth of globalisation is highly overstated, ‘the world is less globalised than we think’ so the impacts on Trump’s trade restrictions or Britain's exit from the EU will not have such a massive impact on the world economy as a whole, being that only 0. 1% of firms are multinationals.

Davide Taliente and Constanze Windorfer write that the ascendancy of globalisation is under threat. Political sentiment has turned against globalisation and the political and economic policies that promoted it. The financial crisis of 2008 has created a bad image for multinational companies, whereby there is little trust in the goods, services and information they provide. Although, Davide Taliente and Constanze Windorfer still believe globalisation is still well and active but it is morphing due to the rise in protectionism and lack of trust for multinational companies. Multinationals companies will now need to adapt to these changing times.

The first major change Davide Taliente and Constanze Windorfer believe is needed ’is the adoption of corporate goals that go beyond short-term gain for shareholders and attend to the longer-term interests of all stakeholders’ these multinational companies become advocates for the community, putting the stakeholders’ interests in mind which include the people in the community, the environment and the government body in that community. Another point Davide Taliente and Constanze Windorfer raised was that there needed to be ‘a shift from global models to approaches based on a global-local hybrid approach’. Rather than implementing the same system across all areas of operations, they will discriminate for each area of operation and try and put out the best products and services that suits that particular community. Anil Gupta and Haiyan Wang might conclude that it isn't the case that globalisation is on spiral heading downhill. By every important measure other than trade in goods, it is thriving. The ongoing reduction in goods’ trade long predates any changes in political sentiment. They believe the reason for this change in goods’ trade is due to the financial crisis of 2008 and also the rising cost in China.

Anil Gupta and Haiyan Wang believe that companies have to become regionally localised in order to stay aligned with the changing economic environment, which might be beneficial in countries with a large market to operate like India, Nigeria, Brazil and USA. Although, not very beneficial for companies operating in smaller countries like Saudi Arabia or Singapore. Anil Gupta and Haiyan Wang believe deeper localisation have its benefits like increased resilience or protection from currency fluctuations. Davide Taliente and Constanze Windorfer are very knowledgeable in their understanding of the current state of globalisation and how the rise of protectionism will affect multinational companies. Firstly, yes, globalisation is under threat which all the authors believe, but it's not retreating, rather it is growing. Now, companies will need to be more responsible in their dealings, taking into considerations stakeholders at every step of an agreement. Pankaj Ghemawat believes that the effects of the rise of protectionism would not be so big because the world isn't as globalised and multinationals only account for 0. 1% of firms, on the contrary the 0. 1% of these multinationals account for 50% of the total revenue generated by firms so Pankaj Ghemawat fails to see the true depth in which multinational companies have and their influence on the global market. Anil Gupta and Haiyan Wang have a very narrow understanding on the implication on the rise of localisation, firms would be losing out on a large market so profits would mostly likely be very low, they would lack access to the cheap resources, labour, and valuable information. These localised companies will also lack diversity, localisation is a huge step backwards in the push for an integrated world. Davide Taliente and Constanze Windorfer’s exclaimed ‘shift from global models to approaches based on a global-local hybrid approach’ is the best course of action for multinational companies and would provide the most efficient truly leaving all parties better off.

At the beginning of the paper I stated that globalisation is constantly evolving and adapting to potential barriers to growth, the present rise of protectionism is just another hurdle in the way of the ever more globalised world, which will be trounced, which is an inline with what Davide Taliente and Constanze Windorfer exclaimed, the sort of hybrid mix of globalisation and localisation is what multinationals will be gearing towards, an evolved model of globalisation.

Globalisation is not something that can be stopped because it is simply the most economically efficient way to get things done. Now with the emergence of the internet, we see the flows of information being ever more prevalent, so there is no use of putting barriers in order to stop something that is beneficial to the people and the economy. I would rather it is that policy makers would take focus more on attractive companies and creating an environment where companies can grow and flourish by allowing free entry and exit for firms, low taxes and tariffs and eliminating all barriers to trade. In this situation the consumers will get the best products at the lowest prices which is truly the best possible scenario for economic welfare.