Neoliberalism and Globalization Research Paper

Pages: 12 (3744 words)  ·  Bibliography Sources: 6  ·  File: .docx  ·  Level: College Senior  ·  Topic: Economics

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This is a polite way of putting it, of course, since the recent crash of the world economy was the worst since the 1930s, and only massive pump-priming, deficit spending and money-printing by central banks preserved this system from total collapse, at least up to now. Like many other writers of the time, Ohmae proclaimed that the nation state was dead, along with Keynesian economics, redistribution of wealth and Fordist mass production industries. Instead, the new centers of economic growth and development would be regional and local economies that found new niches within the global system, like the call centers and financial services of Ireland and India. At the moment, of course, with Ireland suffering from bankruptcy, high unemployment and IMF-style austerity programs, his celebration of its great success would also seem to have been somewhat ill-advised. Even in 2005, though, Ohmae's analysis and forecasting were the conventional wisdom of the day, and he did not see the disaster looming ahead, no matter that there were many warning signs like the Asian meltdown of 1997-98 and the dot.com crash a few years later.Buy full Download Microsoft Word File paper
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Ohmae declared that the new economy began in 1985, when Microsoft developed its new Windows system, Mikhail Gorbachev became head of the Soviet Union, and the Plaza Accords devalued the dollar to lower the U.S. debt and facilitate its exports. Indeed, he describes the pre-1985 period as Before Gates (BG) and the era that followed as After Gates (AG) (Ohmae, pp. 35-37). In the 1980s and 1990s, China also began to open its door to international trade and investment for the first time since the 1949 Revolution, and the type of capitalism that emerged there was particularly ruthless and exploitive, with economic growth the first priority rather than the environment or labor conditions. Traditional economists failed to understand any of this at the time, however, or to "make sense of the global economy" (Omhae, p. xx). He praises the pioneers of the new system, such as John Reid who introduced the new technologies to Citibank when he took over there in 1984, although this is somewhat ironic given the fact that the bank nearly collapsed in 2008-09 and had to be bailed out by the U.S. government. Omhae also admires Akio Morita of Sony Group, who was ahead of his time in regarding the world as "one big market, with few or no barriers" and his slogan "Think Globally, Act Locally" (Omhae, p. xix).

In the new global economy, physical location, size, population and domestic markets are no longer important for success, and stock exchanges no longer require a location at all. Platforms are far more important, including telecommunications, satellites, the Internet, ATM machines, and ability to communicate in English (Ohmae, p. 141). Old-style governments of nation-states are obsolete, and the main role of the new type of governments will be to facilitate the development of specialized local and regional economies, or at least avoid actively hindering and inhibiting that development (Ohmae, pp. 102-03). Central governments were simply "ill equipped to play a meaningful role on the global stage" compared to regions, the European Union or new trade zones the NAFTA (Ohmae, p. xxiii). This new world system has no borders and is often invisible, connected through cyber-technology and no longer measured in money but by multiples and derivatives. Capital flows control the world today, not central governments, and these move trillions of dollars around instantaneously. In our borderless world decisions are "made in a split second, sometimes by nonhumans," and are no longer under the control of traditional hierarchies, bureaucracies and elites (Ohmae, p. xix).

Regional economies must be allowed to expand freely without centralized controls, and be permitted their own autonomy and decision-making so that they can adjust to the global economy and remain flexible. They have to market and brand themselves in order to find their proper economic niches. Governments often stand in the way of development because they attempt to protect home industries and markets and redistribute wealth rather than allowing regions and localities to thrive on their own. For example, the Baltic States have excellent potential to become new centers of e-commerce, finance and high technology, as Finland and Ireland already have (Ohmae, pp. 262-63). British Columbia, despite its high taxes and heavy regulations, has an advantage because of its highly-educated, English speaking workforce, its proximity to Microsoft and Amazon in Seattle, and the numbers of Asian tourists and businesspeople that it attracts (Ohmae, pp. 259-60). Almost everywhere, Ohmae expects these region-states to surpass nations as "the most useful and potent means of economic organization in the global economy" (Ohmae, p. xx).

China's coastal regions provide one example of the new type of international economy that Ohmae is describing and the manufactured goods and services which they provide to the international markets. Many of these end up in the U.S., which "worries incessantly" about its trade deficits, while China "seems to voraciously suck raw and semi-finished materials, machines, and robots into its economy" (Ohmae, p. 6). He finds that such fears and anxieties about China's rise are misplaced, given his assumption that the world system is already unified and nations are relics of the past. Dalian went from being a Communist rust belt to "one of China's most important and dynamic industrial centers," as well as a powerhouse of services and high technology, with shops full of international goods (Omhae, p. 7). China's central authorities have delegated most authority to regional and local bosses, who are expected to produce annual growth rates of at least 7% or lose their jobs. This is certainly an incentive to cut corners and produce bogus statistics of success, although the development of ports like Dalian has been quite obvious and visible over the last twenty years. Over 3,000 Japanese firms are operating there and the Chinese authorities are eager to accommodate them. All the coastal regions of China are undergoing globalization, while the interior remains "light-years behind in economic development and prosperity" (Ohmae, p. 10). China is not a homogeneous nation any more, and the regional imbalances and uneven development are matters of great concern to the nation's leadership.

Open platforms that are easy to use for non-specialists, interactive and widely accessible are also essential for success in the new economy. Countries that have a large numbers of English speakers like Ireland, India, the Philippines and Singapore also have an advantage over their competitors, since English is the main language of the Internet and global commerce, and most of the major world brands are American (Ohmae, p, xx). In present-day capitalism, "the drama takes on one enormous stage" which is in "perpetual motion" because on instant communications -- so fast that only machines can keep up with all of it (Ohmae, p. xxii). Companies will increasingly depend on these platforms for survival, and there are already one billion customers on the Internet actively seeking out goods and services. Corporations will have to become borderless, no longer tied to home markets or domestic economies, and will have to be open to new technologies to better interface with customers and suppliers. With over eight billion Web pages in existence in 2005, business managers, administrators and scientists could "draw a synthesized perspective and knowledge in a split second" (Ohmae, p. xxiii).

Business Process Outsourcing (BPO) was becoming routine in the new economy, especially in the proliferation of call centers, claims processing, and financial and insurance services to countries with large numbers of English speakers like India and Ireland. When it became independent in 1922, Ireland was a mostly rural, agricultural society and had been deliberately kept that way by Britain. For that matter, India was in much the same condition when it gained independence from Britain in 1947 and both had been subject to famines. Like most colonies, Ireland was left "with a sense of the country being a victim of forces beyond its control," and so it remained into the 1970s. It had very poor communications and infrastructure, and in the old industrial system was "too far away from potential markets." Yet this turned out to be an advantage when the revolution in technology and telecommunications began, since it also had "no rusting industrial plants and no unemployed workforce born and bred to heavy industry" (Ohmae, p. 11). Ireland found its niche within the EU as a center of finance, insurance and e-commerce, at least until the great boom collapsed like a house of cards in 2008-09. Ireland became a prime location for call centers and financial services, and like any other regional state, it branded itself by offering "something different that sets it apart from the competition" (Ohmae, p. 12). For the first time in its history, it also began to attract immigrants instead of losing population to foreign countries. Thanks to globalization, Ireland's location was no longer a… [END OF PREVIEW] . . . READ MORE

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