The big question in the faced by every economist in the world is whether globalization has a future. Not until recently, the response to this was an obvious yes but today, many doubts are being cast upon its future. Proponents of globalization are however very optimistic and quickly dismiss the skeptics (Ponce, 2008).
In the future, globalization will be among the key forces deciding the competitive advantage. Economists project that the emerging markets especially in Africa and Pacific Asia will be the new focus of global trade with increased production being experienced in many developing countries (Thomson, 2002). There are key trends that studies feel will be responsible for shaping the future of globalization and if implemented by companies and governments of developing nations. The trends include initiating a focused strategy of globalization to shape the competitive advantage’s future. For instance rising economies such as India and China will have to redefine their future. The war in search of talent, security, global supply chains, emerging markets, outsourcing, demographics, cutting-edge technology, innovation and new markets will heighten hence globalization will also intensify.
However, globalization is also facing threats. The events of terrorism like the occurrence on 11th September, 2001 are threatening the process of globalization. According to Stephen Roach, the Morgan Stanley’s Chief economists, the enduring effect of shock has a great ability of challenging the globalization’s underpinnings (Micklethwait & Wooldridge, 2003). United States of America being a major player in the in this field, it therefore follows that any event threatening its stability will affect other countries, especially the developing nations.
Thomson (2002) explains that the ever increasing globalized supply chains, dramatically growing trade and the ever expanding financial capital flows are being threatened hence it will have a negative impact on globalization. The faith of most of those who supported market globalization is highly melting down. For many, the concept of globalization is fuzzy particularly if its political and cultural consequences are put into consideration but its economic scale can only be determined by the three underlying measures: financial capital flows, immigration and global trade. The above variables have all increased over the past two and a half decades with capital flows and global trade soaring in the late 1990s, however in 2001, global trade and capital flows stalled but immigration was left unchecked especially from developing countries to the rich nations.
Due to the volatility of the global trade, it is likely to be affected negatively because its fluctuations are normally more manifested by than the aggregate statistics of the Gross Domestic Product (GDP) of the world. The recent reports concerning trade are dreary as according to the United Nations, global commerce was nearly inert in 2001, this was a sudden reversal of the global commerce growth rate that was recorded in 2000 of 12% which came in the wake of 7% mean annual growth rate experienced all through the 1990s (Ponce, 2008). Judging by this trend, the future prospects of globalization in the developing countries will shrink because their activities are reflected from a global scale.
Additionally, the UN stated that the total amount of foreign direct investment (FDI) was approximately $760 billion in 2001, this represents only a half of what was realized in the previous year. Globalization has incorporated all the global markets in a way that a majority of national economies are synchronized directly with one another like never before in the history f global markets. It should however be noted that this does no imply that globalization is facing extinction any soon but there are high chances that worldwide economic integration could by far slow down hence reducing the elevated productivity and the developing world and also leading to low rates of inflation, as the situation was in the 1990s.
Ponce (2008), states that the future projections are that there could be increase in capital costs, policies concerning immigration are expected to become very limiting, measures of security could also become very expensive and lastly political risk concerns will reduce the number of developing countries to be involved in the global/ expanded trade.
Emergency of anti-globalization movement has threatened to reject global capitalism together with environmental concerns. The movement has attracted many followers including students, civil societies, activists, environmentalists, organized labor and the general public and in the developed countries of Western Europe and North America, the support for more liberalized trade measures is now trembling. The reason for this declining support is because many citizens across the world now feel endangered by the impacts of globalization they consider bad for humanism (Thomson, 2002).
Globalization as many perceives it today is a process of integration and interaction amid individuals from different countries and cultural backgrounds, different governments and companies or business organizations. This process has investment and international trade as its main driving forces with the support of information technology. This process has been very elevated in developing countries from the last three decades with countries especially those in Asia including China and India in the forefront.
Globalization has both positive and negative effects in developing countries. Among the benefits of this process are growth in economies, growth of tourism industries, efficient production, employment creation and quick technology transfer. On the other hand, there are some negative sides which include but not limited to erosion of indigenous cultures in some countries and bringing about environmental hazards. Its future is not definite as critics observe that due to the terrorism risks tearing the world apart, it might as well deteriorate but the pessimists point out that globalization is here to stay.