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ShareThroughout the eighties and nineties, there was so much enthusiasm for globalisation, particularly among manufacturers, financial market participants and IT companies.
Manufacturers shifted their operations from USA/ Europe to developing countries, more particularly China, due largely to cost advantage and availability of large labour pools.
Financial firms were for unrestricted movements of capital. The ability to invest in other jurisdictions without restriction, the ability to get the benefit of these investments in the form of interests and dividends, and the ability to exit at any point of time constituted the core of the globalisation by financial institutions such as private equity players, pension funds and venture funds, etc. In other words, unrestricted entry and exit was demanded.
And if it was not provided, it was said that the market is not creative or innovative.
Financial institutions also argued for diversification of investments between uncorrelated markets and that gave rise to ideas of risk minimisation. Developing countries could get funds from global institutions due to this argument.
But the meltdown has impacted the idea of globalisation. Suddenly, countries which are supposed to be de-coupled from the global markets are considered smart. The RBI is praised for keeping India "de-coupled" from integrators. The US congress has included a "buy American" clause in the $787 billion stimulus package, particularly mandating the use of US-made iron and steel in stimulus-funded projects. China has a "buy Chinese" clause in its stimulus package of $586 billion. Protectionism seems to have trumped globalisation.
Some US experts are also suggesting a new grouping of G-2 to guide the world --- with US and China as members. China has sold billions of toxic toys (chemical laced) to the USA, which in turn has sold billions of its toxic treasury bills to China. Hence, there is a Mexican standoff between the two in the globalisation sphere. Interestingly, except India, nobody is talking about the G-word in the financial or product sphere.
But the third and most important dimension of globalisation is in the context of the labour markets to allow free flow of human beings to carry out brown colour work in the West.
The Western countries need substantial amount of labour for removal of garbage and cleaning their drains, for picking grapes to make wine and also for baby sitting. This work has been traditionally done by brown/ black colour workers who are migrants from developing countries. It is very difficult to think in terms of outsourcing these activities compared with white colour work, which can be outsourced through information technology. But it is not possible to either outsource brown colour work or accept massive migration of labour from Africa/ Latin America and Asia.
For instance, there already are a large number of migrants from Latin America in the USA -- particularly from Mexico -- and there is resentment about it among a large section of white Americans. So is the case with Kurds in Germany and Algerians in France and Somalians in Italy, etc.
But the requirements are soaring in the brown colour area. We find that the municipal waste alone has significantly increased and the per capita waste or generation intensity for OECD countries is more than 600 kg per annum, which has increased manifold compared with the population. This, coupled with industrial waste, provides a very large challenge to the West since the brown colour work is not being preferred by the white Caucasians.
The problem is compounded due to ageing of developed countries and also lesser and lesser working hours. The best example is the term "Working French," which has become an oxymoron.
Arguing for uninterrupted financial flows while trying to limit labour flows is not realistic. Also, developing countries get substantial amount of remittances due to these labour. But it is not acceptable by the West since they treat globalisation as a one-way street. That explains the presence of the "minutemen" in Arizona who will shoot illegals; the rhetoric of Obama about Bangalore taking away the jobs from Buffalo; and drowning of illegal Africans by Italian police. The economic axis has shifted to Asia and that is an important point to be recognised by the West. It will be globalisation on the terms of the East. That is why Doha talks are stalled and G-20 has become a reality.
India is the most enthusiastic and eligible candidate for globalisation since the country is a world in itself, though many do not realise this. In my class of 100 students every year, I have at least eight major languages as mother tongues, six different cuisines and four major religions and multiple ways of asking, "How are you?" Can any group be more globalised? India understands heterogeneity much better than the homogenisation process of globalisation thrust by the West on the rest.
Indian globalisation is based on acceptance and not tolerance. That is the difference. That is the real globalisation. That alone will work. Even China is learning it the hard way by the revolt of the Uigurs, which brings the issue of heterogeneity and China's ability to handle it. This implies we need to get into a world where the words Jihad, Crusade, Kufir, Pagan and Heathen etc are not used. That is the new emerging world with its axis in Asia.
The writer is professor of finance, Indian Institute of Management - Bangalore
Views are personal.
