Globalization

Seen by some as a desirable and irreversible engine of prosperity and progress, globalization is resisted by others as the soft underbelly of a corporate imperialism that plunders and profiteers in the global marketplace. Globalization has brought many benefits, including the reduction of poverty in several countries. But it also has drawbacks: the unleashing of negative forces as a result of the compression of time and space made possible by modern technology. Examples include the transnational flows of terrorism, drug and human trafficking, organized crime, money laundering, and global pandemics.

Economic globalization refers to the increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, flow of international capital and wide and rapid spread of technologies. It reflects the continuing expansion and mutual integration of market frontiers, and is an irreversible trend for the economic development in the whole world.

Today’s model of economic globalization came into prominence in the early 1980s, sparked in part by the beginning of the third world debt crisis and the incoming administrations of British Prime Minister Margaret Thatcher and American President Ronald Reagan. Poor countries had found themselves caught in a “perfect storm” of bad economic forces and could no longer make payments on their external loans. International financial institutions such as the World Bank and the International Monetary Fund (IMF) stepped in to buy the bad debt from commercial banks and offer lower interest rates to the indebted countries. In exchange for their help, the Bank and the IMF demanded dramatic structural adjustments in the economies of the indebted countries. Those demands eventually became the de facto rules by which today’s global economy is largely run.

CBE research shows that globalization has a double sided effect and therefore has to be valued in every case separately to gain effective knowledge about it. The economic benefits of globalization not always seem to unfold at the same pace of many developing or undeveloped countries’ growth speed. When this happens globalization becomes anachronistic and forced. Environments where these conditions are found cannot at the moment benefit from globalization and everybody should acknowledge the problem. Our insights have proved that in many cases globalization speeded up processes that would have taken 3 times the time in normal conditions. But this acceleration is possible only where the basic conditions are ready and are developed enough to accept modernization, technology and innovations all at once or in a short period of time.

CBE helps global companies in implementing global strategies which keep into account differences in culture, macro-economic development cycle and legislation of different regions of the globe. Our strategy practice can help global companies in identifying strategic risks and define the most appropriate implementation plan.