Defining The New Global
The New Global is the pulsating economic and business environment that is continuously being shaped by hard to reverse megatrends such as changes in consumption trends, demographic patterns, the spread of innovation, and government policies, what we like to call the four pillars of The New Global. The New Global is not unidirectional – it is not about one set of countries gaining in prowess while the current leaders inexorably decline. It is multidimensional, with each of the megatrends holding both promise and peril for every major economy – both developed as well as developing. While some countries are favorably positioned to take the most advantage of the megatrends, even countries that appear currently disadvantaged could benefit through appropriate policies aimed at fostering innovation and efficiency.
The Four Pillars of The New Global
Factors that are Facilitating The New Global
The fall of authoritarian regimes since the late eighties has brought profound changes to the global economic environment. The new governments were more receptive to increased economic integration with the rest of the world, and this process added significant consumption demand and production capacity to the global economy. The so called ‘march of democracy’ also encouraged even countries that were previously democratic but had closed economic systems to open their doors to the rest of the world.
The risk of an all out war between the major countries has probably never been lower than it is now. The global institutions established since the Second World War have matured and are now playing an important role in preventing conflicts from escalating into war. The world is gradually moving from random acts of deal making between countries to more rule bound interactions, best exemplified by the World Trade Organization (WTO). Groups such as the G-7, G-20, and Asean have become influential in global policymaking while trade pacts have become popular. Then there are projects such the European Union that has both political and economic aims, attempting cohesion in a region that has been the crucible of the most dreadful wars. While the progress is not smooth, as the crisis in Europe shows, the current environment is vastly more preferable to the old order.
However, the most important trend that has contributed to global geopolitical stability is probably the explosion in global trade volumes. As all the major countries are now significantly intertwined with each other though trade, it is not easy for any of them to upset the proverbial applecart. Deepening global trade ties are in many ways the most durable barrier against war, but a lot remains to be achieved.
Easier Transmission of Technology and Innovation
Earlier, it took a very long time before innovative products and technologies spread from the country of origin to the rest of the world. Inventing companies with narrow geographical footprint limited product availability to markets that they were familiar with. Restrictions on foreign investments and imports also prevented the spread of technology and products, while in countries that were relatively more open to foreign investments and goods, there were often concerns about intellectual property protections. Some countries actively discouraged the use of products that are popular else-where for political and ideological reasons. Accordingly, in terms of their usefulness and quality, there were sharp differences between products and services available in the developed countries and the rest of the world.
This has changed dramatically in the New Global environment. Transnational corporations that have very extensive foot-prints and familiarity with local regulations now have the confidence to launch the latest products and services across most markets at the same time. Intellectual property regimes have improved, though there are significant violations of patents and copyrights in the developing countries. Technology and product licensing agreements have become popular, and inventions by small corporations are now being put to use across the globe in a short time. These trends are opening new markets and driving productivity gains, creating tremendous economic opportunities all across the globe.
The information revolution, aided by the spread of internet usage and rapid growth of global media networks, has played a major role in making the trends discussed above more sustainable. Today, discussions on social media help strengthen mass movements for democracy. Information about events in one country rapidly spread across a region, and help drive change in other countries as well. Most importantly, the flood of information has diluted apprehensions about the unfamiliar and encouraging nations to lower their guard and become more globally integrated.