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The ties that bind

By Nayan Chanda

26 February 2009

In 2008, the process of globalization suffered two seemingly devastating setbacks. First, skyrocketing prices for petroleum and its derivatives raised the cost of international shipping and travel. Then came the crisis engulfing the world’s financial markets—a crisis that destroyed trillions of dollars of wealth and appears to have sent the West into a deep recession. Evoking World War I and the Great Depression, observers such as Financial Times columnist Martin Wolf suggested that the economic crisis will stoke protectionism and nationalism and therefore halt globalization. Plunging transportation costs, freer global trade, and cross-border money flows brought the world closer together. If those trends reverse, the logic goes, it will again drift apart.

Decades from now, however, the oil spike and the crash of 2008 will look like mere speed bumps on the road to an inexorably integrated planet. Globalization is not a purely economic phenomenon. It is a long-enduring and all-encompassing process that has been sustained over millennia, driven by the desire for a fulfilling existence. This process is not likely to reverse.

Globalization began when our ancestors started spreading out from Africa toward the corners of the world. Humans have been reconnecting with each other ever since, in all aspects of life, through a thickening web of relationships. Traders have been one set of agents for globalization; the others include preachers, adventurers, and warriors. As all of them left their homes in search of different kinds of fulfillment, they continually connected dispersed human communities and civilizations, gradually making the world smaller by shaping it into a patchwork of ethnic and religious groups.

Indeed, history teaches us that the forces driving global integration are remarkably durable, having survived myriad backlashes and long interruptions. Time and again, trade barriers have been raised, entire countries walled off, traders expelled, preachers executed, wanderers incarcerated, and foreign invaders repelled. Natural disasters and pandemics, like the Black Death and, more recently, SARS, have halted international contacts, often for long periods. The misery of the Great Depression and the destruction of World War II offered little hope for a prosperous, integrated world.

Once peace returned, however, the drive to connect—promoted by new technologies and institutions—resumed at full force. Migration grew. Trade volumes skyrocketed. Low-cost international travel and mass tourism turned ordinary citizens into adventurers.

Of course, the current worldwide economic crisis could again interrupt globalization. Trade may slow, and political or social turmoil may disrupt cross-border ties. But any swing toward protectionism and isolation, I believe, will be even shorter than the decade and a half of retreat that followed the Crash of 1929.

A number of factors make globalization virtually impossible to reverse. Diaspora communities are now connected, for the first time in history, in real time, through audio and video communication. From daily necessities such as food and clothes to automobiles to high technology, the products we use and consume today are truly global. Millions of goods have labels indicating a single country of origin but are in fact produced by supply chains touching the far corners of the earth. From iPods to granola bars, almost every manufactured item or processed food contains components or ingredients that traveled thousands of miles. These complex production systems will be hard and costly to dismantle, and consumers will not be easily weaned from such products and services.

The world is irreversibly integrated socially and culturally as well. Two hundred million people—more than the entire population of Brazil—are recent migrants living away from their places of birth. A global culture has emerged, from pop music to manga, TV soaps to video games, soccer to baseball, blogs to YouTube. Christians, Muslims, Buddhists, Jews, and members of other religious groups are connected as never before. Preachers will continue to spread their religions and religious ways of life.

As for the traders, the 2008 crash will not slow them for long; eventually, the global economy will recover. And while shipping and air travel could become more costly if oil prices soar again, sustainable-energy alternatives will appear. Technology will continue to make communication faster and cheaper.

Globalization has been pronounced dead many times in the past. This time too those reports are greatly exaggerated. The age-old motives that have led human beings to connect will continue to integrate the world ever more tightly.

Comment [15]

Agree? Disagree? Let us know what you think. Please include your full name with your comment. Comments may be edited.

Globalisation is a very popular but often abused term nowadays. For Nayan Chanda it’s a drive that is inherent in us human beings, the drive to move closer together. His opinion is very straight forward, he clearly doesn’t believe that obstacles can hinder a tighter bond in the long run. A lot of people see great threats in change but overlook opportunities and chances that lie within. They have fears, that something from “outside” could break in and endanger their existence. Technology will indeed enable faster and easier communication and socialisation in the following decades, but will it necessarily be used to unite people? Nevertheless we should try and face this “change” with positivity, because it is inevitable. We have to realise, that the planet as we know it, is more and more becoming a “global village”.

Posted 16 December 2009, 04:28 by Victor Gaspar, Johannes Gastinger, Udo Schober
Let me be candid. For a petroleum geologist like me, this debate of globalisation, its future pace, etc sounds little funny. However, this impression has nothing to do with the wonderful book “Bound Together” written by the author, Nayan Chanda. I take this opportunity to thank him for ‘gifting’ us such a nice account of our ancestors under the catchy word ‘globalisation’.

When we debate about globalisation, I think we forget one basic fact, that the planet earth is a tiny ‘standalone’ cosmic entity drifting aimlessly in vast empty space of the cosmos. Its like a tiny island in a vast ocean. Would it be surprising that the island dwellers will interact among themselves, and with time the interaction and inter-dependence will become more intense and complex? They may fight or be friendly to each other, but they are destined for mutual interaction, inter-dependency and growth (hopefully no mutual destruction like MAD). With passage of time they are supposed to include other nearby island dwellers and then the farther-ones, if any, in their journey of discovery and growth. Not to expect the island-dwellers to ‘glocalise’ among themselves will be quite naive. There may be little hicups here and there, now and then, but the overall trend is geographically destined.

Similarly, we are cosmically destined to globalise. Those who do not accept this or oppose this are ‘temporally disabled’. They have little sense of time. It may not be out of place to mention here that the perception of time is vastly different from a Politician to Economist to Historian to Archeologist to Anthropolgist to Geologist and to a Cosmologist.

Let’s take care of this tiny cosmic entity in all its facets, including globalisation. We are products and passengers of Cosmos,and globalisation is a necessary infrastructure for our cosmic voyage.

Posted 28 April 2009, 03:06 by Chakradhar Mahapatra
Globalisation is not a recent phenomenon. I t has been in place since time immemorial- since the begining of the human race on the planet. The human beings have got a basic herd instinct that drove them to travel places in search of opportunities and a curiosity to know about different geographies and cultures. Slowely, but significantly this drive turned into trade partnerships between people of different locations to complement each others lack of resources. The scarcity of resources in one geographical location was fullfilled by trade with other. The desire to rule over regions other than one’s own was the next drive toward globalisation. But the significant step towards the process of globalisation was achieved with the outset of the industrial revolution in the 19th century. The process of globalisatin has stuck many obstacles in its journey, but the very herd instinct of human beings resumes it soon. The economic downturns, like the one we are currently facing, may push the national economies to turn protectionist, but, in the run up to the the recovery they have to shed this protectionist attitude because every economy is integrated with every other economy to such an extent that the rcovery process can take place only through co-operation with other economies, not in a isolated manner. Thus, the globalisation has got to increase with time, even though the process has slowed down a bit.

Posted 14 April 2009, 03:36 by Ranveer
Globalization is another term of international trade – the movement of goods and services beyond the geographic boundary and the custom territory. Motivation to discuss globalization may include, but not limited to, maximizing the profits for the commercial and private sectors and improving the overall economic benefits of a country.

Factors and the weight of those influencing globalization are changed in today’s financial crisis. Decreasing consumer buying power weakens the trading activities between involving partners. Local official policy and strategic goal takes detour under the re-thinking wave of protecting the economic well beings of people. Regional organized agreement, outside of the World Trade Organization, among member countries provides momentum to move goods and services across political boundary but less advantage to non-participating parties.

Globalization already enters a new era – the fading phase of globalization. Yet the new international trade concept and activity is slowing forming and to be defined.

Posted 1 April 2009, 16:45 by Po-Wen Lu
Globalization as a phenomenon needs to blossom as a structured approach. In a highly localised scenario, issues, effects of financial and political excesses and cultural intolerences have effects that are contained and limited to local boundaries. In a globalised environment, such effects have a massive effect plunging millions across the globe with its adverse and positive effects. We have seen the positives and negatives of this in the financial markets with the pain of adverse effects being felt now in a highly coupled economy.

Traders, merchant, investors and adventurers have been discovering new lands, cultures and opportunities far beyond their local boundaries. Free market approach is the most viable method to get started as the risks of failure are borne by the individuals and a few entrepeneurs who fund such activities. Once a threshold number of such activities have achieved its goals and have prooven successful, global bodies with participation from all global stake holders should start imposing and implementing structured processes, rules and policies that govern such cross border activities.

We have bodies like, IMF, UN, Word Bank, International Criminal Courts, Amnesty International, etc but these organizations have not been able to perform par excellence. Pressure from powerful groups have always skewed decision making capabilities of such organizations. BASEL was supposed to have given the financal markets the much needed strength on the governance and risk assessment side but its complexity and complication has diluted its implementation.

For a truely globalised world to flourish in a format where growth comes at a moderation that prevents deep rooted adverse global impacts from the related risks, we need tight monitoring and management of risks at global level. Many countries have relatively good risk management imposed by their central banks and these countries will be able to better manage the damages to their economies. A similar approach at global level that is neither US centric or China centric would be needed.

Market forces operate primarily to generate profits for their stakeholders leveraging the respective stakeholders apetite for risk. In a global environment multiple actors with diverse risk taking abilities are not really the ideal entities who would strategize and think about prosperity of the globe. We need independent policy making bodies with mix of intelligecia and entrepenuership to create the right policies. We need an independent agency to monitor these and give feedback on their effectiveness back to the policy making bodies. Without this approach prosperity in a globalized market will always look as an unsustainable proposition in the long run.

Posted 28 March 2009, 02:22 by G N Nagaraj
Why did you not include Hindu’s as a community that are more connected than before? They are clearly more of them around the world than Buddhists or Jews? I don’t know if you practice Hinduism, but it is a curious, if unfortunate, omission.

Posted 27 March 2009, 09:19 by Naganesh Bhatt
I think that this crisis presents a self-fuelled opportunity for globalisation to take a better shape and meaning

World over we now realise that the institutions that were meant to safeguard globallisation have failed. More so we now realise that we cannot do without a more coordinated approach to the current crisis.

Eventhough there are pockets of protectionism and drops in trade globally; this is just a shortlived reaction.

Embrace a future that will be more boderless.

Posted 27 March 2009, 05:57 by Wangolo David Ivan
The author has rightly pointed out that “world is so deeply integrated and the roots of integration have gone too deep to disentangle or uprooted”.The vested interests of “a few” has led to the problems that we are facing today.It is just a matter of time. We have to keep our spirits up.

What is more important is the learning that comes with the crisis. We need to strengthen our institutions through which regulations are carried out…The responsibility lies with the leaders to actually transform the entire system.

Posted 27 March 2009, 00:44 by kalika Bansal
The world economy was perhaps more ‘globalised’ in the nineteenth century than now, which was a time when European powers dictated world trade. The challenge today is to make nations come together in spirit of equality. All stakeholders must get to feel that the global system is fair and that it helps them actualise all their aspirations – economic and cultural. Has Nayan Chand focused on this aspect?

Posted 27 March 2009, 00:36 by Sujit Sinha
Post 2008 Globalization will be slightly different.Massive “outsourcing” will be replaced by intelligent “outsourcing” depending on government policies. As an example, the recent lifting of ban on Federal funding for stem cell research in the US, has led to fears about brain drain from India where research was in some sense ahead of that in the US. There were no such restrictions in India. Similarly because of the historic legacy of Math and Logic ambiance in India, IT will continue to be a major driver for Indian economy. Research institutions of excellence need to be created to produce the future Ramanujans. That is the challenge for both the IT industry and the Government.

Posted 26 March 2009, 23:50 by M.A.Pai

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