Book Extract

Role of the individual

Globalisation is not only driven by governments, multilateral organisations, and corporations. Indeed, as the globalisation index shows, economic integration has had its ups and downs, and political engagement has remained more or less constant in recent years. Yet the role of individuals in shrinking the world has only intensified. The rapid rise in travel, inexpensive communication, and the Internet empowers activities to coordinate social and environmental movements around the world and allow far-flung families to stay in close touch.

In 2002 alone, more than 130 million new Internet users came online, driven by exponential growth in large developing countries such as China, India, and Brazil. International telephone traffic grew by 15 billion minutes to average more than 21 minutes per person. Developing countries such as Botswana, Hungary, Indonesia, and South Africa became better connected than ever before, as the rapid build-up of wireless networks allowed customers to leapfrog over poorly developed fixed-line infrastructure directly into mobile telephone service.

Even international travel saw a rebound as the number of people crossing national borders surpassed 700 million for the first time. Despite dire predictions that the September 11, 2001, terrorist attacks would put an end to globalisation, the world was more integrated in 2002 than ever before.

Living in a globalised world

Globalisation is a complex phenomenon, with all its component parts working together in tandem. Consider the case of remittances, the money earned by migrant workers and sent to family and friends back home. Remittances to developing countries have surged from $17.7 billion (US) 2002.

The most obvious driver of this phenomenon is the increasing movement of people across national borders. According to the United Nations, some 175 million people live and worked outside their own countries in 2000, up from 154 million the decade before. But other forces are also at work, including the political considerations behind H1-B visas that the United States issues to foreign high-tech workers who fill the ranks of Silicon Valley, or the training programme that Pakistan developed to export nurses in the hope of getting a return on its investment when they send their earnings back home.

Technology also underlies the worldwide flow of remittances. Harvard University’s Devesh Kapur and Queens School of Business’s John McHale point to the global expansion of Western Union as the most visible expression of the burgeoning infrastructure that allows migrants to quickly and safely wire money back home. Between 1996 and 2002, the number of agent locations outside of North America jumped from 10,000 to 95,000, and it dominates the market in regions such as Latin America. The company’s share of the global market is just above 10 percent, and this high-margin business is swiftly attracting new competitors, such as Internet giant Yahoo!

Migrant interactions

These financial spillover effects also reshape how migrants interact with one another and with their governments back home. For instance, Mexican immigration in the United States began forming ‘hometown clubs’ during the 1960s to more effectively pool their resources and send money south to the border.

During the last 20 years, these clubs have banded together to form larger coalitions representing individual Mexican states, funding projects that sometimes receive matching funds from the Mexican government.

As remittances to Mexico have grown—between $12 billion (US) and $14.5 billion (US) in 2003 alone—so too has the potential clout of the Mexican diaspora. In 2004, a delegation of Mexican governors met with a coalition of migrant groups in Los Angeles for the first time ever. Jose Guadelupe Gomez, president of the state of Zacatecas federation of Southern California, recalls how in the 1970s the Mexican government had nothing but scorn for those who left the country. Today, he says, “remittances have revolutionised the way our government looks at us.”

Looking deeper

In some cases, migrants offer their home countries more than foreign earnings. The Indian government, for example, has launched a major initiative to encourage its 22 million expatriates working abroad—in particular, the estimated 150,000 Indian millionaires outside the country—to channel their savings into investment projects at home. Silicon Valley’s large population of Indian programmers and computer scientists has responded, making substantial contributions to building and funding successful software firms in Bangalore and elsewhere.

In April 2004, one of India’s top software service firms, Infosys, announced that it would begin expanding overseas through its first wholly-owned subsidiary in the United States, with two prominent non-resident Indians among its founding members.

By the same token, linguistic and cultural affinities between countries create opportunities for businesses to expand globally.

In a business that turns on personal relationships, Spanish banks BBVA and Banco Santander have built a distinct competitive advantage by looking to Latin America for growth opportunities at a time when key competitors were preoccupied with consolidation in Europe.

The complex interplay of globalising forces is rapidly transforming our world. Contrary to the claims of some critics, the results hold promises for a better tomorrow. The most open and globalised countries in both the developed and developing world generally have the lowest levels of government corruption and the highest levels of political freedom and civil liberties. Led by Western European countries, they show the most fair and equal distribution of income. Governments in the most globalised countries typically spend more on education, health, and social welfare programmes, and their citizens, on average, have longer and healthier lives. Measures of women’s education and financial well being are better in the most globalised countries, and environmental protection is more robust.

For these reasons, global integration is on par a positive force for change. However, because the benefits of globalisation are not distributed evenly, it suffers from a profound image problem.

Paradoxically, the same forces behind interconnectivity and integration can work at cross-purposes with globalisation. In parts of the world that have yet to reap benefits from global integration, many people resent the growing inequality between North and South and perceive globalisation as a modern-day reincarnation of economic imperialism. Even people living in societies that have, on measure, benefited from globalisation are experiencing a rising sense of anxiety and insecurity. Forces beyond their control seem to threaten their jobs, their privacy, their security, and even their national cultures.

Around the world, people feel disenfranchised and powerless against these emerging trends. Whom do they hold accountable? The most visible beneficiaries and drivers of global to these constantly moving targets and threats.

Excerpt from ‘World Out of Balance’ by Paul A Laudicina. Reproduced with permission © 2005, Tata McGraw-Hill Publishing Company Limited. Price Rs 375. E-mail: vishwanath_mum@tatamcgraw-hill.com