Mastering the Globalization Challenge

Despite cyclic, economic, and structural financial crisis, the globalization of the value chain is an unstoppable fundamental mega-trend with bright future perspective. But, the rules are constantly changing. As troubles in financial markets spread around the world, accelerating economic downturns on three continents, anti-globalization activists could well have felt vindicated. But, the doomsayers have got it wrong. Globalization is here to stay. What’s more, the financial meltdown actually might be a catalyst for the globalization process. As the German writer Kurt Tucholsky said early in the twentieth century, the world economy is all interlinked. It is not just the banking sector that was brought to its knees. The financial market crash struck at the heart of the real economy too. Industrial production in all pockets of the world was cut, as companies expected lower trade and exports. In some cases, this accelerated layoffs, taking more pay checks out of the economy. As a result, consumer spending is in the basement. Few would have predicted this scenario a year ago. If nothing more, the financial meltdown highlights one of globalization’s hallmarks: change. The rules of the globalization game are not set in stone, they are constantly in flux. Doing business is complicated in a globalized world. While it is just got a whole lot more complex, it was tricky to navigate before late summer 2008 too. This becomes plain when we take a step back to a time just before the financial tsunami hit, when the world felt like a safer place. Asked by the German Marshall Fund of the United States if free trade is necessary, citizens in industrial countries were almost unanimous in their answer back in 2007 (Fig. 1).