Will High Oil Prices Kill Globalization?

Nope, companies will innovate and adapt.


Excellent by post by global strategist and superblogger Thomas Barnett on the impact of higher energy prices on globalization. Here's a nice hunk of it (boldface mine):

Up to now, accessing virtually any cheap, reliable labor made sense, given the cheapness of energy. Now, only those who can figure out how to make that happen with commensurately lower energy costs will be able to do so, and frankly, that should produce a better globalization. We've long let several crucial sectors of our economy off the hook in terms of serious innovation because there was no great incentive to pursue it. Now, we have those incentives.... I would expect to see a lot of glocalization by global corporations: continuing to "go global" by "going local," meaning they become truly "globally integrated enterprises" of the Sam Palmisano mode (R&Ding locally, hiring and resourcing locally, and producing and selling locally—all the while remaining a global corp). So the Ikea that imports everything now starts producing locally, creating local manufacturing jobs. Sure, expect jobs to be "saved," just don't expect to get unduly picky about who the employer is. You can call that a "reversal" if you want, but that's what a lot of economists and business types have been describing as the next stage of globalization anyway. In the end, though, we have to thank ourselves for this wonderful challenge: If we don't succeed so brilliantly in spreading globalization, we don't create all that new demand for energy, which in turn drives up prices and pollution, forcing us (more collectively now) to address those issues with far more seriousness than in the past. By going to locations with less stringent environmental laws, we expand globalization, but that expansion now rewards greater efficiency, so watch companies now demand better environmental rules as a cost-saver.


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