Globalisation isn't dying. It's too deep

Globalisation’s winners did little for its losers. The backlash against globalisation therefore comes as no surprise. But it is too early to write globalisation’s obituary.

Amid indications that the pace of globalisation is stalling, it is interesting to see how the boss of one of the most globalised companies in the world views things. A reporter of a leading Indian business newspaper recently asked Microsoft CEO Satya Nadella whether he still saw a case for labour mobility given the increasing protectionism in the West and worrying signals from the United States.

Satya Nadella’s answer was interesting. He said as a multinational, his company’s primary job was “to operate everywhere in the world” and to “make sure that we contribute to that market in a fundamental way”. The overall labour mobility in the world, as Nadella put it, is “going to be defined by every country’s immigration policy, every country’s trade deal or protectionism”.

Every country would and should put its national interest first, Nadella said, but the Hyderabad-born CEO of Microsoft did not see that as a marker of the end of globalisation or labour mobility. Even at a time when the strains of India First, UK First and America First are ringing loud and clear in the respective countries, he was confident that Microsoft would continue to operate in all these countries.

The key was the principle of local opportunity creation. Not just the direct employment a multinational creates when it sets up shop in a country but also “employment in the partner ecosystem”, as Nadella put it.

Globalisation is not likely to die any time soon. We have got too accustomed to her face.
Workers in America’s Rust Belt may have lost their jobs, the middle-class in many parts of that country their upward mobility. But as of now, cheap goods from China still have their allure. Indeed, according to one estimate, China manufactures 11 per cent of all merchandise sold today in the United States. In India, check out the handsets that everyone uses, including ultra-nationalists. They are likely to have been assembled in China, Taiwan or Korea. And the subziwallah down my road still sells Washington apples.

This is not to underplay the mounting anxieties around globalisation. But don’t underestimate the globalisers’ ability to acclimatise to new contexts. This is not the first time that globalisation’s death is being predicted. Globalisation is not just about movement of goods and services and outsourced jobs. It is also about the exchange of ideas and collaborations and in the hyper-connected world that we live in, that is unlikely to end. Globalisation in its new avatar would simply have to adapt to the growing anxieties, as Nadella’s statements implicitly suggest.

In these turbulent times, the everyday verbal slugfests on the social media suggest an increasingly corrosive duel between the Left and the Right. But the real divide is between the well-educated and highly-skilled and those who lack education and are low-skilled or whose skill-sets are dated.

What does that mean for a country like India? India has been a big beneficiary of the globalisation phase that started in the late 1980s. It fuelled impressive economic growth in emerging markets on the back of outsourcing and trade. This, alongside the explosion of cell phones and adoption of the Internet, led to a boom, specially in the services sector, lifting millions out of poverty and creating a whole new middle class in this country.

India’s growth story since 1990 has been too well-chronicled to bear repetition here. But the moot point is the model of globalisation that yielded a bonanza for so many Indians may not continue, or not quite in the same pace. Globalisation will continue, but in a different way.

To understand this, check out a recent tweet by Robert Reich, Professor of Public Policy at the University of California at Berkeley, which flagged an interesting article about Boeing, one of the last great American manufacturing companies. The article points out that while the planes are assembled in the US, most of their parts come from overseas — from countries like South Korea, Japan, Australia, Canada, France, Sweden etc. Nearly a third of these countries, as Reich points out, have good wages, universal healthcare and effective unions.

There is a lesson here for India. In these protectionist times, just cheap labour is not a good enough selling point. As the gap between the highly skilled and others deepen, countries that do not invest in human capital and reboot their skill-sets will be on the backfoot.

As manufacturers big and small embrace digital technologies to remain competitive, many jobs will be shed. But there will be new opportunities and new jobs. It is critical to understand and plan for this huge structural shift ahead.

How do we create a work force that can cope and thrive during these changing times and in the years ahead? There is a lot of talk about skill development. However, skill development for the world of work in the future will need a good sound basic education at the minimum.

The rise of digital technologies means job profiles of the future will differ from what we have or what we can imagine right now. As work gets more and more automated, workers will be required to carry out increasingly complex tasks. The skill to adapt to quickly to new technologies requires sound basic education.

India does not have that now. As numerous surveys have shown, millions of Indian children can barely read or count. The ability to absorb knowledge will depend on how solid the base is. Today, large numbers of India’s youth do not even finish school. With such a low level of education, how equipped will they be to handling the increasing demands of technology?

Infrastructure investments will be absolutely necessary for India to sustain its economic growth. But investments in human capital  equally so.  A healthy workforce with solid basic education for everyone may sound like a utopian dream. But be sure, without that, all the talk about leapfrogging and leveraging new technologies will remain just talk.