Reverse globalization is the opposite of globalization; it is a trend which leads to decrease in movement of goods and services across borders. The trend presents a decrease in international trade that is carried out by multinational companies, this is due to price volatility and the rapid increase in price of commodities in most developed countries regardless of quality of inputs, labour, capital cost, land and materials for production. Most firms now prefer purchasing their products locally due to this trend of reverse globalization (Anand, 2015).
Most countries in the past years have been greatly engage in global business which had a great impact especially for the growth of developing countries economy. However, in the recent years, most developing countries are getting rid of global trade and start to focus on local trade. Most firms now prefer inter-trade between firms within their countries rather than engaging in international trade. This is due to influence by various factors such as unpredictable changes in price of commodities and volatility in price. Various trends of reverse globalization are discussed below (Budzak, 2016).
Most developing countries that are moving away from global trade are doing so because of the influence of protecting their own self, their country and customers who are also citizens of the particular country and due to the failure to agree on global tariffs reduction. The government find it appropriate to protect local investors from investing in other countries where they mainly end up paying high tax and spend high cost in production due to the high charge on global tariff, and all this investment help in increasing the economic growth of the already developed country and not its own. The government also protects firms from the unpredictable changes in price which affects investors negatively and they end up making losses. In addition, most developing nations experience unequal economic growth development as well as unequal social distribution which leave most nations with an option of not engaging in global trade. This in the end results in nationalism since most countries now prefer their own culture of doing things and carrying out businesses at their own interest, a trend of reverse globalization (Chen & Hsu, 2012).
Globalization have been identified to only benefit the countries that have already developed and they have enough resource causing developing countries to now transform most of its rural areas and to enable most rural investors to receive urban dwellings. The act has led to rising of urbanization which attracts local investment and causing globalization not to last for long. This is because this trend in the long run, discourages international trade and promotes local trade, therefore promoting reverse globalization. The trend of the rising urbanization results in growth of the economy which makes the country to encourage investors to invest more locally to improve in the development of the economy of the country. This trend automatically results influence of reverse globalization.
The rapid change in technology has influenced most developing countries to embrace technology fully in its industrial operation. Developing countries considered globalization as way of economic development in the past years because they had not discovered the importance of embracing technology fully. Currently, most developing countries have identified the importance and have embraced technology. This enables the countries to be able to run their own local industrial operations by use of technology. That is, operations from production to trading. This act in the long run has resulted to reverse globalization, because most firms now focus on local trade and not globalization.
Protectionism and nationalism being the major trend in reverse globalization was caused by the need of oneself and satisfaction of own interest of the people. On the other hand, the government was influenced by the rapid economic growth of other developed countries; this attracted the need for change and the government of the particular countries focus on protecting their nations not to lag behind in economic development also (Kar, 2010).
The rising urbanization was influenced by the rapid change in technology. The fully use of technology in various activities resulted in fast development of the rural areas and opening of many industries. It has also resulted in creation of more job opportunities due to manufacturing of big data and robot that facilitated manufacturing. Most investors are attracted to the rural areas where they invest more therefore leading to growth of more urban centres, which results in the rise of urbanization (Steger & Wilson, 2012).
Innovation in technology is caused by competition from other developing countries. Every country want to be developed, the source of development is technology innovation. Therefore, for the countries to achieve the goal of being a developed country, they have to fully embrace technology (Nederveen Pieterse, 2012).
According to these articles, globalization is identified to rapidly change as years goes by. Various trends in globalization have resulted in negative and positive impact of the global economy. Increase in global power of the emerging market is one of the common trends in globalization. In the first place, most new markets are emerging as a result of globalization. International trade presented the importance of embracing technology innovation which has greatly assisted in the growth of many markets both in underdeveloped, developing and developed countries. Secondly, demographic shift have also change the business world and rephrased the society as well as a result of the rapid growth of the middle class. Most private sectors are now able to relate well with the public sectors leading to a balanced global power, whereby both sectors can make decision based on the global business operations. The innovation of technology has made countries like China to move up the value stream as well as making it become technologically advanced country (Khandwalla, 2017).
Expansion of social benefits for emerging markets is also another changing trend in globalization. Governments are now taking over to protect their own interest of their country. The differences in culture that creates a barrier for most international traders is identified to be the cause of slow growth of the economy leaving the countries undeveloped, this is because most investors prefer engaging in global business (Machida, 2012). The government of various developing countries are now trying to encourage reverse globalization, so that investors will invest locally, in their own countries and enjoy all the social benefits without experiencing any cultural barriers. The transformation of globalization is also another changing trend in global business. Countries should come together and set up common goals to transform globalization which is now being opposed by other countries, especially the developing ones (Kulishov, 2014). Political stability, economic policies and flexible government laws concerning international trade, are the key drivers of globalization which developed countries are now trying to put in to consideration, for a successful transformation of globalization as proposed by Xu Jian, the vice president of China.
Blockchain technology provides means for coordination of common activities, whereby they interact directly with each other and are able to control and govern themselves in a decentralized and more secure way. The digital currency used as an application of blockchain technology is cryptocurrency and bitcoin. The following are different examples of the benefit of blockchain technology to international business in different sectors.
Blockchain technology helps to ensure that data stored cannot be tempered with, lost or replaced because of the encryption key in place to ensure verification and authentication of data which is also decentralized. This in the long run ensures perfect means of managing digital documents for trade. The organizations that use blockchain technology are also able to maintain good records which can be easily accessed by auditors both locally and across borders. This makes the supply chain very efficient (Ko?odziej, 2017).
Blockchain technology enables easy flow of transactions involved in international business. This is because; no middle men or intermediaries are needed since it is a distributed database system that serves as an open electronic ledger that simplifies business transactions as well. This makes it cheaper to carry business transactions across borders.
Blockchain allows all parties involved in the international business to also give their opinions on product development. This is a great benefit to investors since the decision about products development does not only depend on what manufacturers say, but they also have a say (Swan, 2017).
Despite various countries like Mexico, Colombia, Nigeria and Pakistan being presented as the leading countries in newspapers headlines with negative news coverage, investors still find the countries favourable for international trade and they go ahead to invest in this country. The main reasons why they prefer these countries are as discussed below;
The above mentioned countries ensures that the political decision they make does not affect the business environment, instead, they ensure it attracts more investors. The countries also avoid international war and actions from the government that can be destructive and discourage international investors. In addition, the countries also works to ensure little restriction to foreign investors, ensure any actions taken to people are harmless, no restrictions on profit that investors should make and avoids taxation restriction as well as discrimination on taxation for multinational companies.
Economic policies of a country will either attract foreign investors or discourage international business. Countries mentioned above, have set in place economic policies which attracts investors because the policies are favourable for them. The policies set do not restrict any financial transaction as well as international trade. The countries also prevent investment barriers which could have discouraged international investors (Mishra, 2017).
References
Anand, B. (2015). Reverse Globalization by Internationalization of SME’s: Opportunities and Challenges Ahead. Procedia – Social And Behavioral Sciences, 195, 1003-1011. doi: 10.1016/j.sbspro.2015.06.359
Budzak, G. (2016). Face and reverse side of globalization as scientific and technological process and of globalism as paradigm of the new world order. Vojno Delo, 68(7), 7-14. doi: 10.5937/vojdelo1607007b
Chen, S., & Hsu, K. (2012). Reverse globalization: Does high oil price volatility discourage international trade?. Energy Economics, 34(5), 1634-1643. doi: 10.1016/j.eneco.2012.01.005
Kar, D. (2010). Comment on Schularick: Real Sector Globalization Precedes Financial Globalization. The Economists’ Voice, 7(2). doi: 10.2202/1553-3832.1731
Khandwalla, P. (2017). Globalization Tumult and Civilizational Greatness. Markets, Globalization & Development Review, 2(3). doi: 10.23860/mgdr-2017-02-03-05
Ko?odziej, M. (2017). Blockchain technology as a quantifier of changes in the financial sector. INFORMATYKA EKONOMICZNA, (46), 79-89. doi: 10.15611/ie.2017.4.07
Kulishov, V. (2014). CURRENT GLOBALIZATION TRENDS. Scientific Journal Of Polonia University, 11(4), 33-44. doi: 10.23856/1103
Machida, S. (2012). Does Globalization Render People More Ethnocentric? Globalization and People’s Views on Cultures. American Journal Of Economics And Sociology, 71(2), 436-469. doi: 10.1111/j.1536-7150.2012.00835.x
Mishra, S. (2017). Trends in Globalization of Select Asian Countries. SSRN Electronic Journal. doi: 10.2139/ssrn.3073622
Nederveen Pieterse, J. (2012). Periodizing Globalization: Histories of Globalization. New Global Studies, 6(2). doi: 10.1515/1940-0004.1174
Steger, M., & Wilson, E. (2012). Anti-Globalization or Alter-Globalization? Mapping the Political Ideology of the Global Justice Movement1. International Studies Quarterly, 56(3), 439-454. doi: 10.1111/j.1468-2478.2012.00740.x
Swan, M. (2017). Anticipating the Economic Benefits of Blockchain. Technology Innovation Management Review, 7(10), 6-13. doi: 10.22215/timreview/1109
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