Globalisation was never a straight path as might have thought. A change in the past trend has taken place over the past two to three years. The new global economy has evolved into one with no borders and propelled by technological advances. Globalisation is not at an end, it is just changing.
Standardisation
The invention of the standardised, or intermodal, shipping container in the 60s sparked the drive toward globalisation. Intermodal containers allowed cargo to be transferred from ships to trucks to trains seamlessly. This reduced the cost of transporting goods internationally drastically. Containers did far more for promoting global trade than any other single factor. Containerisation led to the globalisation of goods.
Similarly, investments in fibre-optic cables sparked the globalisation of the service industry. The speed, resilience, and, most importantly, the reliability of internet connections have changed how businesses operate by allowing them to work with staff remotely. Companies have benefited immensely by gaining access to a geographically distributed workforce. This has allowed countries, like India, to export software services, leading to the globalisation of services.
Future Innovations Will Drive Globalisation
Technology is continuously reshaping modern life, and this continuous change is accelerating us to yet another inflexion point. Technology has long been one of the fundamental drivers of globalisation, but in coming years its role will become even more important.
The world is becoming borderless. It is now one where capital and goods move swiftly and freely between international citizens and organisations.
Three transformational innovations will have a profound impact on how businesses will operate in the future. These three innovative forces are powerful enablers of globalisation and have the potential to change the competitive landscape at an unprecedented pace.
3D Printing
Many corporations took advantage of the global supply chain by offshoring production to low-cost manufacturing countries. 3D printing is disrupting and streamlining this decades-old trend. The technology brings with it two major leaps benefits:
The digitisation of goods will enable production and trade of large volumes at a minimal cost.
Helping make products easier to modify. This will make it possible to have each product developed with unique specifications without retooling costs.
Raw materials will still need to be transported, but the design of parts and components will be digitised. The designed product will
then be 3D printed and assembled into a final product in-house. This could eliminate the off-shoring of factories. This would impact the labour markets in low-cost countries. However, at the same time, it would create vast opportunities for small-scale businesses, which are the bedrock of employment in many economies. 3D printers could also reduce start-up costs usually required in the production of goods. McKinsey Global Institute estimated that 3D printing could generate $550bn in economic gains per year by 2025.
Hyperloop
Advances in transportation technology reshape lives, communities, and how and where people live and work. When Elon Musk first described his vision of a futuristic transportation system that could send passenger or cargo through tubes at high-speed in 2013, it seemed far-fetched at that time. The Hyperloop system has come a long way over since then and has been developed rapidly with inventors and investors backing this project.
Hyperloop can revolutionise modern-day transportation systems by carrying a large number of people and goods over long distances in an efficient and quick manner. This would be beneficial for businesses which manufacture goods at a location away from their main markets and also for manufacturers trying to expand in newer locations as the transportation costs would plummet. This technology has the potential to disrupt the present day supply chain models and be environmentally efficient at the same time.
Blockchain Technology
The invention of Bitcoin presented the most interesting opportunities not in the coin itself, but rather in the underlying blockchain technology. The use of blockchain, as a secured, decentralized and encrypted public ledger, could be groundbreaking. It can change the way trade is currently done and revolutionise the shipping and finance industries. It can enhance transparency, speed, trust and, most importantly, reduce costs along the way.
Supply chains today have become so complex that there is a significant lack of transparency. Consumers do not know the true value of the products they are purchasing, and it is very difficult to investigate supply chains due to the logistical complexities involved. The blockchain is essentially a distributed ledger, on which every transaction is recorded across multiple copies of the ledger which are distributed over many computers, enhancing transparency. The technology is secured since every block links to the one before it and after it. It is efficient and scalable and can increase the efficiency and transparency of supply chains and positively impact everything from supplying to warehousing to delivery to payment.
Bottom Line
With these technological innovations acting as a catalyst for sustainable development, the world could be entering a new era which will bring economic and social benefits, increasing productivity and providing unprecedented access to information. With the rise in nationalist and protectionist feeling, the strategic challenge of the coming decade would be navigating a world that is simultaneously integrating and fragmenting.
Source: The Market Mogul
Key words: globalisation, changing, 21st Century
