Saturday, April 10, 2010

Open to ALL !!!

You are at the airport about to board a flight to another country. You are informed that there are no security/baggage checks and no VISAs are required for any destination. You land at your destination and receive the same hospitality as your home country. The regulations are in favour of trade and result in better relationships between countries involved. Companies are flourishing, people not only seem happy but are indeed happy. All this seems so ideal to you. You are so used to negativity at every level in your life that this situation seems way off the norm. So, you pinch yourself to make sure you are where 'you think you are' - Only to realise that it is 4AM on a weekday night and you have your bedroom closet to your right !!!

Welcome back to the world we live in today - a world which has divided us on every possible opportunity - Be it citizenship, color, religion, caste, health, wealth etc.

A truly 'Open' world would be exactly what was just described as a dream - the boundaries cease to exist and there is equal opportunity for ALL.
But, before we fantasize such a world, it would be a good idea to perform a reality check of where we might land up with if just extrapolate the present...

There is a lot of talk about Globalization 'opening' up the world economy and providing better opportunities to countries that are in need.

Wiki states globalisation as "An ongoing process by which regional economies, societies, and cultures have become integrated through a globe-spanning network of communication and trade"

Essentially, globalisation dilutes barriers for trade and creates an ecosystem which enables seamless interaction between countries. And, one of the most commonly used form of interaction these days is 'Outsourcing'.

China, India and the like are great outsourcing hubs today primarily due to the cost advantages they offer. Chances are bright that in 25 (or maybe 50 if the world doesn't get destroyed in 2012!!) years from now, these countries would lose their advantage to some Latin American country or possibly, an African country. Chances are even brighter that these countries might lose 'it' to some others and this may continue until we reach a point where there is no relative advantage in outsourcing. Because, outsourcing is nothing but arbitrage and by nature, arbitrage is temporary and would be washed off in a limited period of time.
Even if we don't limit ourselves to Outsourcing, every other trade opportunity is some way or the other related a specific advantage of a country - and in a vague sense, a modified form of the concept of outsourcing.

But, the point that is worth thinking on is:

"How would this globalized world be without any arbitrage opportunities???"

"How would trade conduct itself when opportunities in foreign markets don't offer any (or very marginal) advantage over home markets?? "
There certainly would be some exchange of commodities which are a direct output of geographical advantage of some countries. But apart from that, there would not be any incentive for countries to trade. The flip side of this situation is that countries would make an attempt to create a niche for themselves to differentiate.

And this attempt would be a revival for us and hopefully would lead us to a world of equal opportunities and we might just get another chance to rectify our mistakes.

However if we do get this opportunity to rebuild, in our race for health and wealth - we should not forget that we have all evolved from the same bacteria which was the origin of life on this planet !!! After all, Source is as important as the Destination !!!

And if we succeed - Only then will it truly be 'OPEN TO ALL'...