Conversation with a friend
Last week I had a conversation with a friend. He said: “Globalization is the new economic of this century as it changes the way countries and companies do business. Why hire a software developer in the U.S for $100,000 a year when you can hire an Indian developer for $30.000. Why build cars in Europe for $13,000 per car when you can do that in China for $6,000. Globalization lower prices, provides cheaper product and services. It is good for consumers. It is good for lower cost countries in Asia but NOT good for higher cost countries such as the U.S and Europe. However, it helps balancing the economic power between countries.”
I told him: “Globalization is more than just the economy of cheaper labor and costs. It is more than balancing the economic power between countries. With globalization, everything will be integrated and the world will be changing into a single entity. Within that entity, every country will work together, collaborate with each other, and at the same time compete with each others. This relationship is complex and difficult to explain as it is still evolving and we are still learning about it. Whether we like it or not, every country will be part of this global system if they want to prosper, else they will be left behind. In other word, with globalization, national boundaries will disappear and people of different countries will learn more about each other, many ideas and lifestyles will be fully integrated. People will realize that regardless where they come from, they are now part of the world with a common destiny. If people understand this concept and cooperate wisely, globalization can be the best chance to improve the lives of a lot of people.”
He argued: “But national border still exist, every country has its own laws and culture.”
I explained: “Of course, countries still exist with their borders but in the “Virtual world” it does not matter. With information technology, everything is connected as more people have access to the internet. Business transaction can happen electronically and products can be manufactured and sent anywhere and everywhere. Today, no country can globalize without having information system and that is why information technology (IT) is the most needed skills in the world. The future of IT is very bright as more jobs are created in this area, more than the number of jobs in manufacturing and agriculture combine. That is why we have shortage of IT people today and this shortage will continue for many more years because to survive and prosper, every country will need information technology. As globalization happens, country that has better information technologies, better skills, and more educated people will dominate. With globalization, societies will be built more on knowledge as it is the asset of the new economy. Today people know about investing in finance and natural resources as they are the basis of the industrial society but in a very near future, the key investment will be on education because it is the basis of the knowledge society.”
He disagreed: “But people still need foods, oil, gas and business still need finance. How can knowledge change these assets?”
I explained: “Today, natural resources such as oil, gas and minerals are key assets of the industrial society, just like food crops are assets of the agriculture society few centuries ago. However knowledge will change these assets as we are moving into a new era. Let's imagine a company invents a “synthetic fuel” that can replace oil and gas than what do you think will happen? Imagine everything that use oil will be replaced by this “synthetic fuel” for much less. What will happen to oil company? What will happen to countries that produce oil? What will happen to companies that sell oil and natural resources? If that company is located in a country than what will happen to that country? Imagine how much that country can make on export “synthetic fuel” to the rest of the world? How many jobs it can create for its people? How much prosperity an invention like that can make? The same thing can happen to foods too. Imagine with biogenetics, a company can create any kind of food crops that can grow anywhere and for much less than natural crops than what will happen to the agriculture market? If you are farmers, would you grow these “special crops” that can give you ten times yields but cost you ten time less? Imagine only one country has that kind of knowledge than what will happen to that country? The possibilities are endless, the opportunities are endless and that is what I meant by knowledge as the key asset of the new economy. That is why I believe having a good education system is the most important thing that a country can invest today to prepare for tomorrow”.
My friend was not convinced: “That is the future, it may or may not happen. We need to look at what happen today.”
I told him: “Do you think my examples are just an imagination? They are real and they are here. This “Synthetic oil” is already exist but the production is not perfect yet. Today only two countries have the knowledge about it and many are conducting research on something similar. I think in few more years, it will change many things. Regarding food crops, they also are here too. With biogenetic technology, companies already created many food crops that have very high yields, resist diseases, and can grow almost anywhere, in cold weather as well as in the desert with minimum water. The issue is on the cost of producing them as they are more expensive than natural crops. If the cost can be reduced to the same level of natural crops, it will change the entire agriculture area. Imagine how much benefits these inventions can bring to the people who invented them? How much advantage to the country that have them? How much our society can benefit from them? The knowledge of these inventions are so precious as it can balance the economic power or it may change the economic power to the better or to the worst. It all depend on which country possess the technology and what are they going to do with them.
My friend argued: “But it has not happened yet. I believe it when I see it.”
I explained: OK, Let's look at how knowledge benefits country like India. Twenty years ago, India is a developing country relied mostly on agriculture. Now it is one of the advanced country in information technology (IT) with millions of skilled workers providing IT services to the world. The lives of million people in India are transformed to the better in less than 20 years. Everyone know that it is the IT industry that helps drive the India's “economic miracle”. In 2000, IT contributed about 2.5% to the country's GDP but today it is 11.5% of GDP. From an economic view, this is the fastest growth that never happened in history before. IT industry also improves software export from $28 billion USD to $86 billion USD in less than ten years. It provides 2.5 million direct jobs and every direct job creates 7 additional jobs for the economy. Most of the additional jobs are for the less educated people. Overall, Indian society benefits greatly from IT industry as it drives unemployment down and helps improve the lives of many Indian.”
He disagreed: “But India is still a developing country and there is still a lot of poverty there.”
I explained: “For an agricultural country with over a billion people, it is not easy to change quickly. However, something actually did happen very fast. When I first went to India in 1980, Bangalore was a small village of few thousand people. Today it is a large modern city, more modern than many cities in the U.S with millions of people. It is hard to imagine a city can change that fast. Not long ago, having a motorcycle was a dream of most Indian software developers but today it is a car, not just any car, but a BMW or Lexus. Today Indian has more millionaires than any country in Asia, most of them come from the IT industry. On the list of 20 richest people on earth, India has three and two of them are software engineers. That is why IT knowledge is the asset, the key driver for economic prosperity in India and it could be the key asset for other countries too. IT is a new field with a very short history but it already changes so many thing. Imagine fifty years ago, who would believe that most richest people on earth are college students. Today, nobody doubt that with the right knowledge, anything can happen. Bill Gates, Sergey Brin, Steve Jobs, Mark Zuckerberg are the real examples. Not long ago, a poor software engineer named Narayan Murthy started a company called Infosys in India. Many people told him that he was a fool to dare challenge big company like IBM. How many people would call him a fool today when he became one of the richest people on earth and most successful people in India. What do these people have that make them so special today? None of them come from rich family, none of them inherit any money. The only thing they have are knowledge and their passion for technology. That is why I believe knowledge is the key asset of this global economy and education is where you develop the knowledge. With globalization the competition will be tough and the advantages will be with countries that have strong education, especially in IT, as everything will be driven by technology.
He seemed convinced: “So it is technology will make everything better”
I cautioned: “Not necessary. With globalization, many thing can happen but NOT everything will be good. Not long ago, having a telephone was a convenience but today it has to be smart phone, an iPhone or Android phone. Not long ago color TV was an luxury for family but today it has to be a 3 D flat-screen color TV. Basically, these technologies move everyone into the same global perspectives. People begin to see the same movies, they watch the same sport events, listening to the same music events. I think technology helps globalization happens faster but it is also a double edge knife. With the arrival of TV, parents begin to lose control of their children as they are influenced by what they watch on TV. Under the influence of TV and radio, many children grew up and behave differently. They want to dress like movies stars, they want to have special clothes, special fashion, special hair style etc. Many children adopt bad attitudes and use bad languages as TV advertising promotes a global consuming trend. If you look careful at globalization. It is not just economic, business, financial or technology but also human behavior and culture where it changes many things. With the proliferation of technology, many cultures will change, some for the better, some for the worst”.
He seemed surprised: ”But you are a computer professor, I thought you like technology”
I explained: “Everything has its advantage and disadvantage. You cannot draw conclusion quickly. If you look at the brighter side, technology broadens the understanding of other cultures, provides greater sensitivity to other society, and deepening our sense of wholeness. It suggests that the next stage of human history maybe an unified world rather than a divided world like today. Globalization is a challenge to every one of us to move past the limiting categories of isolation and assume a worldwide perspective. I think we are at a point in worldwide development where our sense of identity is being forced to widen and include all aspects that are unfamiliar to us. It is not easy for parents to see that their children grow up with different ideas, different values, different attitudes but it is something that we all have to accept. The best we can make out of it is having BETTER education, an education NOT only focus on technology, NOT only focus on business, NOT only focus on skills, BUT ALSO focus on all aspect of humanity too. There are certain values that we must keep, for example family relationship, individual responsibility, honesty, integrity and ethic. I believe to have a new education system that have all these things is a challenge that every country must face because it will determine whether we are moving forward to the better or to worst.”
Sources
- Blogs of Prof. John Vu, Carnegie Mellon University
