Assignment 2 - Globalization Business Environment in Nepal Sushil Bajimaya, ACE EMBA, Fall 2011

Globalization is not a bundle of opportunities and benefits, it carries with it certain opportunities and threats; if not dealt with, might create crisis in the economy. Do you agree with this statement? Yes, I agree with the statement that globalization brings opportunities and threats and if not dealt with it properly, it might create crisis to the economy. Globalization is a process that promotes world-wide exchange of natural and cultural resources. Advancement in transportation and telecommunication technologies, and especially with the rise of the Internet, has escalated the globalization in 20th century creating further interdependence of economic and cultural activities. The history of globalization goes back as much as 3rd millennium BCE. The Silk Road that connected China with Eastern Europe, conquest of Britain, Spain, Portugal and France for covering territory all over the world is some basic examples of globalization happening in the past. In the past, the movement focused on territory coverage or trade route expansion. The Silk Road connected China with the Eastern Europe and gave European merchants access to China and vice versa. In 2000, the International Monetary Fund (IMF) identified four basic aspects of globalization. They are: a. Trade and transaction b. Capital and Investment movements c. Migration and movement of people d. Dissemination of knowledge In the past century, globalization was triggered by advancement in industrialization, transportation network and telecommunication technologies. The globalization trend escalated in the 1990s with introduction of cable television. Television has been major factor in influencing cultures. For example, fashion trend in Nepal, especially in cities like Kathmandu and Pokhara were mostly influenced by characters in soap operas telecasted in the televisions, and lately, it was influenced by fashion trend of Korean actors. Recently, the Korean song Gangnam Style has become a world phenomenon and has been copied by many people. It has even influenced by

Assignment 2 - Globalization Business Environment in Nepal Sushil Bajimaya, ACE EMBA, Fall 2011

parodies suiting peoples taste and requirements. Even more, there is a Newari version of Gangnam style. Such is the influence of globalization. Along with cultural influence, globalization transfers knowledge and capital from one place to another. The introduction of mobile phones, the Internet etc is some examples of technology transfer. People migrating from countries like Nepal to countries like Japan, USA, and Australia for further education, employment opportunities are also some examples of globalization. With such migrations, people transfer their knowledge and culture. For example, it is not surprising that more than 50% percent of the employees of the NASA are of non-US origin. We shouldnt be surprised to see restaurants serving momos and typical Nepali food in countries like Japan, USA or the UK. Globalization can provide access to investment capital to countries or localities that they could not have achieved on their own. This can induce development activities in such countries or localities. For example, Gujarat implemented laws that enabled easy entrance for foreign industries which helped foreign companies like BMW, Toyota, Coca-Cola etc to set up factories there. This gave Gujarat access to vast foreign direct investment which it could use for the developing the state and hence has achieved tremendous economic growth because of this reason in the last decade. Today, Gujarat is taken as a model state for development activities. Not just introduction of new technologies and knowledge, countries like Nepal have benefitted from globalization with the employment opportunities that it brings. Hundreds of Nepalese youths migrate to countries like Malaysia, the Middle East, Europe and the Americas for employment opportunities. This brings huge amount of foreign currency in the country. Remittance from people employed abroad is 40% of the GDP of Nepal. Remittance has established as a reliable source of income for people especially in rural areas of Nepal and they have immensely benefitted from it. Therefore, there is no denying that globalization creates different kinds of opportunities for people, be it for education or employment or settlement. However, globalization brings threats to the world and economy in a very subtle way. Its negative impacts are:

Assignment 2 - Globalization Business Environment in Nepal Sushil Bajimaya, ACE EMBA, Fall 2011

a. Environmental impacts like climate change b. Cultural trespassing c. Change in society structure d. Negative impact on domestic industry among others In todays world, we no longer are isolated; our every action affects the lives of others no matter how far apart we are. For example, global warming, climate change have become major issues and subject of concern for everybody. Since the last century, the consumption of fossil fuels have dramatically increased thereby resulting in higher percentage of carbon dioxide gas in the atmosphere, which is the major cause for the effect called global warming. Countries like Nepal are ones who suffer the most from this effect. The Himalayas are the major attraction of Nepal; thousands of foreigners visit Nepal just to catch the glimpse of snow capped Himalayas. Because of the global warming, snow in the Himalayas is melting in increased rate and if there is no snow, people will not visit Nepal and hence we will not generate enough revenue. Moreover, climate change has triggered erratic weather pattern like heavy rainfall during off-monsoon months, sparse or no rain during monsoon and so on. Such weather patterns have affected the livelihoods of the people depending upon the rainwater for agriculture. Another negative impact of globalization is cultural trespassing. In countries like Nepal, where most of the population is young, there is high probability that the people will learn and adapt to culture of other countries to which they are exposed to. For example, in context of Nepal, cultures like St. Valentines Day, Christmas do not exist at all, but more and more youths are celebrating these festivals every year simply because they are bombarded with information about these from different channels like the Internet, FM or the television. This has induced people not celebrating their own festivals, but enjoying in the festivals of cultures totally unknown to them. Another threat induced by globalization is change in society structure. With globalization, people have become more aware and have become more independent. This gives them economic freedom and hence people are opting to live alone. As people get economic freedom, they do not have to rely on their family for their expenses and hence opt for living alone. This has affected the architecture of society in culture like ours. Families are becoming smaller, food habit of people has also changed, people opt to dine out rather than to have a home cooked meal. Even

Assignment 2 - Globalization Business Environment in Nepal Sushil Bajimaya, ACE EMBA, Fall 2011

though this may appear beneficial for the individual, it is a loss for the society as a whole as it threatens the very existence of society like ours. Another threat that we get from globalization is suffering of the domestic industries. The primary interest of any consumer is to pay less and get the best quality product. With globalization, it is very likely that someone can produce better goods at even cheaper prices. Consumers will eventually opt for such goods as they are cheaper and hence, domestic industries producing the same good at higher cost will definitely suffer. Todays world is highly connected world. Any event happening half the world apart will affect the people living in the other half in one way or the other, be it climatically or economically. The recent global recession of 2008 is one prime example. Even though only the US was hit by recession at first, the whole world suffered from it. The whole world economy nearly collapsed due to the recession in the US. As a result, the European Union is still having hard times saving Greece, Italy, Portugal and Spain from their debt and recession and recently, Japan again slumped into new recession. In a whole, globalization is a movement that no country can be apart from. It brings opportunities to prosper and grow, but in the mean time, can bring threats. In case of Nepal, though it provides us access to funds for development, technologies made by others, globalization still threatens our society and domestic industry. Therefore, it is necessary that the concerned department (the government) have strict policies on regulating and controlling the globalization process so that the country benefits from it and yet the society fabric stays intact.