Globalization, Free Trade and the Mindset of Success

The concept of globalization

The globalization concept describes the notion that free trade is always and everywhere a win-win proposition. In classical theory, perfect competition and integrated markets was the general assumption. It was believed - and for some it still is - that absolute free trade without any restrictions and perfect information (implying zero transaction cost) is beneficial for all the parties involved. However, economies have evolved, times have changed and political uncertainties seem to be a constant. 

Where it all went wrong?

In present days, in a world where the UK voted to leave the EU, triggering probably the worst political crisis in history, and where the President of the US, Donald Trump assured his supporters that he’s going to put America first by withdrawing from the Trans-Pacific Partnership, people can’t stop but wonder what does it all mean for free trade and globalization.

It seems like every aspect of this globalized economy is under assault. A backlash against free trade and unrestricted cross-border movements of capital has picked up momentum and British and EU-based companies still want to sell their products and services without tariffs, taxes or quotas in each other’s markets after Brexit. So why is this happening? 

Free trade and why political leaders keep calm

Well, according to a study by former president of the American Economics Association, William Baumol, whether trade arrangement is win-win, zero-sum, or neutral in its impact on participants depends highly upon the circumstances of each country involved, industry and technology. In reality, there is no history of countries becoming evidently rich by free trade. The UK, the US, Japan and Germany have all become global leaders as a result of capitalism and protectionism, and only after becoming rich they become free traders. Some may say they could look at this as an opportunity to go back to their origins.

Mindset of success and next steps

Now, all I’ve outlined above may or may not be true - mainly because it depends on the perspective you adopt. However, from a business perspective, what is clear as day is that we live in a time of confusion, and guidance is much needed. Those who predict that the era of globalization is extinct are too pessimistic and it’s just not the case. Let’s be honest, the rapid expansion of trade, rising cross-border capital flows, and, on top of everything else, the spread of new technologies and innovation have made the global economy what it is today.  Going towards protectionism and nationalism may temporarily attract popular support, but history has shown that, ultimately, it may well threaten global prosperity. All we can - and should - do is look at the horizon with a hopeful view. 

Being an entrepreneur or business owner comes with difficult challenges and the struggle to increase growth and productivity, whilst creating jobs and sustaining a good local economy will continue. However, there are also many opportunities. There’s no such thing as restoring old frameworks. We are a civilization driven by progress and innovation and our challenge will always be to build new frameworks - that work. 

No Matter What Happens, Going Global is Returning

That’s why we are still holding Going Global Live, the hub for businesses that are looking to expand internationally, export products or set up overseas operations. If you’re looking for the answers to all of your questions, register now for free and come and see our impressive line-up of speakers ready to share advice that you wouldn’t otherwise be able to get hold of.

If you are interested in exhibiting at this influential event, contact Event Director Simon Chicken on 0117 929 6091 or simon.chicken@prysmgroup.co.uk.