by Sigalit Hoffman

Concordia professors are eager to embrace the inevitable. International business professor Ramdas Chandra believes that while globalization is a certainty, it may also raise the standard of living of developing countries. “There’s no way around it,” Chandra said. “What happens in Japan affects you in Canada.”

Professor Chandra explained that the presence of multinational companies have changed the way businesses compete. They have broadened the sphere of competition, and put less efficient companies in danger of being undercut and forced out of the market.

Globalization can be a blessing to developing countries. “In the short run, economic growth deals with poverty, and brings in new technology,” Chandra said. Although he said it’s likely that Western companies will make inroads into developing countries as part of this trend, he did not foresee foreign companies threatening local businesses.

“Local companies will respond,” he said. “They will become more effective, more able to compete.” For example, Latin American car manufacturers have continued to be successful despite GM plants like the one in Brazil.

In some cases, local companies will be at an advantage. The Caribbean tourism industry is one such example.

Concordia business strategist Mick Carney thinks that globalization will allow countries to capitalize on their strong points.

“Where there’s globalization, countries must decide where they do well, where their natural skills are,” Professor Carney said. Canada excels in telecommunications and in manufacturing winter boots. Globalization will make it easier to export these products, and will result in customers getting better products at better prices.

Not only do industries stand to gain from globalization, Carney believes that companies are in danger of losing by not becoming multinational. Since the aviation industry has remained nationally based, a “country that doesn’t have a good airline is stuck with it.”

Chandra pointed to the saturation of domestic markets and the opening up of markets like India and China as the two major causes of globalization. Thanks to new communications technology, citizens of developing countries have seen and sought the industrialized world’s standard of living.

“They want this lifestyle. They want the luxuries that the average North American has,” Chandra said.

Globalization is the result of a worldwide adoption of a capitalist social structure. There have been two experiments, he said, capitalism and communism. “It seems that the capitalist model has won out,” he said, and cited vast amount of empirical evidence that links free markets with economic growth.

Before globalization can benefit developing countries in the long-term, Chandra warned that there must first be a stable political system in place. “In the long run, unless there are legal systems, there won’t be too much benefit to the larger population.”

Carney pointed out that sometimes, companies in developing countries do not want to conform to international working standards. Although the furniture manufacturer Ikea does not sell products made by child labour, these standards have been difficult to enforce in their Indian plants. Carney said that the local governments sometimes side with local businesses that try to break the rules.

Chandra believes the entry of multinational companies has threatened local identity, and insisted that governments institutionalize the protection of local identity.

Carney disagreed. He predicted consumers will guard their identity by distinguishing between cultural and consumer goods. “People still prefer their news from a Canadian company, not Ted Turner’s CNN. They don’t care where their stereo is made.”

This is the second in a series of articles about the issue of globalization from the perspective of Concordia professors and students.