[Column] The myth of globalization

Shin Kisup, editorial writer for the Hankyoreh

The World Trade Organization's (WTO) Doha Development Agenda (DDA) has come to a halt without producing any agreements. Global free trade, one of the main goals of globalization, is not happening.

The term "globalization" as a marketing strategy first appeared in the Harvard Business Review in May 1983, in a paper by Harvard Business School professor Theodore Levitt titled, "The Globalization of Markets." In it, he said the world is becoming smaller because new technologies are spreading media across the globe and because the cost of communication is getting cheaper. He claimed that a single, global market was forming, in which consumer tastes were becoming similar and in which producers can sell standardized products.

You can summarize the claims of proponents of globalization by saying that first, products of the same form and standard are to sell globally and that second, multinational companies can dominate their markets globally with a single product.

However, there are also arguments claiming that this is not only not happening, but that it will not happen in the future, either. One example would be "The End of Globalization" by Indiana University professor Allan Rugman. He said that instead of globalization, what we have are three economic blocs (North America, Europe, and a Japan-centered Asian one) and that the trend is going to continue that way. He provides statistical evidence: 85 percent of automobiles produced in North America, 90 percent produced in Europe, and 93 percent produced in Japan are sold only within their respective regions. There is no such thing as a single automobile for the whole world. Rugman says that the situation is similar for the steel and heavy industries and energy market, and that only the electronics industry is the exception. You can also see it in the quantity of trade. In 1997, 49 percent of exports from North American countries represented trade within that region. For Europe and Asia, the figures are 60.6 percent and 53.1 percent, respectively.

Rugman says you should think locally, act regionally, and forget globalization. That is making a lot more sense since the breakdown of the Doha Round negotiations.