Globalization is a fact – it is just like winter or autumn… it simply happens. In preparation for the Winter, people go and buy coats and heavy clothes, and make sure the heat-equipment and fuel are suitable. And just like that, we have to prepare for Globalization.
By we, I mean the country Jordan. How can one prepare for Globalization? well, very simple.
Globalization simply means that communication and transportation happen very quickly in today’s world. When an event takes place in Indonesia (remember the Tsunami waves), most parts of the world would know about it within few minutes. When the Asian stock market crashed in the 1990s, the New York stock responded. When 9/11 happened, even European companies got affected.
This also means when a company in China manufactures laptops $200 cheaper, then the laptops will sell probably for ~$200 cheaper in the US (assuming free market and that manufacturing cost is still dominant in sale price). Not just that, laptops will get cheaper just because of such news – way before the first cheap laptop makes it to the US!
What does this mean to Jordan?
Many people think that Jordan and its people have a lot of potential, but they are weak economically. And, I think, all Jordanians wish if Jordan has a stronger economy.
To have a stronger economy in the age of Globalization, one should think more in terms of Globalization.
Many idealists talk about “local industry” i.e., consume only locally-made products. this simply does NOT work! (it is good as a personal motto, giving business to people you like, but not as an economic plan).
Why? because with the current very cheap transportation prices (a.k.a Globalization), it is cheaper to buy clothes from China than to make them in Jordan.
The idealists would say: “We don’t want the clothes-makers in Jordan to lose. Thus, we will ban Chinese clothes and force everybody in Jordan to buy Jordanian clothes.”
With this move, you are causing all of Jordanians to lose (pay extra money that they could have spent elsewhere) for the clothes-makers to make money. As if you are taking extra sales tax from people who buy clothes, and giving it to the Jordanian clothes factory. Is this something you really want to do?
With Globalization, countries are not “local economies” anymore, but they are more like a Dukkan – a shop, in a big mall of other shops. Each country/shop sell things that other shop-owners need. Thus, to succeed, you have to make more Goods that are desirable and profitable to sell to others – locally and globally. And you want to make sure that what you sell to others is more than what you are buying from them.
To enhance Jordan’s economy, we must start exporting companies in Jordan. We need companies that can sell goods and services to people outside Jordan, thus, bring more money to the local economy. Each one of us must be thinking of business ideas that can work globally, and bring returns and create jobs in Jordan.
Back to the clothes example. The better way to support Clothes Manufacturers in Jordan (if we decide that it is a feasible business to enter globally) is for the government to give them direct incentives and tax-cuts that would help them compete globally. We want their products to be so competitive, that people in Jordan and elsewhere would choose to buy them – without any “imposed laws”.
Why did I talk about Globalization all of a sudden… well, I actually just wanted to introduce a very nice piece of news I got. But since this post has gotten long enough, I will put the piece of news in a separate post. (check in few minuts)