Is Globalization Tenable?

Globalization is here! Over the last couple of decades, the barriers to exploring and exploiting remote markets have continually eroded. Aided by the web and other factors, even small firms and individuals are able to create and tap clients the world over.

However, is this going to continue to flourish or even be tenable in the future? That, in my opinion, has become a good question over the last few years. The momentum is good, but the momentum arrestors have become quite active now.

Regulators! They are the ones playing spoil-sport. Local regulation has always been as much about populism as protection. Jingoism and parochialism have ruled the day. The topics have also run the gamut – one of the newer entrants being data”.

Regulations around data now abound. Under the labels of privacy and protection (worthy goals in themselves), various countries around the world have created a dis-balanced situation. Essentially, the story is going to “we welcome all your data and we will process it, but our data is not allowed to leave our borders”. In some cases, this is not only for data that can identify individuals, but also for transactional data. For highly regulated industries like banking and pharmaceuticals, this can create havoc. Can other data intensive industries, even e-tailing be far behind?

What is the impact?

  • If data cannot be transferred across borders for processing, global systems become a no-no. Local systems across the globe are not the most cost-effective or the most effective solutions
  • Home countries wish to/need to regulate organizations as a whole – evaluate risks as a whole, monitor for not-nice things, etc. If the data cannot leave individual country boundaries, this is simply not possible. A case of regulations ensuring violation of other regulations
  • The cost of conforming to different regulations in different countries reduces the motivation to globalize in the first place

So, what is going to happen? At some point, the global view will need to be restored. For this, the regulators might wake up and realize the cost that their parochialism is extracting (fat chance?). One other possibility is if enough organizations from an industry actually decide to move out of a country that becomes too heavily regulated threatening a paucity of services (not nice, but has happened before). Not sure what the action will be, but I am convinced that the globalization train will get over this bump.

Sure, 9-to-whatevers, feel free to call me an optimist…