The Belt and Road Initiative and the Transformation of Globalization
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30 KWARTALNIK NAUK O PRZEDSIĘBIORSTWIE — 2018 / 1 Biliang Hu The Belt and Road Initiative and the Transformation of Globalization Globalization is now facing one of Globalization is the biggest challenges in the history: an Objective Historical Process… British exit from the EU (Brexit), USA’s …and nobody can stop it. Globaliza- quit from the Paris Agreement on cli- tion, broadly speaking, is a kind of phe- mate change, USA also quitted from nomenon of global integration of many TPP agreement as well as from UN- different things, including trade, invest- ESCO. People start worry about the ment, people’s mobility etc. [Kolodko, next moves of globalization. Therefore, 2001]. It should also include the dialogue we need to discuss the future of glo- among different cultures and civiliza- balization seriously. tions, exchange of knowledge and so on [Stiglitz, 2006]. Clearly, economic glo- Clearly, globalization brought very balization is one of the very important positive impact on economic, social, po- areas, which means the tightened integra- litical and cultural developments for all tion among countries by increasing the the countries including the developed as flow of goods, services, capital and labor. well as developing economies. However, globalization also brought some nega- My personal understanding is that tive effects, such as the income disparity the essence of globalization is the process among different groups of people and dif- in which global connectivity and global ferent countries. It has been continually contact continue to expand (breadth) and enlarging, not narrowing down in the deepen (depth). From the ideal point of process of globalization. view, global integration will eventually be How to deal with the continual glo- presented. In other words, the intercon- balization? Of course there are different nection among countries, companies, and ways. We have been seeing the rising of people will continue to be strengthened, the nationalism, the protectionism in with higher degree of scope and depth. some of the countries, we have been see- Such process, I think, is the essence of ing withdraws of some countries from globalization. From this point of view, the global governance institutions. At the the emergence and development of the same time, we find that China has been European Union is in line with the basic making great efforts not only pushing for- developmental direction of globalization. ward the continual globalization but also From the coordinated usage of resources trying to transfer the old style globaliza- (coal, steel, etc.), security and defense, and tion to the new style globalization which commodity market to the integrated la- is what I called the transformation of glo- bor market, capital market, even to single balization in the new era through the Belt currency (Euro), EU is on its way to be- and Road Initiative. come a unity with wider scale and higher Na marginesie 31 degree of depth, so the general direction doing international businesses, theoreti- should be correct. cally speaking, are also relatively higher. The process of globalization is not a The third motivation comes from new phenomenon, but rather has a long technological advances and innovations, history of development. Some people even particularly the rapid development of think that the ancient Silk Road can be information technology and digital tech- seen as part of the globalization at that nology. These innovations will drive glo- time, which implies that globalization balization to evolve in a higher degree of has a history of more than two thousand depth because of the constant innovation years. and improvement of information, digital Once the globalization is launched, its technology and other technologies will momentum is irreversible. There are three continue to cut costs. main motivations. The first is that because The emergence of the Internet is a of different geographical location each revolutionary innovation. Internet has country has its different resource endow- reduced the transaction costs down to al- ments, thus its comparative advantage is most zero for all people at a certain level, not the same. For example, Saudi Arabia and it provides public platform and public is rich in crude oil resources, Russia and goods for all. It is because of the Inter- Kazakhstan produce oil and natural gas, net, a variety of “Internet +” new models Brazil has abundant iron ore resources, appear which provide new jobs and new and France, South Africa, Chile, Aus- profit margins. With further improve- tralia, Argentina and etc. produce good ment of the Internet, coupled with the de- wines of superior quality. China’s reserves velopment of Internet of Things, the digi- of oil, natural gas, iron ore are not much, tal economy will prosper, and as a result, so China needs to import to meet its de- the global production net will be built up mand. Thus, international trade and in- which directly deepens globalization at vestment are unavoidable due to the large the same time. differences in resource endowments ob- It is precisely because of the above jectively, which are beneficial for different three forces together, the breadth and countries. depth of global interconnection will con- tinue to strengthen; even for some special The second important motivation of reasons, for example, the connectivity globalization is the power of the market, was temporarily slowed down and even which is the most fundamental driv- suspended due to the impact of the First ing force. Capital, labor, technology and and Second World War, but afterwards a other economic factors are ultimately to stronger momentum would rebound and seek high returns, which, in the context recover the process. Therefore, globaliza- of globalization, is to seek high returns on tion is an objective process of historical a global scale. Driven by interests factors development, and its momentum and such as capital, labor, and technology will trend cannot be stopped. flow to countries or regions where returns on investment are higher, through trade, Dividends and Drawbacks foreign direct investment, or through of Globalization mergers and acquisitions. Because re- Globalization is an objective, fairly source endowment gap among countries long historical development process that is usually larger than that of domestic re- reflects the basic trend of human deve- gions, the comparative advantage is also lopment, which means that globaliza- relatively larger, thus the benefits from tion represents the positive side of human 32 KWARTALNIK NAUK O PRZEDSIĘBIORSTWIE — 2018 / 1 development. But this process has also tries have the chances to study or work in been criticized by many, and even politi- developed countries and so on. cians have adopted hardline attitude and Based on the empirical data, we find policy of anti-globalization. Therefore, we that Foreign Direct Investment (FDI) has should give globalization a fair and objec- shown the fastest growth due to globaliza- tive evaluation in order to better play its tion. Taking the last three decades of the advantages and limit its negative impact, twentieth century as an example, in 1970s, so as to promote sustainable and healthy apart from individual years, the nominal development of globalization. growth rate of FDI was about 30%, and the 1980s and 1990s not only continued On the positive side, the theoretical such growth, but the nominal growth rate analysis shows that globalization is of para- grew more than 30% in many years. The mount importance to economic growth growth rate of the first decade since enter- in general [Barro, Sala-i-Martin, 1995; ing the 21st century was also high, except Sachs, Warner, 1995; Greenaway et al., for the two years that had been seriously 1998; Vamvakidis, 1998; Frankel, Romer, affected by the international financial cri- 1999], especially for the rapid develop- sis. The nominal growth rate of interna- ment of developing countries [Dollar, tional trade, despite the fact that FDI had 1992]. The main reason is that globaliza- grown much more, was relatively stable at tion continues to reduce costs, especially a level of nearly 8% (real growth rate was based on the development of Internet about 5%).The growth of international and digital technology, which greatly ac- investment and trade has contributed di- celerates the dissemination of knowledge rectly to economic growth. In the past 40 and ideas among different countries, thus years – expect for special occasions – the bringing industries to expand among nominal growth rate of the global econo- countries. As a result, industrialization my has been stable at more than 6% (real becomes a common phenomenon, and growth rate was about 3%). economic structure and income in differ- ent countries show the clear trend of con- As for the impact of globalization the vergence. basic understanding is shared by most, In addition to the impact of globaliza- that globalization has greatly contributed tion on economic growth, many have also to global investment, trade, and economic studied the impact on the overall quality growth. Both developed and developing of life of developing countries and they countries are the beneficiaries of globali- generally believe that globalization has a zation. Developing countries has gained great significance in promoting the qual- relatively rapid growth, and in the process ity of human development, especially in global poverty can be greatly alleviated reducing poverty [Bourguignin, 2004; and reduced. China, for example, in the Neutel, Heshmati, 2006; Rodrik, 2002; early days of its reform and opening up, Nissanke, Thorbecke, 2008]. J. Stiglitz’s was basically in the general state of pover- study [2006] also shows that the results ty. After nearly 40 years of development, of globalization will greatly improve the China’s population under poverty line standard of living for all the people of was reduced by more than 700 million, the world, especially for the people of the and the country will get rid of extremely poor countries, because they gain more poverty by 2020.