Globalisation and networked economy: A virtuous cycle

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Wim Elfrink, Executive Vice President, Cisco Services & Chief Globalization Officer, Cisco Systems, Inc.

Nayan Chanda, in his recent book Bound Together: How Traders, Preachers, Adventurers, and Warriors Shaped Globalisation asserts that while the word globalisation is of recent origin, the process of growing interconnectedness built on trade, travel, cultural diffusion, and conquests harks back to the beginning of history. All that is new is the ease and speed of the connections that drive economic evolution.

An analysis of technological diffusion in the developing world, as per the World Bank's report Global Economic Prospects 2008, shows that technology is spreading to emerging markets faster than it has ever done anywhere. The middle-class sectors in the emerging markets are growing quickly, indicative of stable societies, increased focus on education, and better standards of living. According to the Economist Intelligence Unit, this is the first time in modern history that the gross domestic product (GDP) of emerging economies exceeds that of developed economies, such as the United States, Japan, and Germany. This means that the rich nations no longer dominate global production, representing the biggest shift in economic strength since the rise of the United States over 100 years ago.

Countries recognize the strong correlation between technology and global competitiveness. According to The Global Information Technology Report from the World Economic Forum, there is an 89% correlation between a country's Information and Communications Technology (ICT) usage and its global competitiveness. Technology of this nature could well account for a sizeable portion of the productivity growth in modern economies. As per a recent report from global research firm IDC, IT spending in India is set to grow the fastest in the world in 2008. And as the information & communications technology market in Asia-Pacific reaches $154 billion in 2008, IDC further says that India and China will contribute half the total IT spend by next year. Thus, over the next three years, the Indian market will nearly triple in size, becoming a US$71bn market by 2012.

Today, large parts of the world are undergoing a substantive phase of transformation as they grow their economies, improve government efficiency through increased productivity and connectivity, augment interactions across borders, and educate their populations. While the computing revolution helped digitise information enabling it to be easily managed, the wireless-communications revolution today is allowing digital information to be made available anywhere and anytime. The intersection of globalisation and technology is driving innovation across the world; a good example of such innovation being the cell phone, having evolved from a simple phone into a wallet, entertainment gadget, health monitor, and navigation device.

Countries like India and China are undergoing a transition from measured growth and limited connectivity to hyper-growth often leapfrogging technology to surpass even the developed world. With about eight million new cell phone connections being added each month, India has been able to skip fixed-line technology and move straight to mobile technology.

Each era of technological advancement since the Industrial Revolution-from steam engines and railways to steel and electricity, and oil and automobiles-has enabled businesses to expand their commerce and production globally. Today's innovators, however, are using ICT to completely rethink how they use information, and they are designing new business models and new capabilities that integrate dispersed partners and coworkers who network closely with each other daily.

As the information technology revolution sweeps through the emerging economies, driven by globalisation, it is spurring innovation and allowing the creation of unexpected and disruptive business models. Indeed, the network has emerged as the fourth utility allowing economies to be connected beyond roads, ports, and airports. Given that most of the emerging economies do not currently have extensive telecommunications infrastructures, the network gives them an opportunity to technologically leapfrog other countries and become more competitive in the global economy. Emerging countries are further inspired to invest in infrastructure as many face growing numbers of young people entering the workforce. Without comparable economic opportunities, the potential of this generation could be lost to these nations.

To serve such dynamic and rapidly developing markets companies should take a holistic approach through solutions for the governments, service providers, enterprises of all sizes, and individuals. In any given economy, these four stakeholders interact regularly, thus exerting critical influence on each other. Though each group has unique needs, each must be assigned equal weight and approached with the others in mind.

The common holistic framework for addressing these sectors-the unifying force for change-is the IP network. The network platform equalizes all countries and has the potential to give emerging countries a huge advantage.

As globalisation continues to evolve economies through technological transformation, the Internet is likely to change the way the world works, lives, plays, and learns. We believe that one day everyone and everything will be connected and the network will empower nations by driving innovation and creating enormous opportunities for all.

Wim Elfrink

Wim Elfrink
Executive Vice President, Cisco Services & Chief Globalization Officer
Cisco Systems, Inc.


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