Posts Tagged ‘Globalisation’
In dog eat dog world, we need to keep up with global mega cities, not Australia or where ever
It’s not countries pulling Kiwis away from New Zealand, it’s cities.
While we say friends and family have ‘gone to Australia’, what’s really happened is that they’ve gone to Melbourne, Sydney or Brisbane.
When we did our OE, we went to London not England.
This pulling power of cities is becoming even more irresistible (according to the UN “unstoppable”) as they suck up more and more of national economies and wealth.
A UK Guardian story on a UN report says the world’s largest 40 mega-regions (mega cities that have merged) have less than 18% of the world’s population but account for 66% of all economic activity and about 85% of technological and scientific innovation.
The top 25 cities in the world have more than half of the world’s wealth.
It’s these mega-regions that are now driving wealth, not countries.
They include:
• The Hong Kong-Shenhzen-Guangzhou area, home to about 120 million people
• The Nagoya-Osaka-Kyoto-Kobe area in Japan, expected to grow to 60 million people by 2015.
The bright lights of these mega-regions not only lure our best and brightest, they are also bad news for our small isolated economy.
It’s a dog eat dog world where the little guys gets slowly eaten away unless cities and towns can find ways to grow themselves. Geraldine gets eaten by Timaru; Timaru gets eaten by Christchurch, Christchurch gets eaten by Auckland, Auckland gets eaten by Sydney, Sydney gets eaten by Shanghai…
Economist Paul McCann says the popular perception of globalisation is that it has made the world increasingly flat (which is good for New Zealand).
But he says the pulling power of cities and regions indicates that the world is in fact pretty uneven place.
He says that in many ways what we see as globalisation is in fact ‘global regionalism’.
While the mega-regions grow, improve their productivity, become more wealthy, peripheral regions (that’d be us) produce less, have poorer productivity, lower wages, possess cheaper land…
McCann’s answer to this situation is for us to develop our own heft by increasing our size and scale and reducing transaction costs between New Zealand and Australia (ie snuggle up more to Australia).
His ideas include:
• Increasing the size of the Auckland-Hamilton-Tauranga triangle through increased immigration.
• Breaking up Air New Zealand’s domestic monopoly to reduce airfares to the regions.
• A rapid upgrade of our broadband infrastructure.
• Encouraging outward global investment.
How globalisation ruined my nachos
Once a week around BigCake’s house we have home-made nachos – the dish is a big hit with the kids and I’m pretty partial to them myself, particularly with a beer.
But now my nachos are sh!t.
The essential ingredient (along with lots of cheese) were either big thick CC and Aztec corn chips, made by Bluebird Foods (a subsidiary of Pepsico), which as cut them from supermarket shelves. Bluebird Party corn chips have also gone.
These Kiwi icons have been replaced by thin sad American brand Doritos corn chips.
According to the NZ Herald, Bluebird held blind taste tests in which Doritos proved more popular.
Doritos don’t do it for BigCake, but he’s willing to accept there are more less discerning people out there when it comes to corn chips.
Interestingly the kids already think Doritos are better – before they tasted them.
Anyway BigCake’s issue with Bluebird’s scrunching Aztec and CCs is that these chips made the best nachos because they were big solid hunks of corn (or whatever went into them gluten, flavour enhancers, food acids…).
Doritos are miserable excuses for chips with unhelpful turned up ends and useless for nachos.
Why did Aztec and CC s have to go? Globalisation.
Mostly BigCake supports globalisation – it gave him nachos in the first place – but the Doritos takeover is a (relatively innocuous) example of how consumers can miss out, at least in the short term.
The move for sure would have been about making the most of the power of the globalised Doritos brand – the economies of scale, rationalising production lines, maximising marketing budgets etc rather than Kiwis suddenly deciding they prefer Doritos to CCs.
As a global brand Doritos were probably always going to kill off other corn chips brands in the same stable. The fact that Doritos will be made in NZ doesn’t make any difference.
The plucky little Kiwi brands never stood a show really.
Globalisation helps find the cure for cancer on the way to creating a better and more prosperous world
Alex Tabarrok has given a rousing presentation on globalisation and its benefits.
Tabarrok, an economist who happily draws from politics, science and life for his ideas, says globalisation is producing a healthier, happier and more prosperous world.
But it also presents a challenge: To keep up, you need to invest in education.
“New ideas are driving growth,” he says.
Globalisation gets some bad press, but as Tabarrok sees it big markets solve big problems.
For example, cancer.
Drug research and pharmaceutical company focus, he says is directed towards fixing common diseases because that’s where the financial payoff is.
“It costs the same to produce a new drug whether that new drug treats 100 people, 100,000 people or a million people.
“But the revenues are much greater if the drug treats 1 million people.
“If China and India were as rich as the US is now, the market for cancer drugs would be 8 times larger.
“Demand for these drugs is going to increase and that means increased incentives to develop them…”
Rising oil prices is another example of how it works.
“[Rising oil prices] mean a bigger incentive to invest in energy research and development.
“When oil prices go up, energy patents go up.”
How do you maximise these incentives? Tabarrok suggests two things:
• Globalisation – creating one world market
• Producing more idea creators such as scientists and engineers.
“If the world was as wealthy as the US is now, there would be 5 times as many scientists and engineers worldwide.
“We all benefit when another country gets rich. We should not fear this.”