As we enter the new millennium, we are on the threshold of a new “Global Age”. Under the impact of globalization, more and more national economies are being integrated with the global economy. Markets are becoming global not only for goods but also for many services. World trade is expanding. Developments in financial markets have been most dramatic. It is estimated that an average of $ 500 billion cross the world's foreign exchange markets each day, of which more than 90% are unrelated to trade or investment. There has been a greater global diffusion of technology.

An increasing number of developing countries are removing trade barriers, dismantling capital controls encouraging foreign investment and opening up their economies.

These developments have altered the landscape. Economic boundaries are being redrawn and a borderless world is fast emerging. With the presence of trans-national companies in domestic markets competition is intensified. Thanks to media explosion, there has been a convergence of global consumer preferences for many products and services. Global branding and advertising and cross border buying and selling have become common.

To meet the challenges of global competition large, medium and small companies are entering into strategic alliances with corporate giants to exploit jointly the global markets by offering superior quality products and services. It is increasingly realized that in future only those companies, which have developed products of global standards, will be able to retain their market share and achieve growth and profits.

Globalization is the corporate response to meet the requirements of the fast changing global business environment. This response has been vastly aided by the structural adjustment programmes pursued by both the developing and developed countries. With the growing trend towards liberalization and transformation of more and more regulated or guided economies to market economies, “One World One Market” is no longer a distant dream but is fast becoming a reality.

Globalization of trade, liberalization of the economy and growth of foreign direct investment help corporations to interact globally through joint ventures, mergers and acquisitions to improve the global competitiveness.

Corporations are able to set up multinational network of information, research and production across the border. This in turn enables them to upgrade, absorb, adapt and innovate technologies which are key to global competitiveness. And this leads to greater integration of the national economies with the global economy.

Globalization benefits all economies including the low-income developing countries. As result of integration with the global economy their domestic firms get the opportunity to participate in international production of goods and services and in addition help them to increase their presence in global markets.

While globalization provides new opportunities, it also carries with it large risks.

World Economic Forum's founder, Klaus Schwab, and its Managing Director, Claude Smadja, observe that:

• Economic globalization is causing severe economic dislocation and social instability.

• The technological changes of the past few years have eliminated more jobs than they have created.

• The global competition “that is part and parcel of globalization leads to winner-take-all situations; those who come out on top win big, and the losers lose even bigger.”

• Higher profits no longer mean more job security and better wages. “Globalization tends to de-link the fate of the corporation from the fate of its employees.”

• Unless serious corrective action is taken soon, the backlash could turn into open political revolt that could destabilize the Western democracies.

At the same time, Schwab and Smadja go on to argue that the globalization process is irreversible and that the task for political and economic leaders is to demonstrate “how the new global capitalism can function to the benefit of the majority and not only for the corporate managers and investors” and convince the public that the current economic restructuring “will lead to renewed prosperity.” They suggest a focus “on training and education, on the constant overhauling of telecommunications and transportation infrastructure, on entrepreneurincentive fiscal, policies, [and] on recalibrating social policies” to increase national competitiveness.

Critics are not wanting who believe that the sudden and swift collapse of East Asian capital markets are the result of failure of globalization.

In the mid 90s the East Asian countries were often cited as examples of successful countries who benefited from trade liberalization and export led industrialization and growth policies. Their openness to the world economy, export oriented development strategy, liberalization of foreign trade regimes, adaptability of their labour force, and government commitment to follow coherent policies towards liberalization across different sectors of the economy were cited as major factors contributing to their extraordinary economic performances. It was believed that “Asian miracle” was the shining light whose example would be followed by many other developing countries and that it would greatly contribute to the growth of the world economy.

However, the second half of 1997 shattered these hopes. The East Asian stock markets started collapsing. Currencies crashed. Enterprises failed. The rapid growth turned to recession. There was slow down in exports. And this affected not only other Asian economies but also significantly the world economy. Pessimists were not wanting to say that Asian miracle was a myth and that this may be the beginning of the end of globalization.

There are several lessons to be drawn from the experience of East Asian countries. Firstly, the financial crisis in East Asia has underlined the need for government to make public accurate and timely economic information. It has highlighted the need for sound macroeconomic management along with microeconomic efficiency in regard to the financial system of the country. Secondly, banks must be prevented from building up risky short-term liabilities especially denominated in foreign currency. Thirdly deployment of funds borrowed abroad in loans for consumption or misguided investment in real estate is risky. Fourthly prudential supervision of domestic financial systems, commitment to good governance, and accurate and transparent financial reporting are essential. Last but not least economic policies and programmes have to meet country specific situations if they are to be effectively implemented.

The collapse of East Asian markets only marks the end of an era but not the end of globalization. All the developing countries, whether they are in Asia, Africa or elsewhere, continue to depend on foreign technology and investment. The greatest change in the world economy since the Second World War has been the extent to which it has gone international. Financial markets are becoming international. It is therefore not possible for any nation to live in isolation in a world, which is becoming increasingly integrated.

The World Economy of 2020 will be shaped greatly by technological developments. The rapid technological advances in transport and communication and the emergence of several key industries — microelectronics, biotechnology, telecommunications, robotics and computers would continue to play a major role in integrating the world economy. For example, advances in microelectronics has already accelerated worldwide communication providing the foundation for the emerging global society.

Technology leads to social change and development. Since the eighteenth century a series of technological innovations have transformed agrarian societies into industrial ones. When the telephone, transistor, radio, television and networks are combined with the ongoing technological advances, the world is on the verge of yet another profound transformation. Information technology would cause a major world transformation where knowledge would become power and information wealth.

According to Nicholas Negroponte, one of the world's foremost expert on multimedia,

“Early in the next millennium your right and left cuff links or earrings may communicate with each other by low-orbiting satellites and have more computer power than your present PC. Your telephone won't ring indiscriminately; it will receive, sort, and perhaps respond to your incoming calls like a well-trained English butler. Mass media will be redefined by systems for transmitting and receiving personalized information and entertainment. Schools will change to become more like museums and playgrounds for children to assemble ideas and socialize with other children all over the world. The digital planet will look and feel like the head of a pin.”

Another major force that is going to make the world of 2020 different from that of today is trends in population growth. The population of the world, which is currently 5.8 billion, will reach 8 billion by the year 2020. But almost 95% of the increase in population will take place in the developing countries. Thus there will be overpopulated developing world and underpopulated developed world causing demographic imbalances between richer and poorer countries. Also the developed world will have more aged people. When these changes occur especially at a time when sweeping technological changes take place they are likely to pose several new challenges to the developing countries. Physical resources may become short in supply and the developing countries may be unable to cope with the new problems related to the environmental degradation.

The globalization of financial systems and services has brought in its wake several new challenges to the nation-state. The borderless world implies that Government has less control over its currency and fiscal policies compared to what they had in the yesteryears. In future government may become smaller leaving many of the business functions to corporate sector.

Industrial policies in several countries are already being reshaped. There is a steady shift away from government interventions to protect home industries to conditions aimed at improving economy wide competitiveness.

Restructuring disinvestment and privatisation of public enterprises are gaining greater importance. In the context of developing countries, the Government will have a major role to play to design policies and programmes necessary to take care of those who may be adversely affected because of deregulation and change over to market economy. More especially Government may have to play a key role in evolving appropriate strategies to ensure that the benefits of globalization reach lower and weaker sections of the society and also take steps to eradicate poverty, unemployment, ignorance and squalor.

New vision emerged with the establishment of the World Trade Organization, to bring together trading partners and achieve a multilateral economic framework covering many areas of common concern to the world economy. At the same time the emergence of powerful trade blocs in the international economy, almost a simultaneous development, creates apprehension about the new forms of protectionism.

In July 1997, The European Commission presented AGENDA 2000. It took a historical decision to further strengthen the European Union by opening the doors to central and eastern European countries. This is a large-scale expansion. The first accessions are expected in 2003. The Agenda includes: reform of regional aid, reform of the common agricultural policy, enlargement and financing of the EU for the period 2000–2006.

The European Union is the biggest market in the industrialized world with a population of over 370 million and a world trade share of about 20 per cent.

Similarly the conclusion of North American Free Trade Agreement (NAFTA), and the formation of APEC present major challenges to several developing countries especially in Asia and Africa who have the fear that they might be left out of the world trade development mainstream. Further while the pressure is put on the developing countries for more liberalization and opening up of their economies it is feared that developed countries might use trade as a weapon by their insistence on social clause including labour and environment standards.

There is no doubt that with the growth in population and depletion of natural resources there would be growing emphasis on the environmental issues and challenges in the coming decade. Agenda 21 of the UN Environment and Development held at Rio reflects a consensus on several issues to be tackled for better protected and managed Eco systems and integrated development programmes. Promoting cleaner production, responsible entrepreneurship, a positive contribution of business and industry for sustainable development, increasing research and development of environmentally sound technologies and environmental management systems, ethical management of products and processes and taking measures for bringing about increased environmental awareness among employees are some of the responsibilities which business and industry will have to tackle in the coming years.

While it is true that adoption of environmentally friendly technologies and production processes will in the long run provide opportunities to improve their sales to environmentally conscious consumers, firms in developing countries are going to face several issues and challenges as they have to incur heavy costs at least in the short turn which might affect their competitiveness.

In a global economy, where the economies interpenetrate one another in large part through trade and investment, the foremost requirement is that our Indian business and industry must improve their global competitiveness. They must develop their capacity to compete with the rest of the world on equal terms. They must be forward looking if the competitive challenges are to be met on the export front. Their focus should be on upgradation of technology, strengthening R and D, improving quality standards, customer service and cost effectiveness. Striving for the maintaining competitive position in world markets should become their goal.

The experience of East Asian countries suggests that unless we improve our export performance we cannot sustain economic growth. In this context the slow down in current export growth should be a cause of concern. Export growth decelerated from a rate of 20 per cent in US Dollar terms over the three-year period 1993–96 to 5.3 per cent in 1996–97 and further to 2.6 per cent in 1997–98. Stable exchange rate, size of the current accounts deficit, removal of procedural hurdles, and improving infrastructure facilities are all required for creating an environment conducive for export growth.

Second, there is a need to bridge the knowledge gap. In the next millennium knowledge workers will play a decisive role in determining a firm's competitiveness. More than the physical assets human capital of the company will play a major role. So corporations in future will have to make much higher investment in the selection, training and in developing their personnel with requisite skills as the new knowledge replaces the old.

Third, corporate structure may change radically. In order to ensure faster response to changing demands of global consumers’ corporations will have to make their organizations more flexible and adaptable to suit the varying requirements. With the setting up of information networks and growing number of knowledge workers, organizations will tend to become flatter instead of having traditional hierarchical structure.

Fourth, in future trade, investment and fund flows will be largely influenced by the regional trade blocs. Corporate managers can no longer consider only in terms of nation-states. Their decisions on marketing, manufacturing and investment will have to transcend the national boundaries and their impact on the needs and aspirations of the different trade blocs will have to reckon with.

Fifth, the role of state is changing. The role of the Government is being redefined the world over. The role of state as a prime economic agent and as a producer of goods and services is declining. In a Global economy, the performance of the Government is judged by the way it controls the fiscal deficit, manages its budget, tax administration and facilitates economic growth. A sound economic policy and an efficient and market friendly Government are the two prime requisites to attract foreign investment, which is a much needed driving force for our economic growth. This requires not only improvement in our public sector management but a wholesale reinvention of our Government which is a major challenge to be faced in the coming decades.

It is realized, however, that state's role as a regulator of the financial system and economic services and its role in regard to social obligations will in no way diminish, nor there is going to be a conflict between globalization and the state discharging these obligations. This is very succinctly expressed by the Noble laureate Amartya Sen when he says in the context of India:

“Much more is involved in freeing the Indian economy from the cage in which it has been confined, and many of the relevant tasks call for more - not less - government activity and public action.”

While he agrees with the need to avoid counterproductive role of state in controlling business and industry, he calls for positive government interventionism in regard to fields like basic education, health care, social security, land reform and the promotion of social change.

The challenge is, therefore, how to create an efficient economy which will liberate not only business and industry from rules and regulations that stifle economic growth but at the same time would also strengthen the hands of the Government to discharge its social obligations more effectively and efficiently.

More than ever before the world economy is getting integrated. It is becoming more global. No country can afford to live in isolation. In the twentyfirst century, countries will not be able to succeed just by relying on factor driven competitive advantages like land, capital, natural resources, low cost labour but they will increasingly depend upon entrepreneurial capability, technology, market access, value added exports, skills of knowledge workers and efficient service sector.

It is here that the state has a vital role to play in creating an enabling environment conducive for developing competitive advantage. To succeed in our globalization efforts the state has a key role to play in improving infrastructure facilities — energy, telecommunications, railways, ports, shipping, transport etc., and in modernising the administrative process, in addition to ensuring a sound economic policy and strong commitment to macroeconomic stability.

Indeed as we move through the last decade of this extraordinary century, a century which has witnessed unparalleled destruction and unimaginable progress; the cruellest mass killings in human history and most outstanding breakthroughs in human welfare, the advent of weapons of unprecedented lethality and the creative probing into outerspace, we find ourselves poised at crucial crossroads in the long and tortuous history of the human race on planet Earth.

Today's globalizing economy provides opportunities as well as challenges. Closer linkages and integration of the economies provide opportunities for economic growth, trade development, and for improving living standards of the people. In order to avail the benefits of the global economy we must have the courage to think globally, to break away from the traditional paradigms and plunge boldly into the unknown.

The challenge is to design and implement bold policies with emphasis on effective mobilization of resources, sustained exports, foreign investment economic growth and developing competitive advantage.

The focus should be on human resource development, protection of the environment, social justice and a determination to integrate with the global economy to enter the world of tomorrow where there will be no poverty and misery and the world “where the mind is without fear and the head is held high, and where the world has not been broken into fragments by narrow domestic walls.”