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The current world, changes ahead and the creation of spaces to tackle these changes

By Marcelo Elizondo research coordinator on competitiveness - School of Graduate Studies of Instituto Tecnológico de Buenos Aires (ITBA)

Marcelo Elizondo The relations among the countries of the world are built on the basis of forces that sometimes converge into more balance and sometimes into greater disagreement.

At present, we are witnessing tensions among countries. Even though some of these tensions are not related to the economy (such as climate change, redefinition of strategic equilibrium or transnational terrorism), there are many that occur within the framework of economic linkages.

The trade conflict between the United States and China seems to be the most complex crisis ahead. But there are also signs of a less harmonious relationship within the European Union, a weakened intrinsic force in the Mercosur as well as harsh internal disagreements within NAFTA. Nevertheless, some strategic advances worldwide are also evident in China, for example, with its project on the new Silk Road, the signing of the new Trans-Pacific Partnership (TPP) without the United States, or the free trade strategic agreement between the European Union and Japan.

But, in the meantime, it is also true that international trade grew in 2017 as it had never grown before in years.

These are signs of a world where economic linkages among countries do not stop, even though they are now more complex than they were until recently. A relevant aspect to bear in mind is that the world economy and trade among countries continue growing and quite considerably, in fact.

But, in turn, it is also true that technological advances have given renewed support to the forces of private organizations (which either produce, or trade in, goods and services), and these private forces challenge and even outperform the political operating capacity of the states (an article published in a World Bank blog compares “the 100 largest economies of the world”, and it states that when considering the revenue of the countries’ public sectors and the revenue of companies –on the basis of their turnover– it turns out that today 70 of the largest economies are companies and only 30 are countries). Added to this, the common competencies now shared by emerging and developed countries alike and the possibility opened by productive delocalization (multinational companies may now transfer their stringent standards, practices, methods and operations wherever they want) have given rise to a situation where those in developed countries which could compete in the past and keep costly systems of public benefits now feel the pressure of those in emerging markets who threaten and defy them with more flexibilities.

In addition, the value creation matrix has changed all over the world. The Asian businessman Stan Sheh states (in what he calls the “smiling curve”) that, in the production chains of the 21st century, value is created preeminently at the beginning (design, invention, innovation, intellectual property) or at the end (marketing, trading, distribution –which are now increasingly electronic). This means that the great value factor of the 20th century, i.e. physical manufacturing operations, was pushed to a position of lesser relevance, disrupting the relationships within international value chains which account for 80% of global trade (world trade is equivalent to 30% of the world GDP).

On the other hand, services are increasingly more relevant, people migrate as never before and knowledge is global. As a result, the capabilities of countries to face supranational phenomena (which impact more on daily life than local phenomena) are lesser. This context compels countries to face the challenge of redefining politics, and they usually follow two paths: they either react by defending their position and therefore they repeat tensions, or they try to keep the status quo and adjust to it. The world is facing the end of a period of equilibrium and we are now witnessing a transition characterized by imbalances that will probably lead to a new scenario of emerging equilibrium still unknown to us.

photo the current world-min compressed

All of this puts human resources trainers (and especially universities) at the critical core of the system. As Klaus Schwab has stated, we are no longer living in the age of capitalism but of “talentism”, where training people, generating knowledge, developing new skills and building up virtues aim at strengthening the main link. And this is achieved by helping companies develop competitive attributes: designing correct strategies; attaining regular and systemic architectures for connection with partners and allies that may be useful and permanent; incorporating knowledge, differentiation and innovation to production and trading; creating reputational instruments that may allow them to compete sustainably; and developing the ability to manage ever-changing and complex environments.

This is why priority must be given to the consolidation of spaces for countries to discuss and come to an agreement. And not just for the political environment in itself but also for companies, universities and other creators of knowledge and information, NGOs and even spontaneous groups.

 

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