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Category: International Affairs Page 1 of 11

Strategic Partnerships & Globalization: Causal Relationships

In the past couple decades, inter-firm cooperation has become an important mechanism of business development, market access, and technology transfer. The private sector has increasingly used various kinds of cooperative agreements – “strategic partnerships” – such as joint ventures, technology exchange agreements, co-production, and joint research and development. These partnerships have created mutual dependence and shared decision-making among multiple independent parties in the private sector – transcending borders. The growth of strategic partnerships has created an expectation of accelerated growth in developing countries through easier and faster access to markets, technologies, and learning opportunities. To that point: do strategic partnerships drive globalization, or does globalization promote strategic partnerships?

The question is like that of the “chicken and the egg,” and does not have a clear answer with one acting as the definitive catalyst. Instead, both globalization and strategic partnerships build off each other, cyclically influencing and reinforcing the other.

The rise of globalization has been an important development in the international economic environment that serves as a foundation for the rise of business strategic partnerships. Through the process of globalization, transnational companies have pushed into new product and geographical markets. As they do so, they seek out partnerships with firms in the local economy to leverage their infrastructure, market penetration, or favorable business, regulatory, and legal environments. Increasing international competition and faster pace of technological advance because of globalization has limited firms’ ability to be self-sufficient in everything. As such, companies specialize in a core competency and outsource everything else – such as research and development or specific products – to other firms. Moreover, firms invest capital in firms abroad and create financial partnerships to capture stake in new and emerging markets and products. This is, in part, a result of economic liberalization in developing countries that has come about through evolutions in the geopolitical environment and the increasing financial interconnectedness of the international order.

Globalization is thus a driving influence behind strategic partnerships, as the economic circumstances that globalization creates incentivizes companies to seek out ways to increase their market share, minimize costs, and focus on core competencies. It is easier for transnational firms to establish partnerships than to penetrate and dominate new markets alone, considering the costs and risks that are involved. In the increasingly globalized world, no company can successfully “go it alone” as it deals across borders.

However, as noted, strategic partnerships also abet and speed up the process of globalization. Through a strategic partnership, the developing firm or country that is a partner with a more advanced or capable firm learns new methods of production, management, or technology. Moreover, the developing firm’s market power and capabilities are strengthened through foreign investment. This feeds into the process of “convergence” between developed and developing countries, as strategic partnerships assist developing countries in establishing competitive indigenous industries. As countries “catch up,” they increasingly participate in the global economic and financial marketplace, strengthening the ties between countries that serve as the foundation of globalization. Likewise, as developing countries seek more foreign investment, they continue to liberalize their economies or seek to establish business and regulatory regimes that are favorable for foreign entities; again, an element of globalization.

Moreover, strategic partnerships necessarily entail “partnership” – the establishment of relationships, networks, and lines of communication between firms, their people, and their cultures. Formal and informal partnering through networks and clusters is again a way for knowledge to disseminate to industries in less advanced markets and economies. The process of learning about new people, new companies, and new cultures – be them political, regulatory, social, or business; all important for companies to understand – absolutely underpins the interconnectedness that defines globalization. Simply partnering and cooperating across borders drives countries, companies, and people across the world closer together.

Thus, as argued, strategic partnerships and globalization feed off each other. As the world continues to globalize, and as it becomes increasingly difficult for firms to maintain market dominance along against a multipolar S&E environment, international technological competition, and rising costs, they will seek out strategic partnerships abroad. Meanwhile, these strategic partnerships disseminate business practices, technology and innovation, and strengthen local economies. This in turn contributes to the factors which led to the strategic partnership in the first place. One does not necessarily come before the other, nor is one a more important element in the push-pull relationship between globalization and strategic partnerships.

The Evolving Global S&E “Landscape”

The global science and engineering (S&E) “landscape” has experienced major shifts and evolution over time; the effect of different growth rates in S&E investment and different areas of S&E concentration across the globe has led to: the “catching up” in particular indicators of S&E activity in parts of the developing world, and S&E specialization in developed nations. As a result, a “multipolar world” for S&E has emerged after decades of preeminence by the developed world. S&E capabilities, until recently located mainly in the United States, Western Europe, and Japan, have spread to the developing world, notably to China and other Asian economies that are heavily investing to build their science and technology capabilities.

Multiple models and theories exist for this evolution, constituting the “convergence hypothesis.” Some countries appear to be converging with the leading economies, while others appear to be diverging with them. So long as trailing economies have much to learn from a leading economy’s performance, they will continue to catch up and approach the leader’s performance. However, as the distance between these economies narrows, the amount of unabsorbed knowledge and new technique to be applied begins to diminish, or even exhaust. The catch-up process begins to weaken or terminates unless some unrelated influence comes into play.

However, there are countries that are so far behind the leading economy that it is impractical to profit substantially from emulating the leading economy’s factors of productivity or absorbing their technology. They therefore fall behind, widening the gap between their economic performance even further. Some argue that a country’s ability to converge is a function of capital accumulation, technological innovation, and entrepreneurship which borrows ideas from abroad and adapts them to local circumstances. Others, however, highlight the important role of effective institutions, including incentives and markets, in determining which countries can economically and technologically converge with more advanced economies.

Looking at resources such as the OECD Science, Technology, and Industry Scoreboard; the UNCTAD World Investment Report; and the National Science Board’s Science and Engineering Indicators; the convergence and divergence of the global S&E landscape can be seen in R&D investment, research output, and global investment across sectors.

All three conclude that developing countries, particularly China, are experiencing robust growth trends compared to the United States and the rest of the developed economies of the world.

Over the last decade, almost all OECD countries saw increases in R&D investment and expenditure. There is also substantial heterogeneity in the share of “research” compared to “experimental development.” However, global R&D performance continues to remain concentrated in three geographic regions: North America, Europe, and the regions of East/Southeast and South Asia. North America accounted for 28% of worldwide R&D performance in 2015; Europe, including the European Union (EU) accounted for 22%; the combination of the regions of East/Southeast and South Asia (including China, Japan, South Korea, India, and Taiwan) accounted for 40%. The remaining 10% of global R&D comes from the regions of the Middle East, South America, Central Asia, Australia and Oceania, Africa, and Central America and the Caribbean.

In terms of research output, the United States, the EU, and the developed world produce the majority of refereed S&E publications. However, similar to the trends for R&D spending, S&E research output in recent years has grown more rapidly in China and other developing countries when compared with the output of the United States and other developed countries. China’s S&E publication output rose nearly fivefold since 2003. As such, China’s output, in terms of absolute quantity, is now comparable to that of the United States. Research output has also grown rapidly in other developing countries—particularly, Brazil and India.

Finally, looking at global investment, developing economies as a group are expected to gain about 10% of global foreign investment. This includes a sizeable increase in developing Asia, where an improved outlook in major economies is likely to boost investor confidence. Foreign investment into Africa is also expected to increase, with a modest projected rise in oil prices and advances in regional integration. Flows to transition economies are likely to recover further after their economies bottomed out in 2016. Flows to developed economies are expected to hold steady in 2017. In the last year, flows to transition economies almost doubled, to $68 billion, following two years of steep decline – reflecting large privatization deals and increased investment in mining exploration activities.

As can be seen by the statistics and metrics above, the developing world is largely converging with developed economies, and certain developing countries are rapidly increasing their research investments and research output. However, certain regions of the world, particularly those characterized by strong developed economies, continue to lead in research and development. Nonetheless, the rise of developing and transitioning economies in the ranks of research investment, research output, and as locations of investment indicates that the world is becoming “multipolar” for S&E as opposed to as it was traditionally, where a small subset of countries by far dominated the global science and engineering landscape.

In the Wake of the Paris Attacks, a Dangerous (and Flawed) Xenophobia

The terrorist attacks in Paris on November 13th, which left more than a hundred dead and hundreds more wounded, were acts of horrible brutality, an affront to all humanity. In the wake of this horrific tragedy, the world rightly stands in mourning for and in solidarity with the people of France. Moments such as this serve as wake-up calls to those whose lives are rarely punctuated by violence and fear at such a scale: the world is, at times, a dangerous and hostile place. For reasons of ideology, religious extremism, or pure sociopathy, there are individuals and groups – the Islamic State, which has claimed responsibility for the attack, among them – who prey on the innocent to further their twisted agenda. To call the Islamic State evil incarnate, a spot of darkness in an otherwise usually bright time, would be appropriate. Its members think, feel, and, clearly, conduct themselves in ways that elicit justified shock and revulsion among those in the civilized world.

Parisians come out in mourning following the attacks. Photo credit: David Ramos/Getty Images

Parisians come out in mourning following the attacks. Photo credit: David Ramos/Getty Images

Yet not only do groups such as the Islamic State prey on innocent targets, they thrive off the fear their attacks create. Lacking an attractive ideology or a sound religious and institutional foundation, these groups use fear as their source of legitimacy and, in turn, strength. And, among all the emotions brought out by the attacks in Paris, fear has been by far the most pervasive and powerful. Fear is what has shuttered the city of Paris in the days following the attack. Fear is what has prompted increase measures of security, scrutiny, and policing. Fear is what has pushed the world’s leaders to, more powerfully over the past few days than ever before, exert greater force and tenacity in combating the Islamic State. Such, of course, is an entirely natural, entirely human, entirely reasonable, and entirely expected reaction. These attacks are aptly labelled as “terror,” and their capacity to terrorize will likely never diminish. In light of that, what matters most is how the victims of the attack, and the world at large, express and use their fear.

A European reporter tripping a fleeing refugee... a reflection of the growing xenophobia in Europe. Source: The Guardian.

A European reporter tripping a fleeing refugee… a reflection of the growing xenophobia in Europe. Source: The Guardian.

Unfortunately, fear can, and often does, manifest itself in the worst possible ways – racism, xenophobia, suspicion, and hate. And, tragically, these currents have tinged the rhetoric and discourse emerging out of the carnage in Paris. An ideological shifting toward the far Right and its associated xenophobic ideals, already well underway in refugee-laden Europe, has been exacerbated by the attacks. Leaders across Europe have been calling for the stymieing of refugee flows, not out of economic concerns as before but out of a lingering suspicion that Muslim refugees could be ISIS terrorists in disguise. Governors and presidential candidates in the United States have come out in opposition to proposals for settling Syrian refugees for similar reasons, proposing instead that the United States only accept vetted “Christian” refugees. Clearly, across the Western world, an underlying Islamophobia, borne from the similar September 11th attacks in 2001, has been aggravated yet again – as seen in hateful discourse laden across social media and growing attacks and prejudices issued against Muslim populations.

Of course, despite the rhetoric of anti-refugee arguments, reality does not neatly correspond with the narratives of those who present them. Only a minority of the refugees fleeing Syria and entering Europe are young males, the typical and perceived perpetrators of such terrorist attacks. The Paris attacks, according to present information, were perpetrated by radicalized individuals of European birth, not fleeing Syrians. In the United States, the process for applying for resettlement can take up to 24 months for Syrians, due in part to extensive background checks and enormous paperwork requirements – a process very likely to root out troublesome individuals. Even then, state governors do not have the ability to supersede Federal resettlement programs, even despite their statements “closing off” state borders to refugees. Their anti-refugee espousal is not rooted in tangible policy, but rather only serves an incendiary rhetorical purpose.

What ever happened to the iconic quote emblazoned upon the Statue of Liberty, a symbol of the values the United States and modern-day France hold dearest? “Give me your tired, your poor, your huddled masses yearning to breathe free,” it reads. It is a quote derived from inherent compassion, from a simple humanistic outlook. It is, amidst the fear which has now gripped the world, a quote at risk of being lost, along with the ideals which frame it.

At its core, this growing xenophobia toward Muslim refugees for reason of their faith and their flight stems from a dearth of empathy. To be fair, this does not inherently or necessarily stem from a lack of compassion. Those who malign refugees, who suspect those fleeing to be possible terrorists, are doubtlessly compassionate individuals toward their friends, family, and loved ones. Instead, this xenophobia likely comes from mere ignorance, either willful or otherwise, of the circumstances of our time. It is a classic example of the philosophical and psychological concept of “Otherness,” of the “Other,” of the challenge we have as individuals to understand and compassionately sympathize, if not empathize, with those whose lives and plights are so far removed from our own. For those who have never met a Syrian refugee, who may not even have had sustained relations with a member of the Islamic faith, yet who are consistently exposed to acts of terror carried out in the name of Islam, there is an understandable conflation of Islam with terrorism.

Of course, not only is this a dangerous conflation, for reasons that will be discussed, it is an entirely flawed one. The simple reality is such: the vast, overwhelming majority of Muslim refugees pouring into the Western world are, as the classification of “refugee” entails, fleeing the very same barbarism that befell Paris on November 13th. These are people who are fleeing their homes and homeland for fear of their lives, a most powerful force indeed. This is the reality lost on those who hope to refuse entry to Muslim refugees. They fear that they may be “terrorists in disguise” because of events such as the Paris attacks, yet they fail to acknowledge the fact that the vast majority of victims of the Islamic State’s brutality, the vast majority of those who have suffered at the hand of Islamic extremism, the vast majority of those whose lives have been up-ended in terror and fear, are Middle Eastern Muslims. The very ones who the far Right now claim to be nascent extremists are those who have been victimized by extremism.

A commentary on the reaction to the Paris attacks. Source: The Washington Post

A commentary on the reaction to the Paris attacks. Source: The Washington Post

Perhaps because it was lost on the Western media and its constituents in the midst of the Paris attacks, the growing chorus of anti-refugee individuals, and even well-meaning Westerners, failed to acknowledge the broader scope and scale of attacks occurring simultaneously across the world. In the days leading up to the Paris attacks, bombings and attacks in Beirut, Baghdad, and Kenya killed as many people as in France, though the predominance of the victims were Muslims. The narrative of the Western media, however, honed in on the events of Paris, relegating these other attacks. And, as a result, the emerging narrative reflected a skewed perception: the West, and specifically the West, is under assault by radical Islam, by Muslims. From this narrative, it is easy to see how an xenophobic notion that the Muslim community at large, and its refugee population, poses a threat. If the attack in Paris was an isolated event, disconnected from the broader context of global happenings, perhaps this narrative would be lent credibility. Yet it was not; indeed, the attack in Paris was intimately connected to the violence of terrorism and the currents of extremism engulfing the world, in particular the Middle East.

Herein lies the danger of the implicit and explicit conflation of refugees and Islam with terrorism. Though clearly not the intended consequence of those who espouse xenophobic and Islamophobic rhetoric, who do so to win the support of their fearful constituencies, such rhetoric abets the narrative of the Islamic State. Indeed, the West’s fear, manifested in suspicion and hate, is precisely what the Islamic State had hoped to achieve with its attacks. Facing threats to their lives at home, yet equally facing a hostile and suspicious West refusing to take them in, the refugee population is ever more susceptible to reactionary radicalization and hatred. Such is an entirely understandable and entirely human reaction: suspicion begets suspicion, hatred begets hatred. For those turned back by the West to a land of terror, a lasting scar has been wrought. It is a scar which tarnishes the compassionate image of the West, an image which set the West apart from the barbarism and backwardness of the Islamic State. Having turned its back to those who most pressingly need its help, the West is losing a war of hearts and minds, a war which is decidedly a part of the broader conflict we experience today.

There is a quote, powerfully spoken by Martin Luther King Jr., which goes as such: “Darkness cannot drive out darkness; only light can do that. Hate cannot drive out hate; only love can do that.” In these troubling times, this sentiment cannot be understated. The world faces the hatred of an extreme and radicalized group, a group bent on inflicting as much harm to innocents as possible. It is a group whose ideology is framed on hatred, which survives off hatred, which seeks and serves to breed hatred. An environment of hatred, of suspicion, of xenophobia and Islamophobia, is the very environment in which groups such as the Islamic State are incubated and thrive. The proper response, the humane response, to groups such as the Islamic State is not that of hatred. It is that of compassion, compassion toward those who have been brutalized by their attacks, compassion toward those fleeing their barbarity, compassion toward those who suffer through their rule. The proper response is not suspicion toward fleeing refugees, but compassion toward them – an open-armed welcoming, a demonstration of the goodness in humanity which persists even through times of darkness such as these.

The Islamic State will not go away any time soon. Attacks will likely continue; the hateful ideology of the radicalized is bound, likely, to persist. In light of this, we are faced with a true challenge. It is not an insurmountable challenge, to be sure, yet one which will touch on the very core of who we are and the values we hold. We cannot be deterred, in times of trouble while facing those who wish to do us harm, from holding true to our humanistic values. We cannot risk being swayed, in these times of trouble, from the very values which form the foundation of our societies, which solely set us apart from the barbarism of the Islamic State.

“Give me your tired, your poor, your huddled masses yearning to breathe free,” the Statue of Liberty reads. It is a quote that resonates with the very fabric of our humane society. It is a quote that encompasses the value of love, a love that can drive out hate. Despite our fear, we should not, indeed cannot, stray from it.

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