By Rameet Kaur

The closing decade of the 20th Century witnessed the beginning of a new phase of globalisation. This was powered, in part, by revolutionary changes in communication and computing technology and, in part, by trade liberalisation. In the New Millennium, greater economic integration, and globalisation-not just of the economy, but of technology, culture, and governance-will bring nations and people closer. But can we look forward to a period of unrivalled prosperity for all nations? And, for a developing country like India, will the New World Order bring real benefits?

Globalisation has 2 broad meanings: internationalism, which refers to the growing inter-dependence between national markets for goods, services, and factors, a result of trade liberalisation, and integrated international production activities and strategies of transnationals. Increasingly, transnationals are dominating global markets: for products, capital, investment, and even labour. In recent years, a spate of cross-border M&As have facilitated the emergence of the megacorp. This has lead to capital becoming more concentrated globally, to the extent that transnationals exceed some countries in terms of economic power.

In the 21st Century, the importance of transnational enterprises will continue to increase as they are a major conduit of globalisation. Large, consolidated companies will be the order of the day, and will enable the optimal allocation of resources. Low-wage economies will specialise in labour-intensive tasks while high-wage ones will use workers more productively. With the continuing trend towards the opening up of the financial markets, capital will be directed towards the most productive investment opportunities irrespective of their location.

These global companies will reap economies of scale not only in production, but also in marketing and brand-building. Vertical integration with suppliers and customers across national borders will become indispensable for companies in an integrated world. However, national governments will need to maintain a constant vigil to ensure that these megacorps do not exploit their economic power. Regulation will need to be focused, and laws of competition will have to be rigorous and clear. In the New Millennium, the State will have to restrict its role to creating an environment in which domestic companies can benefit from globalisation.

Today, the world is a more prosperous place, with average per capita incomes having more than tripled even as global GDP increased 10-fold, from $3 trillion to $30 trillion, over the last 50 years. This trend will continue: countries will benefit from increasing trade and higher world production. Combined with decelerating population growth rates, this will lead to improved standards of living for a larger populace.

This vision of one world in the 21st Century is not just Dorothy's dotty dream, but is based on a global ideological shift towards greater openness that began in the last decade of the previous century. Even as far back as 1991, for instance, 35 countries introduced changes in 82 regulatory regimes, 80 of which sought to liberalise or promote trade and foreign direct investment. This spirit of liberalisation also extends to the political arena. Most states are now independent, and more than 54 per cent of the world's people-up from 35 per cent in 1980-live in pluralist democratic regimes.

In the last few decades of the previous century, countries in Eastern Europe and the CIS began the painful transition from centrally-planned economic systems to market democracies. This period of transition witnessed many setbacks-notably, the Asian economic crisis and the collapse of post-communist transition in Russia-and it is testimony to the increasing commitment to globalisation that no developing country has closed its doors to the outside world. Indeed, there has been a growing consensus in favour of an overhaul of the institutions on which global capitalism is based, with developing countries getting a greater say in the proceedings than they have been getting in the past.

The very character of globalisation makes a reversal to trade-protectionism difficult. The world may be far from being genuinely integrated today, but new and developing technology will enable greater integration in the future. The Net has enabled real-time transactions across space and time. But if technological change makes globalisation feasible, trade liberalisation gives it an economic basis. With the establishment of the World Trade Organisation (WTO) in 1995, multilateral agreements now extend to new areas-services such as insurance and banking-and Intellectual Property Rights. Withdrawal from the WTO would not be possible without debilitating consequences for the country in question. No country can afford to do so with impunity.

Global capitalism is the best route to global economic greatness for a developing country like India. In many ways, India is well-equipped to succeed in global markets. It has a pool of highly-educated people, a well-developed judicial system, democratic governance, an established banking industry, and fairly sophisticated and inter-linked financial markets. Knowledge industries will be at the vanguard of global economic opportunity, and India is poised to take advantage of this trend with its corpus of highly-skilled knowledge workers.

To really benefit from globalisation, though, we need to shake off our socialist heritage, and embrace market reforms whole-heartedly. Rent-seeking family businesses must give way to professionally-run world-class companies. Indian companies do not need to fear the large transnationals entering the country; they should, instead, emulate their approach to management. The government must divest its stake in public sector undertakings, and concentrate its efforts on building superior social and physical infrastructure. Globalisation should be viewed as an opportunity-not a threat. In the 21st Century, it is this force that will enable India to shrug off the dubious title of being the world's biggest under-achiever.

Rameet Kaur is post-graduate student at the Delhi School of Economics

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