Below is my observation and understanding of the effect of globalisation. Compared to 20 or 30 years ago the world economy has gone through different stages of reform. After ending of the cold war between the formal Soviet Union, Communist China and the Western countries, the economy of the formal rivals are interdependence.
An American multinational company might outsource the production of its goods in China and manufactured using the steel imported from Australia. The goods are later sold to the consumers in Europe. There is free flow of capital, skilled workforce and resources from one country to the others depending on the supply and demand. A Chinese company might buy over a mining company in Australia due to the demand of the resources in China.
I would like to share on my thought why some country will progress whereas other is going backward. The wealth of a country is a contribution from the following:
1.Natural resources like oil, gas, steel, coal, aluminium etc.
2.Skilled workforce like trade person who can maintain machines and professional occupation.
3.Capital. The industry in the country shall have sufficient capital to carry out research and development work and invest in new technology to find a way to reduce cost in order to make the products competitive. For example, automation used in factory to reduce labour work.
4.A stable government.
5.Equal opportunity
I can say the prosperity of the Australian economy is due to all the above mentioned factors especially resources. There is one tiny little country that is proporous since independent from British and Malaysia without any natural resources. The country is Singapore. The country is making full advantage of the other four factors for it to develop to where it is now.
If a country is rich in natural resources, will it be wealthy? The answer is no if the other factors are not developed. The best example is Malaysia. The country is blessed with abundant of natural resources like oil and gas, tin, timber, etc. However the economy of the country is deteriorating year after year.
I will explain the situation of Malaysia from the last factor, equal opportunity. Malaysia is practising discrimination policy which is known as New Economy Policy (NEP) where the Malaysian of Chinese ethnic do not have the same right of the indigenous Malay in education and business opportunity. The intention of New Economy Policy is to redistribute the wealth of the country so that the Malay will also benefited from the development.
The intention of the NEP is good, but the way it is implemented through the government policies has caused the Chinese to lose control of the much bigger companies to the Malay. In addition, the Chinese do not have equal opportunity for further education.
As I explained before that the globalisation has enable capital and skilled workforce to free flow from one country to the others, the Chinese with their capital and skills are leaving Malaysia to other countries like Singapore, Australia, New Zealand, Canada, Britain and America. New capital or foreign direct investment is avoiding Malaysia due to the NEP.
The tricky political situation in Malaysia where politicians siphon the country coffers into their own pocket and the politicians are applying all dirty tricks to keep them in power created a very unstable government. The government delivery system, police, judical system are corrupted beyond operational.
In the factor of capital, the foreign exchange revenue from the export of resources are unfortunately used in non productive way like building white elephant projects. The capital is not used to improve the production technology. Factory are labour intensive. Construction site are labour intensive. Automation and prefabrication technology are not promoted. To reduce the labour, capital is required to acquire new technology or new way of doing things.
The outflow of skilled workforce is happily replenished with heavy in flow of unskilled workforce. This is disaster in the making where the productivity of the economy is competing in the lowest end labour intensive market.
Above are my own opinions and what make me leave Malaysia to settle in Australia. I don't expect my opinions to be accepted by others. But I believe if my opinions are taken into consideration, it will help in reviving the current situation in Malaysia.