Monday, November 17, 2008
The short-term economic consequence will be a deep recession, mostly induced by rapid unemployment due to the collapse of the travel and tourism industry. It is only a matter of time before we will see a massive rise in U.S. unemployment, to at least 6 percent.
But globally, there will be unprecedented unification of world opinion. The world will realize that the economic consequences of ideology carried to the extreme are staggering and greater than those for past wars or genocide. It will be suicidal if political leaders do not unite, no matter what form of government (democracy, dictatorship or monarchy) they employ.
While the short-term consequences will result in survival and crisis management, the long-term consequences are likely to be very positive with respect to economy, technology and globalization.
It is very likely that we will experience worldwide recovery and boom by 2003 as spending on defense and security generates economic recovery. For the first time, the United States and the world will set aside debates between monetarists (Freedman) and fiscalists (Keynes) and engage in dual stimulation by both keeping interest rates low and increasing government spending to create jobs, especially by improving infrastructure industries. The consequent economic boom is likely to last for a long period of time similar to the post-war recovery programs. But unlike the cold war and nationalism that dampened the potential of the post war programs and policies, the impact of free trade (WTO) and market-oriented economies will create an extraordinary economic boom. In particular, Mexico and India will benefit enormously as leading trading partners of the United States.
Distributed Work
The primary long-term technology consequence of the tragic event will be a permanent shift toward distributed work in order to avoid the potential threat to centralized work, information and knowledge. Distributed work will imply concurrent activities in multiple locations across countries and geographical clusters rather than simply relocating work to cheaper countries through offshore outsourcing. It will also imply that enterprises will have redundancy and security technologies on the same level as military or public services such as telecommunications. Most technological innovations will be focused on deploying distributed work.
This has enormous consequences for the Indian Software industry. Rather than relying on business process outsourcing or call center relocations in India, and even offshore software development in India, most Indian companies will have to be present globally.
Finally, there will be a permanent realignment of nations and their economies. The evolution of regional trading blocks that began since the 1980s, especially after the formation of the European Union, will speed up. This will result in three trading blocks: the Americas (North and South America); the European Union including Eastern Europe and Russia; and the Asia-Pacific block consisting of the ASEAN, Japan and China.
I believe India will have no choice but to align with the United States economically, politically and militarily. It will also become more visible in the Middle East; and even though it may sound far-fetched, India is also likely to become a trading partner with Pakistan and other neighbors such as Bangladesh and Srilanka. If the Eastern European countries and Russia can think of joining NATO, nothing is as far-fetched as we think in today’s realities.
Dr. Jagdish (Jag) N. Sheth is the Charles H. Kellstadt Professor of Marketing at the Goizueta Business School at Emory University. si
