Breaking into international markets encourages a very interesting but controversial process of globalization. Nowadays we can hear many discussions whether forming a global market will have a favourable impact on the economies of particular countries or will damage them.
As I was interested in that problem I made a decision to choose the talk with Alex Tabarrok for my next review. In the video Mr.Tabarrok argues free trade and globalization are shaping our once-divided world into a community of idea-sharing more healthy, happy and prosperous than anyone's predictions.
According to the speaker's opinion, the main reason to support globalization is knowledge and ideas sharing.
At the beginning of his speech Alex reminds us of the famous words of Thomas Jefferson:
He who receives an idea from me, recieves instruction himself without lessening mine; as he who lights his candle at mine, recieves light without darkening me.
This idea goes through the whole Alex's speech. From his point of view, the greater function of ideas is going to drive growth even more than ever before. This provides a reason why trade and globalization are even more important and powerful nowadays. Mr.Tabarok explains what he means by giving an example:
Let's compare two diseases. One is common and the other one is rare. If they are not treated they are equally severe. However, there are more drugs to treat common diseases, rather than rare ones. This happens because of incentives. It costs about the same to produce a new drug whether this drug treats a 1.000 people or a 1.000.000. But the revenue is much greater if the drug treats a million people. That's why the incentives are larger to produce drugs which treat more people.
Alex Tabarok puts it differently: Larger markets save lives. He believes that if China and India were as rich as the USA is today the market for cancer drugs would be eight times larger than it is now.
Moreover, as other countries become richer, the demand for these pharmaceuticals is going to increase tremendiously and that means an increase incentive to do research and development which benefits everyone in the world.
Larger markets increase the incentive to produce all kinds of ideas: not only pharmaceuticals but software, computer chips, or, even new designs.
It can explain why action movies have larger budgets than comedies: action movies are easier translated into other languages and cultures. So the market for those movies is larger: people are willing to invest more and budgets are larger.
'If larger markets increase the incentive to produce the ideas how do we maximise the incentive?' - asks Alex Tabarok. That's when idea of having one world market and globalyzing the world could be helpful.
One idea, one world, one market.
Anothere advantage of globalization Alex reminds us of is spreading of 'idea creators'. Today less than 0.1% of the world's population are scientists and engineers. The US has been an idea leader because a large fraction of those people live in the US. However, the United States is loosing its idea leadership, that seems to Alex to be a good thing, because for too long the US and a handful of other developed countries have shouldered a burden of research and development.
'The real strategy of the last century is this: If you think about world's population as a giant computer, a massively parallel processor, then a great strategy has been that billions of our processors have been put off line', - Alex mentions. ' But in this century China is coming on line, India is coming on line, Africa is coming on line.'
'We shouldn't fear other countries becoming wealthy. That's something we should embrace: a wealthy China, a wealthy India, a wealthy Africa. We need a greater demand for ideas those larger markets I was talking about earlier and the greater supply of ideas for the world.' - Alex resumes.
Alex Tabarok finishes his speech with a conclusion that Thomas Jefferson didn't count one important thing in his words: when they light their candles at ours there is twice as much light available for everyone.
It took me 4 times to watch the video before writing this report. Firstly, I understood the key ideas of Alex Tabarok. Then I wrote the main points (during the second and third watching) and finally I checked my wrirings.
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