Have you been to Europe lately? If so, when you’ve crossed borders you’ve noticed that you no longer have to go through passport control and get your passport examined, then stamped. You can travel throughout the European Union just as you can travel throughout the United States, unimpeded by border control.
This, in my opinion, is part of a worldwide weakening, and in some cases disappearance, of national borders. The driving force behind this phenomenon is plain old economics. The world is shrinking, and cross-border trade, partnerships and cooperation have reached a level never before seen.
Just consider NAFTA, the North American Free Trade Agreement. Here’s what Canada’s International Trade site had to say about it: “The verdict is clear — it has been a great success for Canada and its North American partners, and we are committed to ensuring that it continues to help us to realize the full potential of a more integrated and efficient North American economy.”
The words “more integrated and efficient” really tell the story. Countries are integrating their economies with other countries’ — thus making them more efficient and more friction free. We are collaborating with other nations to an extent never seen before.
Outsourcing is just one part of this collaboration. Multinational syndications, partnerships and joint ventures are all coming together in one massive worldwide effort to make trade and commerce as integrated and efficient as possible.
Here are some examples of how countries work together to create value while keeping the cost of a product or service down:
- U.S. tax returns are prepared in India with the collaboration of American accounting firms. The U.S. client gets a great product at a lower cost.
- X-rays that are taken at night in a U.S. hospital when the radiologists are not on duty are e-mailed to foreign doctors in another time zone who analyze the x-rays and either e-mail the diagnosis to their American counterparts or call them back to discuss the results.
- Products are broken down so that their respective parts are simultaneously manufactured in the U.S. and abroad — all with close collaboration among the manufacturers. The finished product, when all of its parts are ready, is then assembled at the most convenient and economical location.
Factors Facilitating Collaboration
If the world is really getting smaller, what are the dynamics behind this downsizing of our planet? The fact is, technology has made much of this possible.
Files can be created in one country, e-mailed to other countries, and worked on simultaneously by all interested parties. This is file-sharing at its best! People don’t have to be gathered in the same room in order to simultaneously work on the same document.
VoIP (Voice over Internet Protocol) is making long distance calling extremely affordable. With such affordability, a businessperson doesn’t have to think twice before calling his or her counterpart in another country. My article VoIP Here to Stay discusses the many implications of this wonderful technology.
Having this massive infrastructure called the Internet, which is used by so many millions of people and businesses, gives us the ability not only to transmit data and voice, but also to transmit anything that can be digitized — images, for example.
This makes teleconferencing a piece of cake. We now see the beginnings of virtual conferences whereby participants from different parts of the world gather in a “conference room” to discuss the matter at hand. The technology is now so good that I expect some business travel expenses to decrease substantially, because participating in a virtual conference is as close to the real thing as anyone can get and thus eliminates the need for costly travel.
Search engines have also played a big part in this transformation and disappearance of business borders. Yahoo has a service called Yahoo Groups that allows groups of people to get together to discuss whatever is on their mind. This means that virtual meetings are being held on the Internet with participants from all over the world. One can see how borders begin to melt away with the availability of this type of technology.
In a recent article, Are We Headed Toward One World Currency?, I discuss currency zones, such as the euro zone, the yen zone, and the dollar zone. These zones represent specific geographic areas where one particular currency is dominant. The point is, we do have a consolidation of currencies when a particular area uses one dominant currency. An example of this is the euro, which is used throughout most of Europe.
The above factors are facilitating the gradual disappearance of national business borders. In fact, there is such widespread collaboration among different countries that today it’s hard to tell where a product was made or developed.
Economics Drives Transnational Cooperation
The train has left the station — the train being worldwide economic forces that are driving transnational cooperation and the blurring of borders. It’s going to be quite exciting to watch this phenomenon morph over the coming years.
There’s no doubt in my mind that cooperation among nations will inevitably lead to even better and less expensive products and services for the consumer. Competition is moving from a local phenomenon to an international one. All of the world’s commerce will be conducted with greater efficiency and at lower cost. It will be fun to watch all this unfold.
Theodore F. di Stefano is a founder and managing partner at Capital Source Partners, which deals in bringing small-cap companies public. He also is a frequent speaker on the subject of financial advice for small businesses as well as the IPO process. He can be contacted at Ted@capitalsourcepartners.com.