The Effects of Globalization on the CIS and Eurasia

Introduction

The purpose of this chapter is to investigate the potential long-term effects of contemporary globalism on the Commonwealth of Independent States (CIS) and Eurasia which have not been addressed in the extant literature. Globalization today is basically accepted as the process that removes geographical boundaries and enables the economic integration and interdependence of national economies into the international economy through trade, foreign direct investment (FDI), migration, and capital flows (Cooper, 2008). Since productivity remains the critical determinant of long-term national growth and prosperity (McKinsey Global Institute, 2015; Drucker, 2002), the effects of contemporary globalism on productivity demands the need for business organizations in particular to sustain a competitive advantage and to remain profitable over time (Chatterji & Patro, 2014; Teece, 2014; Campbell, Coff, & Kryscynski, 2012; Porter, 1998).

Furthermore, Anderson and Wong (2013) state that competitive advantage in the digital economy of the 21^st century focuses on intangible factors including firm strategy and positioning, radical innovation and first mover advantages, intangible resources and competencies, organizational ambidexterity, network effects and externalities, transaction cost efficiency, and relational optimality. Global competition today is an entirely new game compared to the last century, and the future of national economies, consumers, and workers are tied to the success or failure of regional, national, and corporate activity based largely on productivity. Other related factors will be covered in this chapter.

Each year the World Economic Forum (WEF) ranks 144 countries in terms of a Global Competitiveness Index (GCI) which captures the fundamentals of an economy on a scale that ranges from 1 to 7. The GCI uses statistical data such as government debt and life expectancy obtained from a variety of internationally recognized agencies such as the International Monetary Fund (IMF) and the World Bank to rank nations in terms of ability to compete on a global scale. The most recent GCI ranking (2017) for the current 11 states of the CIS show a declining or only marginal improvement over previous years with the exceptions of Ajerbaijan and the Russian Federation (WEF, 2017a). The long-term projected Gross Domestic Product (GDP) growth at Purchasing Power Parity (PPP) through 2050 shows a general decline in the largest state of the Former Soviet Union (FSU), the Russian Federation, which is the only FSU state listed in the report (PwC, 2017).

Why this state of affairs is occurring in the CIS and Eurasia and what might be done to correct the situation will be covered in the following sections: Background, Literature Review, Discussion, Analysis, Recommendations, Future Research Directions, and Conclusion. The contribution this chapter makes based on a critical review of the sections below to the extant literature on the CIS and Eurasia is a more global economic perspective than is currently found in such literature. The desired outcome is the development of pertinent research projects on, and a better awareness of, this geopolitically important region of the world for the benefit of all concerned. This work is based on a synthesis of both academic and practitioner literature from a variety of authoritative sources.