World 3.0

World 3.0

Global Prosperity and How to Achieve It

Book - 2011
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Since the financial crisis of 2008, many of us have had to reexamine our beliefs about markets and globalization. How integrated should economies really be? How much regulation is right?

Many people fuse these two dimensions of choice into one, either favoring both globalization and deregulation--or opposing both of them.

It doesn't have to be that way.

In World 3.0 , award-winning author and economist Pankaj Ghemawat reveals the folly in both of these responses. He calls for a third worldview--one in which both regulation and cross-border integration coexist and complement one another.

Ghemawat starts by exposing common assumptions about globalization to hard data, proving that the world is not nearly as globalized as we think. And he explains why the potential gains from further integration are much larger than even pro globalizers tend to believe.

He then tackles market failures and fears--job losses, environmental degradation, macroeconomic volatility, and trade and capital imbalances--that opponents of globalization often invoke. Drawing on compelling data, he shows that increased globalization can actually alleviate some of these problems.

Finally, Ghemawat describes how a wide range of players--businesses, policy makers, citizens, media--can help open up flows of ideas, people, and goods across borders, but in ways that maximize the benefits and minimize the potential side effects.

World 3.0 dispels powerfully entrenched--but incorrect--assumptions about globalization. Provocative and bold, this new book explains how people around the world can secure their collective prosperity through new approaches to cross-border integration. Ghemawat's thinking will surprise and move you--no matter where you stand on globalization.

World 3.0 reveals how we're not nearly as globalized as we think we are, and how people around the world can secure their collective prosperity through new approaches to cross-border integration. Provocative and bold, this new book will surprise and move you, no matter where you stand on globalization.
Publisher: Boston, Mass. : Harvard Business Review Press, c2011
ISBN: 9781422138649
Branch Call Number: 337 GHEMAWAT
Characteristics: xiii, 386 p. : ill., maps ; 25 cm


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Dec 27, 2018

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Feb 04, 2018

Ghemawat persuasively asserts that the world is still round. For the most part, the emphasis on international trade is regional. Ghemawat scrutinizes the myths surrounding globalization and compares them to the data. What he finds is that globalization is neither as pervasive nor as destructive as we have been led to believe. There are still opportunities to increase integration, but they should be pursued only after careful examination of the data and if they serve both business objectives and the public good.

Ghemawat spends a good deal of the beginning of the book addressing the contention that the world is "flat", open and insensitive to distance and culture. Proximity is important enough that it provides much of the explanation for why the United States' largest trading partner is Canada. In 2009, that relationship was worth $600 billion, down from $750 billion in 2008. Those numbers make the two countries the world's largest bilateral trading pair.

Yet, Canada's internal trade is still five to ten times more intense than its trade with the US. Similarly, when Czechoslovakia divided into the Czech Republic and Slovakia, despite trade and labor agreements, trade intensity between the two new countries fell by a factor of four. On the other hand, trade between the former East and West Germany grew sixfold in the five years following their reunification. Proximity matters, but borders matter more.

Ghemawat does not deny that globalization has changed some choices and habits around the world, but it is a fallacy to think that big corporations are steamrolling existing tastes to suit their business models. Coca Cola and KFC have achieved international success by tailoring their offerings to their locations. Perhaps most surprising is the behavior of McDonald's, the anathema of individual choice. Are french fries sold in every location? Yes, but in Israel they can be bought with a McShawarma. That is not available in India, but a vegetarian patty called the McAloo Tikki is. Further, McDonald's has been known to "export" successful regional innovations into other markets, perhaps most famously their McCafe line from Australia.

One of the other objections to integration is that if unchecked, the world will become dominated by a handful of mega-multinationals. However, the data does not bear this out. For example, in 1970 the top five automakers were responsible for 50% of global production; in 2010, the top six were. While concentration has increased in cement, steel and paper and board and especially carbonated soft drinks, it has decreased in cargo airlines, copper, iron ore and passenger airlines. When the figures from those industries plus automobiles are aggregated, we find that concentration levels over time have declined.

Ghemawat isn't advocating a new economic paradigm as much as he is asking politicians, business leaders and the world's citizenry to take a look at the facts on the ground before they assume "flat" globalization. As of 2010, worldwide international business integration is 10 to 15 percent, barely qualifying as "semi-global". Some countries may indeed do well to increase their levels of integration for certain industries. World leaders should also assess their opportunities (greater integration of food markets would have diminished the food price increases of 2007 and 2008 and fewer restrictions on migration would improve the economies of origin and destination countries). However, globalization without consideration of competencies and needs is ill-advised, as many companies who were overexposed discovered during the 2008 downturn. Finally, while Ghemawat acknowledges that integration does exacerbate some (but not all) environmental problems, leaders are advised to choose the framework for the solution based on the specifics of the threat; while climate change should be addressed at a global level, localized acid rain is more appropriately dealt with by regional actors.


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