Customer Reviews

Plowing the Sea: Nurturing the Hidden Sources of Growth in the Developing World

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This is a complex and multidimensional book on many levels. This book is not really about what governments can do to help their countries develop. In fact, the word "development" hardly appears. It is about the unproductive relationship between government and the private sector that wastes time and other valuable resources in emerging economies. The authors hold both parties responsible for moving on.

As stated on the first page, Simon Bolivar's epitaph reads, "Whomsoever has worked for a revolution has plowed the sea." Meant by Bolivar to convey despair and the heartbreak of failure, these words are transformed by the authors who have maintained a sense of optimism and good humor throughout their own experiences in the rugged world of transformation consulting. The Introduction, the book's first substantive chapter, is a cautionary tale of the Colombian flower industry, that prospered globally for decades, but later declined and has not yet recovered. Through this "case", seven patterns of firm behavior that inhibits economic agility are identified. The first seven chapters of the book elaborate on these patterns, wonderfully illustrated with other cases (Peru's fishmeal and Bolivia's soy industry, for example). The authors describe a sort of bratty adolescence that traps companies and industries in emerging economies. Chapters 8 and 9 are a fine application of micro principles around the theme of strategy, again focused on the firm. The authors advocate the old-fashion but culture shattering step of focusing on customers, costs and competitors in order to guide and inform decisions about strategy, positioning and productivity. They offer information and learning as a way for firms to experience a "coming of age" in the competitive sense. The role of government in promoting economic transformation is not touched until Chapter 10, two-thirds of the way through the book. Chapter 10-12 are probably where readers will find the book a bit frustrating and repetitive. Not enough time is spent defining what the authors mean by "steering mechanisms". This is undoubtedly because the book assumes the reader already knows alot. Chapter 10 mostly illustrates shifts in steering mechanisms using the case of a wall-bouncing Bolivian government. Chapter 11 is almost singular for business books - there is an actual discussion of research and the presentation of data. It is a practitioners discussion, however, not an academic one, so potential readers can relax.

B-school vets and other warriors will recognize alot here as an application of Michael Porter's "diamond model" from his Competitive Advantage of Nations (1990) and indeed, Porter writes the Foreword. The authors have extended the "diamond's" scope and reach, but their own model is not apparent until the end, Chapter 13. Their model for bringing about industry level change appears in the book's final four pages.

This book's protagonists are leaders in firms, industries and government, as well as their mindsets and actions. The word "leader" might be interpreted by some readers as "government" but this is not accurate. This book does do something extraordinary, however. On one hand, it is a blood and guts how-to on diagnosing and fixing the self-defeating decision making of firms in the emerging world. On the other hand, the conceptual framework within which political economics is practiced, debated, planned and evaluated is updated to reflect the fact that competitive advantage, not absolute or comparative advantage will increasingly referee the win/loss columns in the global economy. The context of political economics is addressed entirely without reference to ideology. This might strike some as soulless or arrogant. It might strike others as about time.

The writing in this book reflects a highly integrated understanding of business and economics, as well as intimate and affectionate knowledge of Latin American business and classical culture. Also apparent are the authors very fine liberal arts backgrounds, years on the road and a sense of mirth. Finally, these authors clearly know their work and thinking is culture altering and socially revolutionary. Their obvious goal is to realize the dream of Bolivar by capturing the minds of today's business, industry and government trend setters. While I would say their hearts are definitely not bleeding nor on their sleeves, their drive and focus are more uplifting than anything I have read or seen in a long time.

It isn't everyday that one gets to read a book about business and have it read as pleasurably as a good novel. Fairbanks and Lindsay have a gift for business analysis and a gift for writing. When will their next book be coming out?

--James D. Wolfensohn, President of the World Bank says that "At last we have a book which applies the best lessons of what makes companies successful to the changes that developing countries can make to create wealth for their people. Plowing the Sea is rich with stories from the Andean countries, but their applications are universal. This bottom-up perspective accentuates a prerequisite for change: the need for ownership at all levels of society. Michael Fairbanks and Stace Lindsay leave the reader confident and even optimistic that the developing world really can become competitive. We all can learn from their practical advice." --President Cesar Gaviria, Former President of Colombia, Secretary General, Organization of American States states that--"This rich and absorbing work provides a new approach for the study of development strategies in the Andean countries and the developing world in general. With clear and insightful arguments, Fairbanks and Lindsay urge government and business leaders to adopt a new economic paradigm, in which wealth creation and distribution no longer depend on existing comparative advantages, but on innovative thinking and competitive advantages. Plowing the Sea is necessary reading for those interested in the sustainable development of Latin American countries." --and finally, Michael E. Porter, Professor of Business Administration, Harvard Business Schoolsays that Fairbanks and Lindsay offer a wealth of valuable insight into the barriers to change in countries and how to overcome them. The book is brimming with rich case studies that will inform both theory and practice for years to come. Most importantly however, the book is based not just on ideas but on results Fairbanks and Lindsay have achieved during projects set in many countries.

WHAT'S A POOR COUNTRY TO DO?

PLOWING THE SEA By Michael Fairbanks and Stace Lindsay Harvard Business School 289pp $29.95

Ask the average economist how a country can lift itself out of poverty, and the answer will be simple: Educate your populace, squelch inflation, open your economy to free trade and investment, and then sit back and watch gross domestic product soar.

But as still-poor people from Bangkok to Barranquilla can attest, it's not so easy in practice. In Southeast Asia, Thailand took off like a rocket when it opened its economy, only to come up against huge trade deficits, a currency devaluation, and a clampdown by the International Monetary Fund. In Peru, with unemployment high and economic disparities widening, the inflation-cutting policies of President Alberto Fujimori are falling into disfavor. In Argentina, which has also cast its lot with free-market capitalism, frustration mounts: Earlier this year, 11,000 people vied for 800 jobs at a supermarket outside Buenos Aires.

What's a country to do? Three new books try to answer that question in different ways. In order of merit, they are Plowing the Sea: Nurturing the Hidden Sources of Growth in the Developing World by Michael Fairbanks and Stace Lindsay; Determinants of Economic Growth: A Cross-Country Empirical Study by Robert J. Barro; and The Marketing of Nations: A Strategic Approach to Building National Wealth by Philip Kotler, Somkid Jatusripitak, and Suvit Maesincee.

Plowing the Sea is the best of the three because it is the most practical. Its authors advise developing South American nations for Monitor Co., a Cambridge (Mass.) consulting firm. Fairbanks worked in Africa as a U.S. Peace Corps teacher, a diplomat, and a merchant banker before joining Monitor. Lindsay used to be a grassroots development worker in Central America and the Caribbean. Their book is full of firsthand reports from Andean countries, ranging from the rose growers of Colombia's highlands to the leather industry of Bolivia.

Plowing the Sea argues that for these developing countries, economists' macroeconomic prescriptions for growth are necessary but insufficient. What's needed, they say, is radical change at the microeconomic level. Down in the bowels of the economy, they suggest, company managers and government bureaucrats remain imprisoned by old-fashioned thinking: overreliance on cheap labor and abundant natural resources, and ignorance of the demands of a sophisticated world marketplace.

As a result, Andean companies are trapped into being suppliers of inexpensive commodities. It's a pattern that's repeated in many poor countries around the world. Because companies compete on price instead of quality and innovation, they pay slim wages and living standards remain low. Meanwhile, they sell natural resources to countries that use them to make higher-margin goods. For all of Andean leaders' brave talk about industrialization, the dependence on exports of natural resources has been rising, not falling. ''The fundamental dynamic of what it takes to create and sustain wealth...does not appear to have stuck with the leaders of the developing world,'' the authors write.

Plowing the Sea's title comes from the epitaph of South American revolutionary Simon Bolivar, who said--probably in a moment of exasperation--''America is ungovernable. Whomsoever has worked for a revolution has plowed the sea.'' The authors who copped his phrase are more hopeful. What's required, they say, is a revolution in worldview. They would have executives in Lima, Peru, go through the same process as executives in Lima, Ohio: understand the strengths and weaknesses of their own companies and competitors; study the needs of the marketplace; then figure out how to provide extra value and earn a return on it.

Defeatists say that climbing the so-called value chain requires skilled workers and money--and it does, eventually. But often, all that's required to make a start is to think afresh. For instance, they say, Peru's asparagus growers stop selling to the U.S. each year right when competition from U.S. growers subsides--instead of trying to build a taste for winter asparagus among American consumers. Also in Peru, an ugly new state hotel in Arequipa completely missed the luxury-travel market it was intended to serve. While it had breathtaking scenery, the authors write, it ''was created from prefabricated metal housing that had been used years before to house irrigation project workers.''

In contrast to Plowing the Sea, the focus of Barro's Determinants of Economic Growth is unabashedly macroeconomic. The slim volume is based on lectures that Barro, a Harvard University economist, delivered last year at the London School of Economics. His method is to compare the performance of about 100 countries--not just developing ones--and ferret out the factors that account for the differences among them using statistical techniques.

Barro's main findings from his computer runs are mainstream: Governments should maintain the rule of law, cut spending, and lower inflation. But he also concludes, controversially, that democracy may not be great for growth. ''Increases in political rights initially increase growth but tend to retard growth once a moderate level of democracy has been attained,'' he writes. That message should be popular in, say, Singapore. Barro's retrospective analysis has its advantages, but it's not clear how well he fares on prediction. Consider his year-and-a-half-old list of the five countries likely to have the strongest growth from 1996 to 2000: South Korea, the Philippines, the Dominican Republic, India, and Poland. Most of them have since suffered setbacks that make it unlikely they will indeed top the world in growth.

The Marketing of Nations argues that countries need to use strategic planning just as companies do. ''There is typically a large gap,'' the book's authors write, ''between what government officials set as policies at the national level and the actual workings of the business system at the local level.'' But The Marketing of Nations lacks freshness. It relies on secondary sources, including several popular books published around 1990. The authors seem to be fans of interventionist industrial policy. In keeping with that, one table lists the competitiveness of Japan and Germany as ''strong'' and that of the U.S. as ''weak.'' They also extol a U.N. report from 1993 that advises developing countries to invest in labor-intensive industries--a message at odds with that of Plowing the Sea. The book's main value is as a detailed catalog of various national growth strategies.

In an era of enormous wealth-creation, the persistence of widespread poverty in many countries is scandalous. These books--particularly Plowing the Sea--point the way to change.

By Peter Coy is the associate economics editor, Business Week

A very insightful book about how countries as a whole compete in the world economy. It presents several interesting ideas about relative competitive strengths & weaknesses of nations and the source of these competitive positions.

The book falls short on readability. The authors could have conveyed the same message in half the pages. Often, I found myself skipping entire paragraphs and sections to find the ideas burried in all the verbiage.

I still rate it a 4 because of the importance of the topic covered and the insights contained in the book.

If you read Michael Porter's The Competitive Advantage of Nations, than this book will surely help you frame an action plan in the public-private sphere.

I found the book a terrific read. I think it is huge task for an developing country to grow out of the habits of being follower. It is not impossible, but the probablity is low, especially since most of these countries are not technologically savvy.

The book gives anyone from an emerging country some hope that they too can compete in this quickly advancing world.

Cheers

Victor

I found the book a terrific read. I think it is huge task for an developing country to grow out of the habits of being follower. It is not impossible, but the probablity is low, especially since most of these countries are not technologically savvy.

The book gives anyone from an emerging country some hope that they too can compete in this quickly advancing world.

Cheers

Victor

This book is a surprise. Very fun to read, very insightful and plenty of new ideas for doing business from emerging economies.