18 of 19 people found the following review helpful
Format: HardcoverVerified Purchase
This is a nuanced book. It is not possible to "review" it without having actually read it, read it carefully, and then read it again. It was easily a five as I got into it, and then became a six as I appreciated just how magnificently the author has reframed all future discussion of this topic, and set the gold standard for data-driven discussion--not something they do in Bonn, London, Paris, or Washington.
This is not a book for data geeks. The author excells from the first page in emphasizing the importance of perception and understanding (however wrong they might be_, and the tangible relevance of convictions, history, and philosophy....these MATTER to business, and in this book I believe the author takes the intellectual and ethical level of any business discussion about globalization and about regulation up a notch.
In a nutshell, the author demonstrates conclusively that globalization is not happening to the extent it could and should, and that globalization should not occur without regulation--the free market fallacy, like the Enlightenment fallacy of open societies that George Soros has recently articulated, is rejected. The author is an advocate of dramatically increasing globalization in terms he defines, while also assuring that regulation keeps pace, not in the micro-sense, but in the macro-sense. His view is that social gains are achievable, if rooted in a solid appreciation of business perceptions.
Two books I would recommend to bracket this one, one focusing on the threats to be eradicated, ideally while making a profit, the other on the source of the wealth and entrepreneurship now untapped by predatory capitalism:
High Noon 20 Global Problems, 20 Years to Solve Them
The Fortune at the Bottom of the Pyramid, Revised and Updated 5th Anniversary Edition: Eradicating Poverty Through Profits
A selection of my many notes:
+ Differences and differences do have tangible economic meaning, those that deny this are without factual foundation
+ New cosmopolitanism is NEITHER all national nor all global, but a nuanced integration of both--in other words, PANARCHY.
+ Question of trust is paramount to the evolution of commerce and society. I recollect a Nobel Prize was awarded to a person who gamed trust and demonstrated that trust lowers the cost of doing business (it also lowers the cost of good governance). Here I cannot help but recollect one of my heroes, Robert Garigue (RIP), whose early insights into security as a foundation for trust, NOT for control, are still priceless today (see his collection of graphics and works at Phi Beta Iota the Public Intelligence Blog).
+ World 0.0 was local and brutish
+ World 1.0 scaled up from local to national
+ World 2.0 in theory is globalization with deregulation, "imperialistic consolidation" BUT he emphasizes, with a great deal of factual evidence, that we are nowhere near World 2.0, and in fact could leap-frog past it to World 3.0.
+ World 3.0 is complex, nuanced, pervasive but transparent, diverse in its options but consistent in its regulation, and generally achieves a prosperous world at peace, generating profits for those who deliver the many contributing products and services that are consistent with what we can know about true cost, cultural needs, and so on.
+ Nationalism has been costly.
+ Population has grown five times but gross domestic product has grown fifty-five time. This is the delta that for me validates the "wealth of networks" literature and my own emphasis on empowering the five billion poor with connectivity and access to the Internet so that they can create infinite wealth.
The Wealth of Networks: How Social Production Transforms Markets and Freedom
Collective Intelligence: Creating a Prosperous World at Peace
His facts on how we are NOT globalized--nowhere near 50% and closer to 10-25%--are stunningly focused and support his view that belief systems and policy prescriptions are totally out of touch with reality. He considers Tom Friedman an especially negative influence and I note with amusement that the words "motley" and "rabid" appear in the context of his commentary on Friedman (I can't stand either Friedman or Zakaria, both are pimps for the "establishment" that just finished destroying the global economy and the US middle and blue collar classes for their own selfish gains).
+ 1% of all physical correspondence crosses national borders.
+ 17-18% of all Internet traffic crosses borders (2006-2008).
+ 15% of patents are "foreign-owned"
+ 5% of news is from foreign sources
+ 3% of the world's population are first-generation immigrants
+ 25-30% of GDP (China an exception at 50%) from exports
+ 15-20% of venture capital goes outside its home country
+ 5-10% of private charitable giving goes outside the home country
QUOTE (34): "Why are intelligent, informed, interested people so prone to globalony? It is important to answer this question because globalony is more than just a harmless way of calling more attention to the international domain. Globalony, even if it stops short of the exaggerations of World 2.0, can be hazardous to global welfare by creating complacency among globalizers and provoking paranoia among antiglobalizers (cf Lamy's point, cited earlier, about the effects of double-counting in trade statistics). The obvious reason for globalony is that much of the debate about globalization takes place in a data-free zone.
+ Technology does NOT abolish distance, eradicate frontiers, or neutralize culture.
+ Internet is now balkanizing, and key countries like India are demanding that the physical foundation for the "cloud" be physically located within their frontiers.
+ There are four barrier sets to constructive globalization: cultural, administrative, geographic, and economic. The "home bias" can be a distorting factor in the 15-150 times range.
+ Government regulations (e.g. differences between Canada's "5 mg" and USA's 5mg create enormous cost and logistics barriers to companies trying to distribute the same product to different micro-management perspectives.
+ The models now used to represent globalization are inadequate to the point of severe lack of professionalism. The standard estimates of potential gains from globalization focus on just the tip of the iceberg, and overlook six major related beneficial domains.
-- Add volume
-- Decrease costs
-- Intensifying competition
-- Normalizing risk
-- Generating and difusing knowledge
QUOTE (79): "The possible connections between openness and democracy rely particularly heavily on informational flows and include the freer exchange of ideas and increased political competition that results from openness, and the discouragement of autocracy by the transparency required to keep capital markets happy. ...the weight of evidence does suggest a positive relationship between trade and democracy."
He observes that globalization should NOT be equated with concentration.
QUOTE (109): "This emphasis on openness distinguishes World 3.0 from World 1.0, and the emphasis on regulation distinguishes it from World 2.0."
The author pays special attention to demolishing the claims of externalities beyond the borders of any given nation, pointing out that 74% of the environmental externalities in any given nation come directly from its domestic ground transportation.
He also takes care to contest the "race to the bottom" thesis, pointing out that Germany has become one of the greenest nations, and yet derives one third of its GDP from exports. [Other books, such as The Innovator's Dilemma: The Revolutionary Book That Will Change the Way You Do Business emphasize that waste is lost profit.]
QUOTE (135): "World 2.0 overlooks diversification opportunities because it misses cross-country differences, and World 1.0 doesn't even look to other countries as a source of safety, seeing integration only as a source of danger. In that sense, World 3.0 does explicitly identify risk-related (potential) gains from globalization that prior world views do not."
QUOTE (139): "Information asymmetries are just one information problem among many. Another factor contributing to volatility is the difficulty investors have figuring out what to do with all the information they do have. Few can conduct even rudimentary financial analyses, leading economists to peg them as possessing only 'bounded rationality."
I am reminded of Ben Gilad's observation in Business Blindspots: Replacing Your Company's Entrenched and Outdated Myths, Beliefs and Assumptions With the Realities of Today's Markets, that "Top managers' information is invariably either biased, subjecive, filtered or late. . . . Using intelligence correctly requires a fundamental change in the way top executives make decisions." My second graduate thesis concluded that the US Government makes decisions on the basis of ideology, completely oblivious to the fact that the secret world and the open world of governments return less than 2% of the relevant information to Washington.
+ Capital flows are divided into good (foreign direct investment, creating local stock markets) and bad (international debt portfolio, bank loans).
Food prices and the relationship among food prices, water shortages, and land leasing or purchasing by foreign countries are discussed in a most useful manner--land leased or purchased is in effect also a water lease or purchase (a below market prices for the water, I might add).
QUOTE (151): "Setting effective alarms often begins with bolstering information flows: to manage risks, you have to know your exposure." I am getting closer to getting an Open Source Agency considers by the sane side of the US Government, and a major part of that legislative outline is the role to be played by the Department of State Office of Information-Sharing Treaties and Agreements.
The book discusses poverty as a major cancer, equality of opportunity as a cure, and I completely agree with the author's focus on lifting the poor vice lowering the rich.
QUOTE (189): "The top tenth of the world's population got 57 percent of the world's income while the bottom 70 percent got only 5 percent." I confess to being confused since Prahalad tells us that the top one billion have an annual income of $1 trillion while the bottom five billion have an annual income of $4 trillion, so this must refer to capital assets and general wealth, not just income wealth.
+ On page 197 the author discusses the International Monetary Fund's claim that technology is the most important factor in reducing labor's share of the income, and I want to puke. See Phi Beta Iota for a couple of great postings about financial terrorism, how Wall Street is murdering one million people a year in the US, and how labor's share of the wealth in the US has declined terribly despite increases in productivity. The IMF is a cancer on the global economy, along with the Federal Reserve, in my view.
The author provides an excellent discussion of the economic cost of artificial states, and I must mention the best book I know of on this topic, by Cambridge professor Philip Allott, The Health of Nations: Society and Law beyond the State.
QUOTE (258), citing Amartya Sen: "Adam Smith viewed markets and capital as doing good work within their own sphere, but first, they required support from other institutions--including public services such as schools--and values other than pure profit seeking, and second, they needed restraint and correction by still other institutions--e.g. well-devised financial regulations."
The author does not discuss corruption or integrity, these two topics seem to be anathema to those that wish to be sage but politically correct. In my view, corruption among all sectors of society--academia, civil society, commerce, government, law enforcement, media, military, and non-governments/non-profit--is THE cancer that leads to 50% of every investment being fraud, waste, or abuse.
SIX PROPOSITIONS (pages 260-264):
01 Market failures and fears need to be incorporated in analyses of integration
02 The cross-border integration of markets often helps correct market failures instead of compounding them
03 In many other cases, integration has a negligible effect on market failures and therefore shouldn't be restricted
04 When integration does threaten to aggravate market failures, mix-and-match policies to try to preserve some of the benefits of opening up while curbing adverse effects
05 Distance sensitivity is inversely related to the optimal scope of integrative and regulatory initiatives
06 Large integration opportunities often exist within as well as across borders
There are a number of really superb tables across the book, and a great section on seven ways to think differently about this challenge of globalization (as a solution) and regulation (as a moderating influence).
QUOTE (319): "More systematically, a study of more than five thousand natural disasters suggests that from the standpoint of U.S. media coverage, each dead European was 'worth' three South Americans, forty-three Asians, forty-five Africans, or ninety-one Pacific Islanders. The same study also confirmed the influence of factors that in an ideal world wouldn't matter at all. For each person killed by a volcano, more than forty thousand people would have had to die in a drought to receive the same expected news coverage.. And even more disturbing, when the news media was occupied with non-disaster news, such as the Olympics, the number of dead had to be three times more than during a slow news period to have the same chance of receiving government relief."
I am reminded of Peter Fuchs, then Secretary General of the International Red Cross, speaking to OSS '94, explaining why the media was worthless as a foundation for open source intelligence: "The media has an attention span of one war at a time, while the Red Cross is active in 34-38 wars at any one time."
QUOTE (336): "How far we are going to get in unlocking the full potential of World 3.0, then, depends on our mind-sets."
With my last three allowed links:
Global Public Policy: Governing Without Government?
Critical Choices. The United Nations, Networks, and the Future of Global Governance
INTELLIGENCE for EARTH: Clarity, Diversity, Integrity, & Sustainaabilty
As I finished reading this book, stories have been breaking about the growing public awareness of the tangible impact of Wall Street's LEGAL crimes against humanity, and the possibility that 57 countries have agreed to set up a new global financial system that shuts down the Rothchilds, Rockefellers, and Goldman Sachs, among others. I have no way of knowing if this is actually happen, but it should. Reality bats last. It's time we start paying attention and exhibiting INTEGRITY in our policy processes.
15 of 16 people found the following review helpful
on May 1, 2011
Format: HardcoverVerified Purchase
This is a must read for professional economists, policy wonks or those who like to be well informed both in terms of theory and facts on the competative economics of globalization. The author as the book jacket informs us is one of the youngest geniuses who has been among other things on the Harvard faculty as a full professor. He writes clearly, lucidly and in a splendid teaching mode. It is also useful to have read when you hear proposals from our own government and the claims of various pollitical parties. It has a informative discussion comparing U.S. and Chinese economic strategies, their advantages and disadvantages. However, the book goes beyond that and is a comparative discussion of wider breadth.
In the general discussion the first chapter is entitled, "colliding worldviews" and it is a discussion on different general theories about growth and about the predicaments posed by different visions and policies. Don't miss this chapter in part I. Part Two is especially interesting as the meat and potatoes of what the author terms, "Seven possible problems" is opened up and theory and data examined; this part includes solid discussions on (l)global concentration at a general level, (2)global externalities, discussing among other things costs and benefits of different economic strategies, (3) global risks, (4) global imbalances, (5) global exploitation, (6) global oppression, (7) global homogenation. For those who want to get the best update on economic aspects of globalizaiton this is a book to have read as it is very precise about how business, economic policy really works and the bibliography is splendid.
It goes well beyond Thomas Friedman's, The World is Flat in its empirical detail.
12 of 14 people found the following review helpful
on July 13, 2011
This is a must-read book.
Amid increasing ideological polarization, Professor Ghemawat's "World 3.0" provides a refreshingly balanced view of "globalization". Unlike some recent pop-business and pop-economics books, which draw over-simplified conclusions from a few "illustrative" cases, this is a scholarly book grounded in macro and micro economics as well as business knowledge. It is a pleasure to read, studded as it is with apt cartoons and witty headings (e.g., "Anxious in Andorra", written with verve.
As a retired Chief Economist who worked for 40 years at the World Bank, I am impressed by the breadth and depth of the book. It focuses on interactions between individual country and the rest of the world. These are mainly economic and financial (imports, exports, foreign investment, migration, and so forth) but also cultural, psychological, and in the concluding chapter about human potential. The author considers the likely impact of internationalization on equity as well as well as growth.
The book posits four "Worlds". In World 0.0 life was "nasty, brutish and short". This was a world without Government - think of Somalia or a Tea Party utopia. Fast-forwarding a thousand years, in World 1.0, nations were largely self-contained. Then came the Industrial Revolution, "globalization" with its ardent proponents - e.g., Thomas Friedman's "The World is Flat" and no less zealous detractors such as Naomi Klein.
Professor Ghemawat steps back from these noisy polemics and presents readers with a wealth of facts, which individually as well as in the aggregate demonstrate that while international activities have increased enormously since the Industrial Revolution, they remain modest in relation to national economic, financial and cultural activities. The book is full of surprising statistics. To mention one: Japan is the world's fourth largest exporter, yet in 2009 it total exports of goods and services amounted to only 13 percent of the country's gross domestic product.
World 3.0 is one of "semi-globalization", a realistic world where distance matters hugely and nations retain primary control of their economic destinies. In some areas - for example short-term capital flows - globalization does present risks which governments can mitigate. In many if not most others, there remains plenty of room for facilitating greater internationalization, as this would lead to greater prosperity.
Last but not least, Professor Ghemawat offers several conceptual frameworks which will be useful to governments as well as companies in shaping their own international strategies.
In sum, "World 3.0" offers readers a sane antidote to ideological worldviews, the "silent majority's take" on globalization.
9 of 10 people found the following review helpful
on July 25, 2011
Format: HardcoverVerified Purchase
While I was reading mr. Ghemawat's book on World 3.0 or `rooted cosmopolism', a young Norwegian killed almost a hundred of his compatriots, ostensibly as an act against multi-culturalism. This atrocious incident is perhaps the best illustration of the single flaw I found in this book: the context and style of a fundamentally positive attitude towards more integration.
Such an attitude is to be expected from a footloose Harvard economist with Indian ancestors living in Barcelona. Nevertheless, mr. Ghemawat's book is the best book I have read on the issue of globalization since the utterly disappointing first book I read on this issue by Thomas Friedman: "Lexus and the Olive Tree". Mr. Ghemawatt struggles to phantom the effects of non-financial motives on human behavior, but at least he spells out a framework for his readers to better understand these issues. In doing so he presents the reader with a wealth of information that underscores his basic point that the world is only semi-globalized, that distance matters and will continue to matter.
At times, as I indicated, I found his optimistic overtone in presenting the information detracting from the fundamental issues they exposed. A case in point. As citizens we spent almost 100% of our lives in our local neighborhood as witnessed by the telephone calls we place. Trade and equity investment are for more than 70% national matters. The highest indicator for `globalisation' is a surprising one: governmental debt, which is 40% foreign. I'm quite a bit more worried than mr. Ghemawat that the current system has created a crisis that puts strain on governing bodies of societies. It may lead to increasing doubts about legitimacy and thus distrust of basic political structures. Perhaps his framing of these issues as being `administrative' and `cultural' have lead him to overlook the fundamental political problem of the control of violence in society and the havoc a breakdown in that political control can create.
Having said that, I would not have wanted to miss the opportunity to become privy to mr. Ghemawat's world of thinking. His way of approaching the issue of global integration, the wealth of information, knowledge and insights he shares, makes it a valuable book that I recommend to everyone seeking a more balanced framework for understanding the characteristics of our interconnected world.
7 of 8 people found the following review helpful
on February 1, 2012
This book describes different perspectives of globalisation, economic, environment, political, ethical, etc. I have no major issue with the content of the book. The purpose of my review is to further describe the style of the book. Some people will like the style and even though I personally only give the book two stars, you might still get value from my review.
The book is a very easy read. The author uses "I" a lot that creates a very informal style. I wouldn't be surprised if this book was based on a course the author would teach in his business school. With the informality come a bit lack of structure.
The scope of the book is very broad, which makes it quite shallow. Others might say that the book gives the big picture. That might be true too, but if you read some books on globalisation the big picture in this book is in no way novel. The scope is too broad in my view and the author lacks knowledge in most of the disciplines. (To the author's credit, he says so himself.)
The author sprinkles the book with various facts from organisations and academic papers. That is fine, but given the broad scope of the book, it feels very ad hoc to get some of this data thrown in.
I don't think the author had a clear objective in mind when writing the book. He probably thought something along the following lines: "let me write a book about globalisation and include material that I find interesting from many different disciplines". So I am often left thinking "so what" after reading a chapter.
The author is a business economist and potential readers would do much better reading Redefining Global Strategy: Crossing Borders in a World Where Differences Still Matter from the same author. That is a four star book. The focus of that book is a discipline the author actually has experience in. It is in-depth and thoughtful.
In World 3.0: Global Prosperity and How to Achieve It, Dr. Pankaj Ghemawat persuasively asserts that, for all of the agreements signed over the last two decades liberalizing trade, the world is still round. For the most part, the emphasis on international trade is regional. This is World 3.0, which is contrasted with World 0.0 (absolute local), World 1.0 (a world defined by national borders) and World 2.0 (the borderless world imagined by some economists and writers). 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. The free trade agreement they signed in 1988 solidified the advantages their proximity and shared linguistic and historical ties provide. (This rooted map of US bilateral trade illustrates the point. Compare US trade percentages for Canada and China.)
Given the open trade agreement, it is surprising that more than 20 years later 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 to facilitate the continuation of existing arrangements, 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.
Of course, nations trade with more distant nations with fewer cultural ties, and many observers have been concerned that this leads to the habits and choices of the "exporting" nation dominating the "importing" nation. 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. While it is true that some industries have become more concentrated, it is hardly the case that all have. 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 the reality of "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.
A World 3.0 philosophy doesn't assume either an Open For Business or Do Not Enter sign anywhere. There are no proscribed policies that fit every relationship, industry or business. Every trading pair needs to be addressed on subjective bases that take into account business objectives, national policies and the public good, and those vary in every situation. It's messier than a belief in a flat world, but more likely to yield profitable results.
Judging from the hype, globalization is either the best thing that's ever happened to the world and its economy or the death knell for civilization as we know it. The truth lies somewhere in the middle, and that's where economist Pankaj Ghemawat wants to lead you in this smart, exhaustive study of the realities of the "semiglobalized" world. Given that there's no turning back, he posits that a more realistic approach to globalization will result in more fairness, greater productivity and increased affluence for developed and developing countries. His formula for making the planet a better place calls for free and open markets with judicious, appropriate regulation. Although the book doesn't dwell on concrete proposals, and it becomes increasingly theoretical in its last two sections, Ghemawat does a superlative job of debunking exaggerated fears about globalization and highlighting its realities. getAbstract recommends this intelligent look forward at the potential of "World 3.0."
on August 22, 2013
Format: HardcoverVerified Purchase
I bought this book for my Management class. Ghemawat does not just show give you the facts but also provides you with the resources to think about. A new world, a new perspective, and a new approach to do business with a such a globalized economy that we have. If you want, read through all the numbers and the graphs and then read through them again just to be sure. I would recommend this book with another book, The Travels of a T-Shirt----.
on January 17, 2013
Format: HardcoverVerified Purchase
This is a thorough treatment of factors that bear on trade, the evolution of economies, international relationships and standards of living among trading nations. A tremendous amount of information packed into a relatively small volume. The book would benefit greatly from a summary of the arguments to be made, steps that could or should be taken and conclusions drawn from the array of data presented.
on August 5, 2013
Format: Kindle EditionVerified Purchase
Fantastic read... the author was right on the money and he did a great job of illustrating his points with tons of data.