World 3.0: Making Sense of a Semi-Global Planet

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I received an advance review copy of Pankaj Ghemeawat’s new book World 3.0: Global Prosperity and How to Achieve It.

I greatly enjoyed his previous book, Redefining Global Strategy, calling it a valuable counterpoint to Tom Friedman’s book The World is Flat.

In his newest book, Pankaj sets out to chart a course forward that balances global integration (globalization) with regulation.

In light of the global recession, Pankaj does not want to see countries revert to an all-or-nothing approach to globalization — either embracing globalization with no checks or balances or completely closing the door to trade, immigrants, ideas, etc.

Of course, charting such a course requires making sense of a world that cannot be easily summarized in sound bites — something most American politicians seem unable or unwilling to do. The fact is, the globalization “train” has long ago left the station. We’re all connected, whether we like it or not. We can either choose to create relationships that benefit everyone or we can live with the outdated mindset that some countries must win at the expense of others. What I really appreciate about Pankaj’s writing is that he believes that globalization (properly regulated) can benefit everyone and he backs up these beliefs with plenty of data and recommendations for politicians, business leaders, and ordinary folks like myself.

What I most liked about this book was how Pankaj debunks popular misconceptions about globalization, which he calls “globaloney.” For example:

  • We have vastly overestimated how global we think we are. At best, Pankaj writes, we are semi-global. According to Panjak, global exports account for just 20% of global GDP. Cross-border Internet traffic accounts for about 20% of all traffic. And about 20% of VC money is deployed outside of that VC’s borders. And from where I sit, as one who studies web globalization, most companies are still very much in the early stages of figuring out how to expand globally.
  • Globalization has not, in fact, resulted in less diversity of brands, but greater diversity. He cites the auto industry, which is more diverse today than it was forty years ago. He stresses that globalization is not a one-way street towards homogenization.While there are Starbucks and McDonald’s seemingly everywhere, the US has seen its fair of share of international retailers set up shop here as well — from IKEA to Uniqlo. But more important, Pankaj illustrates how global brands are effectively localized to such a degree that they are just as local as they are global.
  • Successful global trade depends heavily on trust. And it’s easier to trust someone who shares your language, culture, and time zone. Pankaj cites data to show how trade levels drop the further two countries are from each other. He devotes quite a bit of ink to just how little trade is conducted between the US and Canada, despite our shared language, time zones, and cultures. Why is that? He cites obstacles like lack of harmonized rules and regulations, customs nightmares that hold up goods, and other seemingly minor details that, in total, give companies reason to rethink expanding beyond borders.

However, I think Pankaj does a bit too much debunking at times. Pankaj says that the “race to the bottom” of countries focusing on low costs at the expense of the environment, human rights, etc. simply does not exist. I disagree. He focuses on pollution largely but there are so many other issues that should be addressed.

For instance, factory farming is, in my view, an absolute atrocity and it is now being exported around the world via US trade agreements. That is, when the US exports meat that has been produced cheaply via factory farming, local farmers in other countries are forced to embrace factory farming to remain competitive or go out of business. A number of Korean family farmers committed suicide in protest of the recent trade agreement between South Korea and the US. Pankaj vastly trivializes these so-called “externalities” and, in doing so, overlooks what is one of the great (and growing) forces mobilizing against globalization.

That said, I recommend this book. Pankaj is one of a handful of writers who are tackling globalization, warts and all, in a thoughtful manner. Globalization is not a black and white argument; there are many shades of gray and this book does a very good job of shedding light on them.

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Author: John Yunker

John co-founded Byte Level Research in 2000 and is author of The Web Globalization Report Card. He also co-founder of Ashland Creek Press.

2 thoughts on “World 3.0: Making Sense of a Semi-Global Planet”

  1. Thanks a lot for the review, John.

    I haven’t read the book, but I would totally agree with the first point: We have overestimated how global we are. A large percentage of people live and work in locally rooted contexts and many businesses operate in regional contexts, but not necessarily internationally. The drive towards globalization ignores the need for people to have a secure social environment (read: friends and family; levels 2 and 3 in the Maslow model) and we are beginning to see a counter-movement of re-localizing. However, I also believe that closer connections between people from different cultures is a good thing, simply for the fact that you’re less likely to go to war with people you know. In that regard, we have made a lot of progress in the last 60 years, but also still a long way to go.

    As far as ignoring externalities is concerned, the author is in plentiful company. It is a built-in feature (or a bug?) of our economic system that many damaging side-effects known as externalities are not included in the price of a product or service (otherwise they would be called internalities :). Many businesses don’t have an interest in including these effects, otherwise the price of the product would such that few people could afford to eat factory-farmed meat every day.

    Cheers,

    Martin

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