Tuesday, March 6, 2007

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"Feh" to globalization

That's the conclusion of Pankaj Ghemawat in this Foreign Policy essay. He makes a convincing case:

In truth, the world is not nearly as connected as these writers would have us believe. Despite talk of a new, wired world where information, ideas, money, and people can move around the planet faster than ever before, just a fraction of what we consider globalization actually exists. The portrait that emerges from a hard look at the way companies, people, and states interact is a world that’s only beginning to realize the potential of true global integration. And what these trend’s backers won’t tell you is that globalization’s future is more fragile than you know....

One favorite mantra from globalization champions is how “investment knows no boundaries.” But how much of all the capital being invested around the world is conducted by companies outside of their home countries? The fact is, the total amount of the world’s capital formation that is generated from foreign direct investment (FDI) has been less than 10 percent for the last three years for which data are available (2003–05). In other words, more than 90 percent of the fixed investment around the world is still domestic. And though merger waves can push the ratio higher, it has never reached 20 percent. In a thoroughly globalized environment, one would expect this number to be much higher—about 90 percent, by my calculation. And FDI isn’t an odd or unrepresentative example....

[T]he levels of internationalization associated with cross-border migration, telephone calls, management research and education, private charitable giving, patenting, stock investment, and trade, as a fraction of gross domestic product (GDP), all stand much closer to 10 percent than 100 percent. The biggest exception in absolute terms—the trade-to-GDP ratio shown at the bottom of the chart—recedes most of the way back down toward 20 percent if you adjust for certain kinds of double-counting. So if someone asked me to guess the internationalization level of some activity about which I had no particular information, I would guess it to be much closer to 10 percent—the average for the nine categories of data in the chart—than to 100 percent. I call this the “10 Percent Presumption.”

More broadly, these and other data on cross-border integration suggest a semiglobalized world, in which neither the bridges nor the barriers between countries can be ignored. From this perspective, the most astonishing aspect of various writings on globalization is the extent of exaggeration involved. In short, the levels of internationalization in the world today are roughly an order of magnitude lower than those implied by globalization proponents.

Read the whole thing. This paragraph helps explain to me why my editor at Princeton made me remove the world "globalization" from the title of All Politics Is Global:
According to the U.S. Library of Congress’s catalog, in the 1990s, about 500 books were published on globalization. Between 2000 and 2004, there were more than 4,000. In fact, between the mid-1990s and 2003, the rate of increase in globalization-related titles more than doubled every 18 months.

posted by Dan on 03.06.07 at 05:44 PM




Comments:

Isn't this more "feh to globalization popularizers like Tom Friedman"?

Globalization may not look like much compared to what some in the popular or financial press have represented, but it's a pretty impressive development compared to what the global economy looked like 30 years ago. Its effects are also a lot more profound in some places than in others. The main point of the article, that globalization is not irreversible, seems inarguable -- except that even in the worst case not all of it will be irreversible.

posted by: Zathras on 03.06.07 at 05:44 PM [permalink]



Doubling, every eighteen months or so, where have I heard that before . . .

So is there a globalization book corollary to Moore's Law?

(actually the rate of the books is faster than Moore's Law, does that mean by the middle of the century, every book published will be about globalization?)

posted by: XWL on 03.06.07 at 05:44 PM [permalink]



The Library of Congress stats are larger than the author presents. (I'm a 30-year LOC employee, now retired, who's had experience at searching the online LOC catalog [http://catalog.loc.gov]) My initial search shows that there are 599 books in the catalog published in the 1990s that are indexed Globalization, which is an established LOC subject heading (ie, index term, or LCSH in librarianspeak). However, there are an additional 555 books published during that period that have the words Globalization or Globalisation (British sp.) in the title, but are NOT indexed Globalization. So, for example, the book Canada-Japan: Views on Globalization, published in 1990, has the LCSHs International economic integration / Canada--Economic conditions /Japan--Economic conditions, but NOT Globalization. Likewise, the book The Asian Pacific Rim and Globalization, published in 1995, has the LCSHs Industrial location / Industrial policy, but NOT Globalization. I haven't checked for the years 2000+, but likely I'd also find a lot of books which almost certainly are about "globalization" but are not so indexed.

posted by: Walsh on 03.06.07 at 05:44 PM [permalink]



This is frankly a bit silly. Most businesses are small service businesses; a barber shop or restaurant is unlikely to have much "international exposure"; few customer-facing service businesses will ever have all that much international presence. And it fails a simple logic test - a business that's 100% "international" is a foreign business as it has no domestic presence!

posted by: Foobarista on 03.06.07 at 05:44 PM [permalink]



Fragile and not inevitable.

It should not be too long before Putin in Russia and Chavez in Venezuela close their dictatorial grips on capital, people, ideas, etc moving across their borders.

Anecdotally, I find lots of evidence of resistance to globalization. I can't find anyone at work who thinks globalization is a good thing. They think its only purpose is to ship jobs overseas for cheap labor. The global ideological hard-left hates Bush and uses that as an excuse to pressure trade. The ideological hard-right is suspicious of immigrants.

Globalization is like capitalism in this respect: it’s much easier to criticize it and call for more government to “solve” some problem than it is to explain the problem was probably caused by government to begin with and markets would fix the problem (Health care, for example).

posted by: Liberty Lover on 03.06.07 at 05:44 PM [permalink]



Fragile and not inevitable.

It should not be too long before Putin in Russia and Chavez in Venezuela close their dictatorial grips on capital, people, ideas, etc moving across their borders.

Anecdotally, I find lots of evidence of resistance to globalization. I can't find anyone at work who thinks globalization is a good thing. They think its only purpose is to ship jobs overseas for cheap labor. The global ideological hard-left hates Bush and uses that as an excuse to pressure trade. The ideological hard-right is suspicious of immigrants.

Globalization is like capitalism in this respect: it’s much easier to criticize it and call for more government to “solve” some problem than it is to explain the problem was probably caused by government to begin with and markets would fix the problem (Health care, for example).

posted by: Liberty Lover on 03.06.07 at 05:44 PM [permalink]






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