The world is spiky, The world is flat ( a contrast in perspectives on Globalization ) PDF

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It is an article on perspectives on globalization. Here two contradictory notions have been compared along with examples. Moreover, another notion has also been formulated with the help of the previous one. Finally, an overall assessment and analysis of the concepts have been summarized...

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Econometrics I ECON-3501

Submitted By Abir Hassan ID No. 16141012 Batch: 16B Department of Economics

Submitted To Emran Hasan Lecturer Department of Economics

The World Is Spiky, The World Is Flat

Bangladesh University of Professionals Date of Submission: 7th May, 2018

ONTENT NTSS CONTE NT

ABSTRACT ............................................................................................................ 2 INTRODUCTION ..................................................................................................... 3 WORLD IS FLAT ..................................................................................................... 3 WORLD IS NOT FLAT .............................................................................................. 4 WORLD IS SPIKY .................................................................................................... 5 POPULATION ..................................................................................................... 6 LIGHT EMISSIONS ............................................................................................... 6 PATENTS ........................................................................................................... 6 SCIENTIFIC CITATION ........................................................................................... 7 SPIKY OR FLAT? ..................................................................................................... 7 THE WORLD: BOTH SPIKY AND FLAT ........................................................................ 8 CONCLUSION ........................................................................................................ 8 REFERENCES ......................................................................................................... 9

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ABS BSTRA TRA TRACT CT Though globalization is a very common word, it’s meaning for the state and economic strategies, structure and policies remains a formidable governance challenge till today. Two popular views about globalization by two writers got considerable attention in recent years. Firstly, Thomas Friedman in his best-selling new book published in April, 2005, says “The World Is Flat” and Richard Florida in October, 2005 issue of Atlantic Monthly asserts “The World Is Spiky”. In this paper, the discussion is extended on globalization through economic expansion, more specifically, two opposite viewpoints are discussed on the issue of globalization. Here it is examined whether the globalization actually creates an even field for socio-economic development for all countries irrespective of their locations. Critics and researchers have debated about this for past several years but could not agree upon a solitary notion. The purpose of this paper is to observe, analyze and infer what globalization really means and what could be the best perspective for mankind. It will also be known why it is so important for people to know how this global connectivity is affecting them. Only secondary data available in journals, newspaper, book pdf, website, online articles etc. have been used in the discussion. Absence of primary data and empirical evidence can be regarded as limitations. Arguments have been put rationally based on real situations that human being are living in a mixed globalization state where flatness creates opportunities but does not free people from spikiness. One must be able to keep pace with the rest of the world through study of these differing perspectives.

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INT NTROD ROD RODUC UC UCTIO TIO TION N “Never accept the world as it appears to be, dare to see it for what it could be”- a saying by Dr. Harold Winston inspires mankind to question about their own existence again. The technological revolution of the 21st century certainly flattened the round world through the tools of global connectivity. But these may be illusions through bare eyes while the world may not be so flattened up as it seems to be. The more someone looks close, the less he sees. And to reveal the mystery, two pioneers came up – Thomas L. Friedman, an American journalist and author, currently working for the New York Times and Richard Florida, the hirst professor of public policy at George Mason University, who appear to clash with each other. The flatness and spikiness that has been mentioned are static metaphors of space which means they define a point in time. So the missing puzzle is the relative velocity of change like a movie showing changes over time.

WORL ORLD D IS FLA LAT T The international best-selling book “The World Is Flat” attracted a whole bunch of people supporting in favor of globalization. Here the focus is on creation of ‘level playing field’ for all in the global economy. The whole thing started during a visit by Friedman in India; looking at a wall screen that connects Infoys Technologies Limited’s global supply chain (Friedman, 2005). He observes that any man from anywhere in the world can reach any corner of the world within a single moment and that’s how the world is getting flattened. He studied the forces of globalization and divided it into 3 phases (Friedman, 2005). i. ii. iii.

Globalization 1.0 (1492-1800) Globalization 2.0 (1800-2000) Globalization 3.0 (2000-Present)

He asserts that there are 10 main forces that are flattening the world. He notifies Berlin Wall Fell (11 September, 1989) as the first flattener which not only meant the end of cold war but also aided the establishment of global connectivity. While wall falls, windows come up (Friedman, 2005). This is the Windows that runs the PCs(Personal Computers), an indication of new era of technology. The creation of the World Wide Web which was initiated by the Netscape (8 September,1995) the first dominant browser which later on lost it’s market to the ‘internet explorer’ and rest is known to all by the present situation on the internet. It flattened the world more than ever before and so did the Workflow Software when machines are able to talk to machines. The other flatteners are Uploading, Outsourcing, Offshoring, Supply-Chaining, Insourcing, In-forming, the Steroids (Friedman, 2005). He also mentioned about “Triple Convergence”. The first convergence is the creation of level playing field by establishment of trade and communications. The second one is the merger of the new playing field through innovative ways and bringing diversification in the arena. The third convergence brought each and every person in this world on this playing field. 7 Billion people in the world are now part of global 3|P age

connection where country like Russia and China also opened up broadly for prosperity (Friedman, 2005). In his work, Thomas Friedman argues that the world is getting more connected day by bay in such a way that eradicates shortcomings of communication, business, trade, job opportunity amongst other things. For example, in his book, he refers to the ability of businesses to set up their work offshore i.e. someone can work from any corner of the world at any moment he wants according to his choice of ease (Friedman, 2005). It may be a corporate office or even a call center and many others as they suit. Through the development of communicative tools like facebook, messenger, viber, linkedin and many other accessories, it seems quite promising that the world is really flattening. For example, Friedman cited David Rothkopf, a former senior Department of Commerce official in the Clinton administration and presently a private strategic consultant, in his book. David Rothkopf opined about flattening to become an inflection point or benchmark like the industrial revolution, or the government intervention during the great depression (Friedman, 2005). Friedman tried to show that, the next emerging player in the field can be anyone, may be from Bangladesh or may be from Nigeria or any remote place that was never a hot favorite before. But the fact is worth concerning whether the playing field became level for all or it created equal level for certain portion of the population.

WORL D IS NOT FLA T ORLD LAT Despite the universal acceptance of the connected world, many have opined otherwise about globalization. Among such ideas, Pankaj Ghemawat, professor of the IESE Business School and the Harvard Business School, put forward the strongest proponents for the idea that the world is not flat. He argues that the world is not as connected as it seems. As it is said earlier, the more someone looks, the less he sees. Because everyone only observes the magic of internet and modern high technologies but how much access one has does not matter much. Not everyone is getting full access of the rewards of high technologies like Ghemawat asserts only a fraction is under globalization (Ghemawat, 2007). Today people of the developing countries are getting introduced to high-tech instruments like mobile phone, computer, VR (Virtual Reality), 3D movie experience etc. but still they lack many resources and facilities that are readily available in developed countries. Pankaj Ghemawat relied more on empirical proof than that of merely fantasizing about the theory. For example, in his analysis of foreign direct investment data (the amount that countries invest in other countries), he found out that it is only about 10% which indicates that most of the investment are still local while global sector plays a minor role (Ghemawat, 2007). The interesting fact is, the same case is repeated while examining other sectors like call revenues, management research, private charity, patents, and portfolio investment as it happened for Foreign Direct Investment (FDI).

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Another key indicator for the rise of globalization, trade-to-gdp ratio is only 20% which means the trade among countries also not that much comparing to the local trades (Ghemawat, 2007). Many protectionist policies as well as political relation among countries constrains the flattening. Even the internet is mostly used to communicate locally. For example, very few people engage in communication with foreign people through internet and even people buy things from local online shops due to lack of access to foreign online market or security purpose. So the key concept is the world is not so flat as the supporters of flatness suggests to be. The stunning magic of technology is merely an exaggeration of the supporters of Thomas Friedman. Justin Fox, an American Journalist, in a November 3rd, 2014 piece published in the Harvard Business Review, also supports the idea about the world not being flat or at least not yet. His perception about globalization is that, the pace of it is still pretty slow. There is still a long time to reach the peak to call the world ‘flat’. To strengthen the argument, he considers the DHL Global Connectedness Index 2014 (collected by Pankaj Ghemawat and Steven Altman) (Fox, 2014). It examines trade, capital, people and information flows to provide a clear view of how entwined the citizens of the world are with each other (Fox, 2014). These data showed Fox that overall breadth of the global connectedness is decreasing. By breadth here means a measurement of how many different countries, a particular country is interacting with and the distances between the nations or over which the trade occurs. For example, in Bahama, tourist trade is popular but study tells that 80% of the tourists are native while only 20% are coming from foreign countries. So the distance may still create a boundary which constrains the world in getting flatter. Beside this, Pankaj Ghemawat also looked into the data of trade between developing countries and developed countries. Surprisingly the trade between more developed country is less frequent which escaped the eyes of flat world supporters. Thus the world may be flat-like but still not so smooth as the viewers like Thomas Friedman suggests.

WORL ORLD IKYY D IS SPIK Richard Florida concentrates on a particular quote from the best-selling book of Thomas Friedman: “In a flat world you can innovate without having to emigrate” (Hagel, 2005). He suggests that location plays a vital role by variety of measures which makes the world spiky. It means activities, particularly the economic ones, are congested in a relatively few geographical locations. Richard Florida raises few issues concerning this notion to demonstrate the spikiness (Florida, 2005). These are as followsPopulation density in urban areas or cities specifically Light emissions ( an exceptional proxy for economic activity) Patent filing Citations to scientists in leading fields 5|P age

OPULAT ULATION POP ULAT ION

Richard Florida also use some topographical metaphors to divide the world intoPeaks: the cities that generate innovations such as New York, Tokyo, Los Angeles, Amsterdam, Paris and many others (Florida, 2005). Hills: the industrial and service centers that produce mature products and support innovation centers such as the tram stops of Oldham Mumps and Freehold are in some of the most economically deprived areas of Greater Manchester (Florida, 2005). Valleys: places with so little connection to the global economy and few immediate prospects such as city like Detroit (Florida, 2005). Friedman’s idea matches with the level playing field for peaks highly and merely a part is for the hills while valleys remain in the dark. The equal playing field is not equality for all and it cannot be until this discrimination is resolved (Florida, 2005). The population proportion living in urban areas increased to 50% from 30% at present in comparison to the 1950s (Hagel, 2005). Cities have always acted as flywheel of innovation, center of growth, founder of monuments and people have clustered here for a new hope in search of economic opportunities. The equal fields are now the fields of cities but a large portion of the world don’t know the existence of a playing field.

LIG HT EMI SSIO NS IGHT MISSIO SSIONS The metaphors themselves indicate the spikiness of the world. For example, the combined actual economic output of the 10 largest metropolitan areas of the United States is greater than that of the actual economic output of any other country in the world except Japan. The economy of New York stands alone against the whole economy of Russia or Brazil. If the US metropolitan states were considered as separate countries they would have been included in top 100 economies of the world (Hagel, 2005). Light emissions have been used as representation of energy use and production of course. While the lights are almost high like the Himalayas in some places like the U.S. and Japan, most of the world remain in darkness (Florida, 2005). A very simple example is the present condition of education of Bangladesh. Most of the brilliant minds are flying abroad to utilize their talents but many thirsty minds remain unguided and nip in the bud due to lack of sufficient opportunities.

PATE NT ATENT NTSS Another important point is ‘Innovation’ where Richard Florida mentioned that USA and Japan possess two-thirds of the 300,000 patents in 2002 (Florida, 2005). The ratio has not changed much since then. Innovation, an indispensable part of development, remains a dream for the “valleys”. The flat world mocks itself with the spikiness throughout.

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CIENT ENTIF IFIC TATION SCI ENT IF IC CITAT ION

It is really surprising that all the prolific and influential scientific researchers are from the US and European countries. This clearly indicates that creative talents needs to emigrate to flourish which ultimately reduces the flatness.

SPI KY O R FLAT? PIKY OR Thomas Friedman believes that cities are not much important in consideration of economic growth rather the blessings of globalization - referred as ‘flatness’- is in the driving role. If someone wants to innovate, he does not require to go in places with higher opportunities. But the real picture may speak differently as people are migrating to cities frequently in search of better work, education and so on. For example, in Bangladesh everyday people from rural region are coming to the capital, Dhaka in search of work or for admitting in better schools which ultimately causing problems like traffic jam, price hike etc. Though the world is flattening, this flattening may not be same for all the regions inside and across the countries. Rangpur is not getting developed at the same pace like Dhaka. It does make a difference living in an urban area than in a rural area. Richard makes an important point: “Because globalization has increased the returns to innovation, by allowing innovative products and services to quickly reach consumers worldwide, it has strengthened the lure that innovation centers hold for our planet’s best and brightest, reinforcing the spikiness of wealth and economic production” (Florida, 2005). Here begins the paradox- few of the forces that flattens the world according to Thomas Friedman are at the same time causing spikiness to occur. So, there are civilizations, evolved through development, getting concentrated in specific regions without any confirmation of efficiency. Richard Florida has extensively written on this issue in his published book ‘The Rise of the Creative Class (2002)’ and ‘The Flight of the Creative Class (2005)’ (Hagel, 2005). It actually clears the natural phenomenon- creative talents search for opportunities to excel. Such as, many students in Bangladesh seek for opportunities in studying abroad and work as well and some of them ultimately ends up in developed cities while others still seek for chances in future residing in native land. Richard Florida emphasizes on the environment for these new talents. One of the missing point in the article is the dynamic nature of spikiness. By dynamic, it means the competition prevailing among spikes, some spikes may become flat while other new spikes may emerge elsewhere which was the theme of the book by Thomas Friedman. The world is flattening in terms of connectivity and new creative minds may participate globally irrespective of their geographical locations i.e. it does not matter whether someone is in Shenzhen or Bangalore. Another limitation seems to be the narrow perspective of Richard Florida about innovation. He is confined to patent protected innovations and fundamental scientific innovations. For example, although Shenzhen and Bangalore are innovative, they focus on rapid incremental process innovation that has been completely excluded from Richard Flori da’s article (Hagel, 7|P age

2005). This causes Richard to miss few of the key dynamics that are acting to reshape the global economy as well as the spikiness.

PIKY THE WORLD : BOTH SPI KY AND FL AT While Thomas Friedman and Richard Florida conflicts on the ‘flat or spiky’ issue, mankind may be living in a world both flat and spiky. Technology has contributed in meteoric rise of the middle class of developing countries which obviously proves the flattening of the world. On the other hand, though it is developing the nations, they are getting focused on particular areas which ultimately rises spikiness. This controversy reminds of the phillips curve as the flatter the world gets, the more is the chance of emerging spikes. Based on the evidence gathered by Richard Florida, the world is getting spikier as more urbanization takes place (Hagel, Friedman vs. Florida, or How to Thrive in a World Both Flat and Spiky, 25 September, 2012). Most of the times, the focus is on the process of mobilization of rapidly developing talents in the fast-growing spikes to prepare them for the global market. But there is still opportunity to settle the new talents and initiators in different spike cities equivalently and then create a connection through digital technology infrastructure. Such a model where competitors turn into collaborators is seemingly rare but this problem can be solved by adaptation through building trust-based relationships, connecting capabilities and amplifying innovation and learning across the spikes.

CONC LUS ION ONCLUS LUSION In this world, patents and scientific...