The World is Round Again!

Came across an interesting article while browsing the net for Tata-JLo (!) deal yesterday. Pankaj Ghemawat, a chaired professor at Harvard Business School disagrees with Tom Friedman that globalization has reached its peak but instead believes that a lot of trade, immigration as well as “bits” travel only within national boundaries, and there is still a long way to go before we can knock down the walls we have built over centuries.

The findings fly in the face of Friedman’s famous work. Take flows of people. Much as we would like to believe that this figure would be astronomically high, it is not. Says Ghemawat, “If you look at the stock of first-generation immigrants divided by the total population of the world, it is barely 2.9%.”

In fact, he claims that in some metrics, we are just about reaching the 19th century level of globalization:

“On the people’s side, the current ratio of immigrants to world population is slightly lower than in 1910. On the FDI side, we have probably reached new heights, but it wasn’t until the 1990s that we got back to the FDI-to-GDP ratio that the world was seeing in 1901,” says Ghemawat.

I can imagine this happening because of the FDI from Britain, France, and Spain into their colonies (which had been quite impoverished by then by monies being sent back as profits). A lot of flow today is in the reverse, the Tata-JLo deal being a case in point. It would be interesting to see detailed numbers, or perhaps they are present in the book.

In fact, at some point, I thought the claim that there is actually increasing localization of products which goes against globalization was being made. For instance, Coke and Wal-Mart and McDonalds have to take local tastes into account. I wonder if this would count as a case of more globalization or less globalization. I guess parts of it can be argued either way.

Link to the original article.

Advertisements

Small Car, Giant Leap

image Ratan Tata really pulled it off. Half a decade back, he had said that he wanted to give India a small car that would be within reach of the millions of Indians who have to make do with two-wheelers, and last week in the Auto Expo, he delivered on his promise. And in what style — the whole world sits up an takes notice! The media’s been abuzz with the grand success that Tata has pulled off, to the dismay of all nay-sayers who believed that the car who found a thousand and one ways to make fun of the whole concept.

Even after the car came out, people have been debating why we need to clog our roads further, how RK Pachauri’s heart would miss a beat, and Sunita Narain would get a shiver down her spine, and Chidambaram due to the oil import bill. While I agree that such a cheap car is such a disruptive thing that the whole way we think about roads, infrastructure, and gas imports needs a rehash. (This really came out of a discussion on the Blogaloreans mailing list:) I would say that in the midst of all the praise and criticism, we miss a few important points.

Firstly, the car is not made just for the cities. The whole problem of parking and traffic vanishes as soon as you move outside the city’s center. The upshot for the rest of the country is far too high to just write off the car. Personally to me, preventing less privileged people from having the luxury of cars when the more affluent income groups easily swift around is a rather elitist point of view. To quote form WorldChanging:

Which leads us to the inescapable fact that a Tata Nano in Chennai is, from the biosphere’s perspective, similar to a Toyota Corolla in Vancouver.

Even within the cities, the traffic argument fails to pass muster when you consider that traffic and other problems would occur anyway — Nano or no nano — and all the new car has done is to accelerate the process. We would have to come up with more innovative means of handling the growing traffic on our roads anyway (taxing vehicles in the Central Business District like in London is one idea) and improve the mass transport system (like in Kolkata and Delhi). The government and the Municipal Corporations need to be more proactive both in legislation and regulation.

I am personally of the view that a car should be used as a means of last mile connectivity and local transport, and I like the concept of driving to the nearest Metro station, park your car there and go to work using the Metro. IMHO, this is the model that can scale in the long run. Obviously, another important use of a car is the drive through the highway, where the safety of a car is far more reassuring than a bike or a scooter.

Autos and cabs would be another thing that would benefit greatly from this development, and if we think about what causes the most madness on the roads (autorickshaws, bikes and the like) we would be better having single-sized four wheel vehicles, which have no option but to stick to the lane discipline.

image There are other fallouts as well, the chest thumping we can now do in a major manufacturing conference is only one of these. The world is sitting up and taking notice of India’s design and engineering prowess, and I am sure the outsourcing companies have already started giving higher revenue projections. The Tata car has almost become a barometer in some circles, and its making its competitors re-think their strategy. It’s already got them new enemies — Bajaj was so worried that he announced his own car! And the ramifications are not limited to the automobile segment alone! The new car revolution might just take the country by a storm just like the mobile revolution, and change our fundamental assumptions about a host of things.

All said and done, to me the biggest advantage of this new development is that Indians will have another thing to boast about — when they promised and delivered. It will add a new spring to their step, and inshallah, help our country forward over the coming years.

%d bloggers like this: