rom the ability to communicate with friends in London via instant messaging to the presence of canned okra from Lebanon in the aisles of Stop n Shop, there is evidence all around us that the world is becoming a smaller place. So too, alas, are indicators that significant distances -- political, cultural, and economic -- stand between us and our fellow inhabitants of the earth.
In his 2000 best-seller, "The Lexus and the Olive Tree", New York Times columnist Thomas Friedman rhapsodized about the positive implications of globalization and the proliferation of the latest development in information technology. No two countries with McDonald s, he reported, had ever gone to war. His 2002 best-seller, "Longitudes and Attitudes," focuses more on the downsides of globalization. It turns out, of course, that in our global village, terrorists can use the Internet to organize, and that even isolated countries like North Korea can gain the expertise needed to produce highly sophisticated weaponry.
Despite today's uncertainties -- many of which have been economically disruptive -- the
forces that spurred globalization are still immensely powerful. The trade in goods, services, and ideas is increasing,
not decreasing. In a fascinating interview, Michael Eskew, the chairman and chief executive officer of United Parcel
Service (UPS), provides insight into one of the workhorses of the global economy (link).
UPS, which began life as a messenger operation in Seattle, now employees 370,000 people in 200 countries. But while
UPS fleet of brown trucks and brown-clad delivery people provide the muscle, the human element is only half the
story. "What really makes us the best is information," Mr. Eskew says. "Information that tells us
where that package is, when it's late, what building it's been in, where it went, who sorted it in the wrong direction."
The recent experience of Argentina, whose decision to devalue the peso has caused massive economic dislocation, shows that discussions about capital flows are not simply academic exercises. At a lively Stern forum last fall (link), Argentina s former economy minister Domingo F. Cavallo (a Henry Kaufman Visiting Professor at NYU Stern), Mario Blejer, a former governor of the Central Bank of Argentina, and NYU Stern professor Nouriel Roubini debated the causes of -- and potential solutions to -- the Argentina morass. Surprisingly perhaps, the economists spent a good deal of time talking politics. For economic growth, you need strong institutions. And for that, you need a well-functioning political system, Professor Cavallo said. The functioning of the constitutional system is more important than any question related to the exchange rate system.
Niall Ferguson, the distinguished Oxford historian who is a professor at NYU Stern, similarly argues that institutions matter. In an elegant and provocative essay -- drawn from his most recent book, "Empire" -- Ferguson argues that the institutions and practices promulgated by the British Empire in the 19th and early 20th century made it one of the original progenitors of globalization (link). "A case can be made that the British Empire was economically beneficial, not only to Britain herself, but also to her Empire -- and perhaps even to the world economy as a whole," he writes.
History similarly informs Lawrence J. White s present-minded discussion of the telecommunications
Drawing parallels between the current telecom glut and the overcapacity of railroads in the 1880s and 1890s, the
savings and loan debacle of the late 1980s, and Japan s rolling crises of the past decade, Professor White offers
some advice for regulators and entrepreneurs: declare bankruptcy, recognize and absorb losses, and move on. And
continue to use sound antitrust policy to encourage innovation. "Good public policy could steer us through
the turmoil and allow us to emerge fairly rapidly with a more efficient telecommunications sector."
Increasingly, growth-seeking giants like Wal-Mart are going to turn to Asia, says Bruno
Bich, the second generation chairman and CEO of the French consumer products company. "I think that in the
70s, you could not call yourself an international company if you were not strong in the United States," he
said in a NYU Stern interview (link). I think in 10 or 20 years you will not
call yourself a strong global company if you are not strong in Asia."