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." Yes, information -- and information technology (IT) -- increasingly drive commerce. Unlike oil or bananas, bits and bytes can move freely and cheaply from pretty much any point on the globe to another at the click of a mouse. That allows an enterprising company to provide IT services to U.S. clients from a location as seemingly remote as India. Today, Infosys, a software giant based in India and listed on the Nasdaq, counts dozens of blue-chip U.S. companies among its clients. In their case study (link) Raghu Garud, Aruna Kumaraswamy and Monica Malhotra show how Infosys is creating a new paradigm that can be emulated by companies from Bangalore to Boston. "What most distinguishes Infosys is the way it systematically built up a post-modern, scalable enterprise for harnessing intellectual capital in the new information economy, they write." The realization that gaping cultural, political, and economic gulfs exist in a world theoretically made smaller is just one of many apparent contemporary paradoxes. Here s another: In recent years, the trade in international financial assets has increased sharply. And yet at the same time, the major economies have seen their paths diverge. We re growing together while growing apart. These two phenomena -- financial globalization and real regionalization -- as Fabrizio Perri and Jonathan Heathcote tell us, are directly related (link). After all, when capital moves more freely, it can follow and pursue returns, and react quickly to local shocks. 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 meltdown (link). 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." ature companies must expand in order to continue growing. But the leap into a foreign market can be daunting. Many companies gain initial knowledge from the experience they build up at home. But, report Peter Golder and Debanjan Mitra, crucial knowledge "can also be generated in foreign markets in which the firm already operates that are similar to potential new markets." In examining Wal-Mart s mixed efforts to expand overseas (link), David Liang concludes that the retailing giants could have benefited from what Professors Golder and Mitra call near-market knowledge. When it first opened in Argentina, Wal-Mart stores stocked 110-volt appliances; the local standard was 220 volts. Wal-Mart has stumbled, Mr. Liang concludes, in part because it has failed to replicate sufficiently the sources of competitive advantage -- its brand, product mix, logistics operations, among them -- that it has developed at home. 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." Today, globalization is a loaded term. It inspires visionary idealists and embittered protesters alike. There s a tendency on both sides of the debate to inflate the costs and benefits of this powerful and unstoppable trend. But if you take the long view, and analyze trends, and place them in their proper context -- as the authors in this issue do -- you can t help but think that the way of the future lies more in crossing borders than in isolation. Daniel Gross is editor of Sternbusiness.