Tuesday, November 4, 2014

The World Is Not Flat And It Is Not Getting Flatter

Tom Friedman made a fortune by telling us a story about globalization and the process of economic integration between nations.  He made up the story by traveling around the globe and giving us his version of "Travels with Tom".   DHL, which is the global leader in logistics, commissioned a study of globalization by an expert in the field.  He did not take Tom Friedman's approach to the topic, he looked at the data and came to a different conclusion.  Globalization has recovered from the drop in trade after the crisis in the financial system.  That is, the level of trade has recovered while the depth and breadth of trade has declined and become more regional.  Trade between developed nations and emerging markets has continued as global supply chains have grown.  On the other hand,  trade between emerging market nations is becoming more regionalized.  Trade between Northern nations has been flat, and so has trade between the North and the South.  The growth in trade has been between Southern nations.

I was surprised by the data on communication flows.  Most of the Internet traffic never crosses national borders and telephone traffic is driven by immigration flows.  For example, telephone traffic between Mexico and India with the US is driven by immigration between those nations and the US.

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