Global Prosperity and How to Achieve it
The Great Crisis of 2008 has forced many of us to reexamine our beliefs about markets and globalization. Do propositions about the gains from market integration survive the reality of market failures? Or might we be better off - as people are particularly prone to suggest in turbulent times - pulling back from, rather than pushing forward with, integration in order to deal with our problems on a smaller, more manageable scale?
Unfortunately, discussion of these and related questions seems to have broken down. This book aims to bring analysis to bear on those fundamental questions - in a way that advances the discussion among people who are interested in building a better world rather than tearing down the present one.
Ghemawat starts by presenting and examining the hard data including:
Secondly, the author looks at lessons from history, philosophy, and other disciplines, to better understand deeply held convictions. For example, calls for protectionism triggered by the crisis are a modern manifestation of what human beings have done throughout history when faced with a threatening environment. And while economics teaches us that closing ranks does more harm than good, people don't intuitively see it that way, especially when they're scared.
- The extent to which goods and services, capital resources, information streams, and people actually cross national borders in the world we live in;
- How much GDP is estimated to grow if we open up more;
- How the impact of globalization on labor markets compares to that of technological change;
- Whether connecting up volatile national markets increases risk through contagion or reduces it via diversification;
- Whether trade causes more or less environmental pollution.
Thirdly, the book seeks to expand policy in dealing with increased integration. More globalization is widely believed to go hand-in-hand with deregulation, and vice versa. Thus, the entire policy space collapses down to a single binary choice, which is referred to as the tug of war between World 1.0 and World 2.0. So, in addition to describing the range of possibilities, Ghemawat articulates a set of propositions for managing the nexus of integration and regulation.
World 3.0's remapping of the terrain suggests a path to greater prosperity that involves more market integration but also addresses its potential negative ramifications. Although contrary to powerful human instincts, increased integration reinforces the trend through the millennia of increasing prosperity and safety by broadening circles of cooperation. It also has some specific implications for what it means to be cosmopolitan in such a context.
While the book draws on the work of researchers in many areas, it mainly leans on the following two disciplines:
Ultimately, this book invites you to reexamine your own views about globalization. While you may not end up in the same place as the author, a willingness to revise your view of the world where it doesn't conform to the evidence should get you somewhere interesting. Smart policies can push us in the right direction, but if we change our mind-sets we can get farther. And a crisis can be the best time to get out of the groove of traditional thinking.
- Economics: Industrial organization economics' analysis of market failures and their regulation and international economics' empirical studies of how differences and distances affect trade and other kinds of flows.
- Business: Adds realism in the sense that business firms, not markets, mediate most international exchanges. In addition, it underscores the importance of pragmatism and a focus on value.
- “At last, some sense on globalization...deserves a wide audience...”
- “In World 3.0, Pankaj Ghemawat provides a fresh look at cross-border integration and its implications. He demonstrates why integration and regulation must be seen as complementary. And he offers great recommendations that should inspire all stakeholders in times of major global challenges. A must-read.”
Pascal Lamy, Director-General of the World Trade Organization (WTO)
- “We are currently stuck in ‘World 2.0,’ a world in which the further impact of global integration is seen as limited. Professor Ghemawat artfully proposes how we can move to ‘World 3.0,’ in which openness leads to wider technological, cultural, and social benefits. The transfer of knowledge— through people, trade, or investments—could have a significant impact on growth. This is an interesting and timely argument that deserves careful consideration.”
Dr. Supachai Panitchpakdi, Secretary-General of the UN Conference on Trade and Development (UNCTAD)
- “World 3.0 is a comprehensive framework for thinking about globalization, market failures, and market integration. Ghemawat sets a visionary but pragmatic agenda for senior managers, businesses, and governments. His views about managing capital reversals and imbalances while exploiting the large untapped potential of globalization are particularly relevant.”
Michel Camdessus, former Managing Director, International Monetary Fund
- “This book deserves to be read widely. It establishes—through the type of clinical analysis on which Ghemawat has built his reputation as a global strategist—that the current world we live in is, at best, semiglobalized, and then proceeds to spell out the implications of such a world for individuals, businesses, and governments.”
Ratan Tata, Chairman, Tata Group
- “This is the right book at the right time. After the most severe economic crisis since the Great Depression, many leaders are looking for ways to make the global economy more stable and sustainable. World 3.0 offers well-reasoned strategies for achieving that.”
Peter Löscher, President and Chief Executive Officer Siemens AG
- “Pankaj Ghemawat has provided an impressive and comprehensive analysis of the world’s situation in times of globalization and strong economic and social imbalances. His book contributes to fostering the mind-set that will enable us to reshape this world in a sustainable way. If we believe in ‘World 3.0,’ we will be able to build it.”
Mohammed Yunus, founder of Grameen Bank and recipient of the Nobel Prize for Peace