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  • Translator: Joseph Geni Reviewer: Morton Bast

  • I'm here to talk to you about how globalized we are,

  • how globalized we aren't,

  • and why it's important to actually be accurate

  • in making those kinds of assessments.

  • And the leading point of view on this, whether measured

  • by number of books sold, mentions in media,

  • or surveys that I've run with groups ranging from

  • my students to delegates to the World Trade Organization,

  • is this view that national borders

  • really don't matter very much anymore,

  • cross-border integration is close to complete,

  • and we live in one world.

  • And what's interesting about this view

  • is, again, it's a view that's held by pro-globalizers

  • like Tom Friedman, from whose book this quote is obviously excerpted,

  • but it's also held by anti-globalizers, who see this giant

  • globalization tsunami that's about to wreck all our lives

  • if it hasn't already done so.

  • The other thing I would add is that this is not a new view.

  • I'm a little bit of an amateur historian, so I've spent

  • some time going back, trying to see the first mention

  • of this kind of thing. And the best, earliest quote

  • that I could find was one from David Livingstone,

  • writing in the 1850s about how the railroad, the steam ship,

  • and the telegraph were integrating East Africa perfectly

  • with the rest of the world.

  • Now clearly, David Livingstone

  • was a little bit ahead of his time,

  • but it does seem useful to ask ourselves,

  • "Just how global are we?"

  • before we think about where we go from here.

  • So the best way I've found of trying to get people

  • to take seriously the idea that the world may not be flat,

  • may not even be close to flat, is with some data.

  • So one of the things I've been doing over the last few years

  • is really compiling data on things that could either happen

  • within national borders or across national borders,

  • and I've looked at the cross-border component

  • as a percentage of the total.

  • I'm not going to present all the data that I have here today,

  • but let me just give you a few data points.

  • I'm going to talk a little bit about one kind of information flow,

  • one kind of flow of people, one kind of flow of capital,

  • and, of course, trade in products and services.

  • So let's start off with plain old telephone service.

  • Of all the voice-calling minutes in the world last year,

  • what percentage do you think were accounted for

  • by cross-border phone calls?

  • Pick a percentage in your own mind.

  • The answer turns out to be two percent.

  • If you include Internet telephony, you might be able

  • to push this number up to six or seven percent,

  • but it's nowhere near what people tend to estimate.

  • Or let's turn to people moving across borders.

  • One particular thing we might look at, in terms of

  • long-term flows of people, is what percentage

  • of the world's population is accounted for

  • by first-generation immigrants?

  • Again, please pick a percentage.

  • Turns out to be a little bit higher.

  • It's actually about three percent.

  • Or think of investment. Take all the real investment

  • that went on in the world in 2010.

  • What percentage of that was accounted for

  • by foreign direct investment?

  • Not quite ten percent.

  • And then finally, the one statistic

  • that I suspect many of the people in this room have seen:

  • the export-to-GDP ratio.

  • If you look at the official statistics, they typically indicate

  • a little bit above 30 percent.

  • However, there's a big problem with the official statistics,

  • in that if, for instance, a Japanese component supplier

  • ships something to China to be put into an iPod,

  • and then the iPod gets shipped to the U.S.,

  • that component ends up getting counted multiple times.

  • So nobody knows how bad this bias

  • with the official statistics actually is, so I thought I would

  • ask the person who's spearheading the effort

  • to generate data on this, Pascal Lamy,

  • the Director of the World Trade Organization,

  • what his best guess would be

  • of exports as a percentage of GDP,

  • without the double- and triple-counting,

  • and it's actually probably a bit under 20 percent, rather than

  • the 30 percent-plus numbers that we're talking about.

  • So it's very clear that if you look at these numbers

  • or all the other numbers that I talk about in my book,

  • "World 3.0," that we're very, very far from

  • the no-border effect benchmark, which would imply

  • internationalization levels of the order of 85, 90, 95 percent.

  • So clearly, apocalyptically-minded authors

  • have overstated the case.

  • But it's not just the apocalyptics, as I think of them,

  • who are prone to this kind of overstatement.

  • I've also spent some time surveying audiences

  • in different parts of the world

  • on what they actually guess these numbers to be.

  • Let me share with you the results of a survey

  • that Harvard Business Review was kind enough to run

  • of its readership as to what people's guesses

  • along these dimensions actually were.

  • So a couple of observations stand out for me from this slide.

  • First of all, there is a suggestion of some error.

  • Okay. (Laughter)

  • Second, these are pretty large errors. For four quantities

  • whose average value is less than 10 percent,

  • you have people guessing three, four times that level.

  • Even though I'm an economist, I find that

  • a pretty large error.

  • And third, this is not just confined to the readers

  • of the Harvard Business Review.

  • I've run several dozen such surveys in different parts

  • of the world, and in all cases except one,

  • where a group actually underestimated

  • the trade-to-GDP ratio, people have this tendency

  • towards overestimation, and so I thought it important

  • to give a name to this, and that's what I refer to

  • as globaloney, the difference between the dark blue bars

  • and the light gray bars.

  • Especially because, I suspect, some of you may still be

  • a little bit skeptical of the claims, I think it's important

  • to just spend a little bit of time thinking about

  • why we might be prone to globaloney.

  • A couple of different reasons come to mind.

  • First of all, there's a real dearth of data in the debate.

  • Let me give you an example. When I first published

  • some of these data a few years ago

  • in a magazine called Foreign Policy,

  • one of the people who wrote in, not entirely in agreement,

  • was Tom Friedman. And since my article was titled

  • "Why the World Isn't Flat," that wasn't too surprising. (Laughter)

  • What was very surprising to me was Tom's critique,

  • which was, "Ghemawat's data are narrow."

  • And this caused me to scratch my head, because

  • as I went back through his several-hundred-page book,

  • I couldn't find a single figure, chart, table,

  • reference or footnote.

  • So my point is, I haven't presented a lot of data here

  • to convince you that I'm right, but I would urge you

  • to go away and look for your own data

  • to try and actually assess whether some of these

  • hand-me-down insights that we've been bombarded with

  • actually are correct.

  • So dearth of data in the debate is one reason.

  • A second reason has to do with peer pressure.

  • I remember, I decided to write my

  • "Why the World Isn't Flat" article, because

  • I was being interviewed on TV in Mumbai,

  • and the interviewer's first question to me was,

  • "Professor Ghemawat, why do you still believe

  • that the world is round?" And I started laughing,

  • because I hadn't come across that formulation before. (Laughter)

  • And as I was laughing, I was thinking,

  • I really need a more coherent response, especially

  • on national TV. I'd better write something about this. (Laughter)

  • But what I can't quite capture for you

  • was the pity and disbelief

  • with which the interviewer asked her question.

  • The perspective was, here is this poor professor.

  • He's clearly been in a cave for the last 20,000 years.

  • He really has no idea

  • as to what's actually going on in the world.

  • So try this out with your friends and acquaintances,

  • if you like. You'll find that it's very cool

  • to talk about the world being one, etc.

  • If you raise questions about that formulation,

  • you really are considered a bit of an antique.

  • And then the final reason, which I mention,

  • especially to a TED audience, with some trepidation,

  • has to do with what I call "techno-trances."

  • If you listen to techno music for long periods of time,

  • it does things to your brainwave activity. (Laughter)

  • Something similar seems to happen

  • with exaggerated conceptions of how technology

  • is going to overpower in the very immediate run

  • all cultural barriers, all political barriers,

  • all geographic barriers, because at this point

  • I know you aren't allowed to ask me questions,

  • but when I get to this point in my lecture with my students,

  • hands go up, and people ask me,

  • "Yeah, but what about Facebook?"

  • And I got this question often enough that I thought

  • I'd better do some research on Facebook.

  • Because, in some sense, it's the ideal kind of technology

  • to think about. Theoretically, it makes it

  • as easy to form friendships halfway around the world

  • as opposed to right next door.

  • What percentage of people's friends on Facebook

  • are actually located in countries other than where

  • people we're analyzing are based?

  • The answer is probably somewhere between

  • 10 to 15 percent.

  • Non-negligible, so we don't live in an entirely local

  • or national world, but very, very far from the 95 percent level

  • that you would expect, and the reason's very simple.

  • We don't, or I hope we don't, form friendships at random

  • on Facebook. The technology is overlaid

  • on a pre-existing matrix of relationships that we have,

  • and those relationships are what the technology

  • doesn't quite displace. Those relationships are why

  • we get far fewer than 95 percent of our friends

  • being located in countries other than where we are.

  • So does all this matter? Or is globaloney

  • just a harmless way of getting people to pay more attention

  • to globalization-related issues?

  • I want to suggest that actually,

  • globaloney can be very harmful to your health.

  • First of all, recognizing that the glass

  • is only 10 to 20 percent full is critical to seeing

  • that there might be potential for additional gains

  • from additional integration,

  • whereas if we thought we were already there,

  • there would be no particular point to pushing harder.

  • It's a little bit like, we wouldn't be having a conference

  • on radical openness if we already thought we were totally open

  • to all the kinds of influences that are being talked about

  • at this conference.

  • So being accurate about how limited globalization levels are

  • is critical to even being able to notice

  • that there might be room for something more,

  • something that would contribute further to global welfare.

  • Which brings me to my second point.

  • Avoiding overstatement is also very helpful

  • because it reduces and in some cases even reverses

  • some of the fears that people have about globalization.

  • So I actually spend most of my "World 3.0" book

  • working through a litany of market failures and fears

  • that people have that they worry globalization is going to exacerbate.

  • I'm obviously not going to be able to do that for you today,

  • so let me just present to you two headlines

  • as an illustration of what I have in mind.

  • Think of France and the current debate about immigration.

  • When you ask people in France what percentage

  • of the French population is immigrants,

  • the answer is about 24 percent. That's their guess.

  • Maybe realizing that the number is just eight percent

  • might help cool some of the superheated rhetoric

  • that we see around the immigration issue.

  • Or to take an even more striking example,

  • when the Chicago Council on Foreign Relations

  • did a survey of Americans, asking them to guess

  • what percentage of the federal budget went to foreign aid,

  • the guess was 30 percent, which is

  • slightly in excess of the actual level — ("actually about ... 1%") (Laughter) —

  • of U.S. governmental commitments to federal aid.

  • The reassuring thing about this particular survey was,

  • when it was pointed out to people how far

  • their estimates were from the actual data,

  • some of themnot all of themseemed to become

  • more willing to consider increases in foreign aid.

  • So foreign aid is actually a great way