“Feh” to globalization

That's the conclusion of Pankaj Ghemawat in this Foreign Policy essay. He makes a convincing case: In truth, the world is not nearly as connected as these writers would have us believe. Despite talk of a new, wired world where information, ideas, money, and people can move around the planet faster than ever before, just a fraction of what we consider globalization actually exists. The portrait that emerges from a hard look at the way companies, people, and states interact is a world that?s only beginning to realize the potential of true global integration. And what these trend?s backers won?t tell you is that globalization?s future is more fragile than you know.... One favorite mantra from globalization champions is how ?investment knows no boundaries.? But how much of all the capital being invested around the world is conducted by companies outside of their home countries? The fact is, the total amount of the world?s capital formation that is generated from foreign direct investment (FDI) has been less than 10 percent for the last three years for which data are available (2003?05). In other words, more than 90 percent of the fixed investment around the world is still domestic. And though merger waves can push the ratio higher, it has never reached 20 percent. In a thoroughly globalized environment, one would expect this number to be much higher?about 90 percent, by my calculation. And FDI isn?t an odd or unrepresentative example.... [T]he levels of internationalization associated with cross-border migration, telephone calls, management research and education, private charitable giving, patenting, stock investment, and trade, as a fraction of gross domestic product (GDP), all stand much closer to 10 percent than 100 percent. The biggest exception in absolute terms?the trade-to-GDP ratio shown at the bottom of the chart?recedes most of the way back down toward 20 percent if you adjust for certain kinds of double-counting. So if someone asked me to guess the internationalization level of some activity about which I had no particular information, I would guess it to be much closer to 10 percent?the average for the nine categories of data in the chart?than to 100 percent. I call this the ?10 Percent Presumption.? More broadly, these and other data on cross-border integration suggest a semiglobalized world, in which neither the bridges nor the barriers between countries can be ignored. From this perspective, the most astonishing aspect of various writings on globalization is the extent of exaggeration involved. In short, the levels of internationalization in the world today are roughly an order of magnitude lower than those implied by globalization proponents.Read the whole thing. This paragraph helps explain to me why my editor at Princeton made me remove the world "globalization" from the title of All Politics Is Global: According to the U.S. Library of Congress?s catalog, in the 1990s, about 500 books were published on globalization. Between 2000 and 2004, there were more than 4,000. In fact, between the mid-1990s and 2003, the rate of increase in globalization-related titles more than doubled every 18 months.