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Between 1820 and 1990, the share of world income going to today's wealthy nations soared from twenty percent to almost seventy. Since then, that share has plummeted to where it was in 1900. As Richard Baldwin explains, this reversal of fortune reflects a new age of globalisation that is drastically different from the old. In the 1800s, globalisation leaped forward when stea Between 1820 and 1990, the share of world income going to today's wealthy nations soared from twenty percent to almost seventy. Since then, that share has plummeted to where it was in 1900. As Richard Baldwin explains, this reversal of fortune reflects a new age of globalisation that is drastically different from the old. In the 1800s, globalisation leaped forward when steam power and international peace lowered the costs of moving goods across borders. This triggered a self-fueling cycle of industrial agglomeration and growth that propelled today's rich nations to dominance. That was the Great Divergence. The new globalisation is driven by information technology, which has radically reduced the cost of moving ideas across borders. This has made it practical for multinational firms to move labor-intensive work to developing nations. But to keep the whole manufacturing process in sync, the firms also shipped their marketing, managerial, and technical know-how abroad along with the offshored jobs. The new possibility of combining high tech with low wages propelled the rapid industrialisation of a handful of developing nations, the simultaneous deindustrialisation of developed nations, and a commodity supercycle that is only now petering out. The result is today's Great Convergence. Because globalisation is now driven by fast-paced technological change and the fragmentation of production, its impact is more sudden, more selective, more unpredictable, and more uncontrollable. As The Great Convergence shows, the new globalisation presents rich and developing nations alike with unprecedented policy challenges in their efforts to maintain reliable growth and social cohesion.


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Between 1820 and 1990, the share of world income going to today's wealthy nations soared from twenty percent to almost seventy. Since then, that share has plummeted to where it was in 1900. As Richard Baldwin explains, this reversal of fortune reflects a new age of globalisation that is drastically different from the old. In the 1800s, globalisation leaped forward when stea Between 1820 and 1990, the share of world income going to today's wealthy nations soared from twenty percent to almost seventy. Since then, that share has plummeted to where it was in 1900. As Richard Baldwin explains, this reversal of fortune reflects a new age of globalisation that is drastically different from the old. In the 1800s, globalisation leaped forward when steam power and international peace lowered the costs of moving goods across borders. This triggered a self-fueling cycle of industrial agglomeration and growth that propelled today's rich nations to dominance. That was the Great Divergence. The new globalisation is driven by information technology, which has radically reduced the cost of moving ideas across borders. This has made it practical for multinational firms to move labor-intensive work to developing nations. But to keep the whole manufacturing process in sync, the firms also shipped their marketing, managerial, and technical know-how abroad along with the offshored jobs. The new possibility of combining high tech with low wages propelled the rapid industrialisation of a handful of developing nations, the simultaneous deindustrialisation of developed nations, and a commodity supercycle that is only now petering out. The result is today's Great Convergence. Because globalisation is now driven by fast-paced technological change and the fragmentation of production, its impact is more sudden, more selective, more unpredictable, and more uncontrollable. As The Great Convergence shows, the new globalisation presents rich and developing nations alike with unprecedented policy challenges in their efforts to maintain reliable growth and social cohesion.

30 review for The Great Convergence: Information Technology and the New Globalization

  1. 4 out of 5

    Soren Dayton

    This book offers a really helpful framework for thinking about globalization that goes beyond somewhat stale discussions. It helps frame up the changes from the 1990s that have created such a havoc on the US economy and political scene. It also makes clear that the changes in the global economy mean that these jobs aren't coming back. This is not just because of automation but because those products are serving local economies. China and India and the like will consume goods made more closely. A This book offers a really helpful framework for thinking about globalization that goes beyond somewhat stale discussions. It helps frame up the changes from the 1990s that have created such a havoc on the US economy and political scene. It also makes clear that the changes in the global economy mean that these jobs aren't coming back. This is not just because of automation but because those products are serving local economies. China and India and the like will consume goods made more closely. And, more importantly, they will consume services that are more attuned to their local cultures. You can't provide those from the West.

  2. 4 out of 5

    Paul O'Leary

    Yet another book on the affects of globalization? Yes, I'm afraid so. But this one is worth a gander. Baldwin's book, The Great Convergence, elucidates how things are made in business today, how information and communication technology has radically changed production, and, lastly, what this now means for jobs. If you instinctively imagine this to be a jeremiad, as most books on globalization and jobs are, you're mostly correct. Baldwin declares without equivocation that the hoary mercantile vie Yet another book on the affects of globalization? Yes, I'm afraid so. But this one is worth a gander. Baldwin's book, The Great Convergence, elucidates how things are made in business today, how information and communication technology has radically changed production, and, lastly, what this now means for jobs. If you instinctively imagine this to be a jeremiad, as most books on globalization and jobs are, you're mostly correct. Baldwin declares without equivocation that the hoary mercantile view of economics not only is quite dead, but can inflict substantial damage through its misconceptions of the present world economy. The old view that nations sponsor and nurture their internal businesses much like their military so its products can be imagined, constructed, and sold across borders like an offensive conquest has become a thing of the past. The nation has been quietly removed from the economic battlefield, often without it even knowing as much. Baldwin views the dynamic of the economy as a process of bundling and unbundling. Production and consumption were once necessarily joined at the hip by force of man's circumstances. Innovations in travel allowed for its unbundling. Rebundling occurred as a result of advances in information & communication technology. He details the history of this process, perhaps with too much repetition. A minor complaint could be directed at this book for its repetition. The book's chapters each have a bit of the feel of the single essay and material is returned to again and again as the reader moves on to the next one. Baldwin claims our present-day globalization is very distinct from the old version. Old version basically utilized a North-south dichotomy which entailed an industrialized north using its advanced development in manufacturing goods for selling to less developed southern neighbors in exchange for primary materials, and perhaps light goods. Manufacturing and trade in goods across borders was still relatively simple. This lopsided dichotomy allowed for workers of the "north"(G7) to be paid a premium for their labor. In response to this, some northern manufacturers would seek to utilize the cheap southern labor available by moving factories to such fiscally salubrious locations where cheap labor ran free and plentiful. Mostly this outsourcing only encompassed easily performed tasks of production, assemblage and its like. This was a bundling of low wage labor with low skill work. An "add labor and stir" approach. Because of this, countries that sought patronage from northern businesses generally did so with the end goal of eventually substituting their own national product after enough northern know-how had been accumulated. Baldwin goes over some historical success and failure stories of this strategy. With the emergence of information communication technology(ICT), however, thinking about the economy in narrow nationalistic terms can severely penalize a nation. Baldwin explains that the revolution of goods efficiently and expediently crossing borders has been surpassed by the revolution of complex information passing across borders, thus allowing "southern" developing states to become part of a Global Value Chain where goods and parts can pass accords borders many times in coordination with the needs and profit-seeking of the northern corporations. Parts of a product can be made in Mexico, enhanced in Taiwan or wherever, then shipped to China for final assemblage, from where it then may enter the United States or European marketplace to be sold. Each international stop in the chain adds value to a product efficiently and inexpensively until it's ready to be sold. Cheap labor has now been bundled with relatively high skill jobs created through transfer of know-how information across borders. A country fixed upon creating its own rival product can find itself completely shut out from these global value chains, according to Baldwin, thereby damning it to economic insignificance in today's global marketplace. Countries already in the club have multiple advantages over those who are not. Success at selling your country for its cheap labor, amenable customs practices for clients, and readiness to meet the needs through construction of physical plants as well as honoring corporate property rights will undoubtedly attract more business, such as China has managed to do in the past two decades. Spillover of technical know-how is possible for club member nations, though virtually impossible for those outside it. And, of course, rising income for those affected workers of chain countries prompt local development and allied internal business growth. Baldwin goes into the "smile" curve a bit, stating a reduction in the cost of manufacturing which outsourcing allows actually creates higher paying jobs in G7 countries. Money that would otherwise be spent on expensive and budgetary-inefficient labor can be allocated instead to R & D, innovation, and service related marketing of an end product in a "northern" country. Baldwin insists that due to the ICT revolution certain jobs will undoubtedly be gone for good in G7 countries. Those companies which refuse to outsource will find themselves likely out of business; or at least non-competitive against rivals. Baldwin hints that even manufacturing jobs overseas may be a thing of the past if 3D printing ever becomes inexpensive. If it were to reach that point, Baldwin warns, people will basically assist machines rather than the reverse. A disturbing thought for the future. Baldwin predicts the next great revolution will be one that allows people to travel quickly and efficiently across borders. Baldwin plumps for the coming of telepresence through either holograms or even robots, where meetings can occur and actions can be performed though participants exist across separate borders. One item that is conspicuously absent in Baldwin's book is the big F word: Finance. It's complete absence in Baldwin's book feels eccentric, though, admittedly, it is generally aside from Baldwin's subject matter. This is basically a book about how widgets are made in the today's world marketplace, and only pending the next revolution....

  3. 5 out of 5

    Iana

    Excellent book for anyone interested in a scientific yet accessible analysis of the current economic globalisation process. An instant classic for the next few years, I would say.

  4. 4 out of 5

    Vincenzo Tagle

    Richard Baldwin provides a framework for understanding globalization as an "unbundling" between consumption and production, and how technological innovations lifted three important constraints: the cost of moving goods, the cost of moving ideas, and the cost of moving people. The first wave of globalization was sparked by innovations made during the Industrial Revolution and led to decreased costs in moving goods, leading to industrialization in the North and deindustrialization in the South. The Richard Baldwin provides a framework for understanding globalization as an "unbundling" between consumption and production, and how technological innovations lifted three important constraints: the cost of moving goods, the cost of moving ideas, and the cost of moving people. The first wave of globalization was sparked by innovations made during the Industrial Revolution and led to decreased costs in moving goods, leading to industrialization in the North and deindustrialization in the South. The so-called "Great Divergence" occurred because the high costs of moving ideas trapped industrial innovations in the North. The second wave of globalization occurred in the 80s and 90s as improvements in ICT allowed for more knowledge transfers from the North to the South. As such, countries like China and India were able to plug into global supply chains. Their share of manufacturing increased, while those of the G7, the early beneficiaries of globalization, decreased. However, clustering still occurred because trade bumped up against the third constraint: the high cost of moving people. Baldwin projects that advances in telerobotics and telepresence will spark the third wave of globalization leading to new winners and losers. It is an excellent book that provides a historical overview on trade and a lucid review of trade theory. However, I feel that Baldwin focuses to much on technology as a driver of trade and not enough on policy. Political constraints can reverse globalizing forces, such as what we are seeing now with the rise of populism. Still, I enjoyed reading this. Recommending reading a bit of Acemoglu to complement.

  5. 5 out of 5

    Ruben Baetens

    The concluding remark summarizes the content of the book perfectly: "Things have changed so much that not even the future is what it used to be." The book brings the story on why todays globalisation differs from our parents' globalization. Lowering trade costs caused a first worldwide unbundling, which triggered a drop in the transfer of ideas and knowledge through ICT as basis for a second unbundlin. In the future, the virtual presence revolution (being the drop of costs for physical presence) The concluding remark summarizes the content of the book perfectly: "Things have changed so much that not even the future is what it used to be." The book brings the story on why todays globalisation differs from our parents' globalization. Lowering trade costs caused a first worldwide unbundling, which triggered a drop in the transfer of ideas and knowledge through ICT as basis for a second unbundlin. In the future, the virtual presence revolution (being the drop of costs for physical presence) will cause a further natural evolution of the manufacturing market, but cause a true revolution in the service sector. Laced with both real-life and fictive examples, the book is a pageturner and brings added value chapter after chapter.

  6. 4 out of 5

    AS

    I don’t know why I have this book. I think I probably bought it in an industrious, optimistic moment after reading some “best book of...” article in some review I respected. What a mistake. General rule to follow: don’t bother with Popular Economics books. Probably true about popular science etc as well, but these are even more annoying than latter-day Pinker efforts. I confess that I found this so annoying after the first few chapters that I’ve skimmed rather than “read” this book - so it’s pos I don’t know why I have this book. I think I probably bought it in an industrious, optimistic moment after reading some “best book of...” article in some review I respected. What a mistake. General rule to follow: don’t bother with Popular Economics books. Probably true about popular science etc as well, but these are even more annoying than latter-day Pinker efforts. I confess that I found this so annoying after the first few chapters that I’ve skimmed rather than “read” this book - so it’s possible I’ve missed some real gems of insights amid the dross of “innovation” and “leverage the value”. There’s a pretty simple article-sized idea here, one that might not have made it past the Economist editors but might have got into the FT or Telegraph. Sort of fun to think about, but expanded into a rambling 300+ pages, complete with lots of little “explainer” boxes, and preambles, summing-ups, etc, it’s frankly tedious. I won’t bother to criticise the content, but warn any prospective reader who’s sensitive to the gross oversimplification of vast tracts of history, to the erasure of colonialism and exploitation, the violence visited by the powerful on the weak and the mindless valoration homo economicus, do AVOID. Couple of areas to think about - provoked by my failed attempt to read this: Seems like the underlying dynamics of human social change, seen through an economic lens, has something to do with the existence and disposition of a “surplus” within a population/region. Given that co-located production and consumption is by far the most efficient way of spending your time, why, for example, did people (as far back as an archaeological record goes) buy “luxury” goods from other places far away? I’m thinking off the top of my head of the import of Chinese porcelain to England in pre-industrial revolution times - but this kind of activity existed everywhere, and as I understand it, was the principal substance of international trade pre-1500-or-so. How do such surpluses arise, who “owns” (controls) them, and so decides how they’re spent (consumed by having nice tea cups from the other side of the world rather than invested in inventing indoor plumbing)? New technology - the steam engine, etc - increased regional surpluses massively (I think), but the disposition of these surpluses changed (more investment than consumption?) through the 19th century (?) Why did parts of the non-industrialised world in 1900 miss this “great convergence” - the export of industrialisation to the rest of the world. China in 1820 had 33% of world GDP (2x that of the whole N Atlantic region), was left behind in the industrial revolution, but recently has industrialised on a scale that would have been inconceivable to the original European/American industrialising countries. But not much of the African or S American continent. Why? This book hints that this is the case, but doesn’t ever attempt an explanation. In works like this, the word “technology” is made synonymous with “knowledge”, “ideas” and “know-how” in a way that I think is importantly wrong and misleading. A key part of the Big Idea here is that there is a “cost of travel of ideas” which has been massively reduced in the 2000’s or so. I get there’s a sense in which he’s got a point, but I think it’s even more important to see that “ideas” have travelled very quickly and with amazing impact for thousands of years. Witness the idea of Christianity from about 300 onwards, the consequent development of the institutions of the Church etc across Europe and Russia. What doesn’t travel so well is production process and actual bits of kit. That’s partly because the physical form of these new and valuable things is easier to control/protect, but also because of IP laws and the cooperation among the powerful Haves of the world to keep these things to themselves.

  7. 4 out of 5

    Charles J

    This book mostly claims to be a book about “globalization,” today’s trendy word, but really, it is a book about industrial revolutions through time and space. The author, Richard Baldwin, offers a new framework for understanding how the world has developed since the Great Divergence, led by England, that created centuries-long worldwide economic dominance by European cultures. In particular, he offers an explanation why, since 1990, the relative share of the global economic pie held by the West This book mostly claims to be a book about “globalization,” today’s trendy word, but really, it is a book about industrial revolutions through time and space. The author, Richard Baldwin, offers a new framework for understanding how the world has developed since the Great Divergence, led by England, that created centuries-long worldwide economic dominance by European cultures. In particular, he offers an explanation why, since 1990, the relative share of the global economic pie held by the West has decreased, when it had never decreased before. All this is interesting and valuable, in particular Baldwin’s conclusion that American critics of globalization are at least partially correct. But it’s incomplete in the end, since Baldwin’s analysis completely omits the critical role of culture and institutions as related to a country’s capacity to develop. Instead, he treats all humans as interchangeable members of homo economicus: a fatal error, but one common to academic economists. Baldwin’s “Great Convergence” is the recent partial rollback of the centuries-long total domination of the global economy by Europe (and America, which for these purposes and all purposes in this book counts as Europe—basically, Baldwin focuses on the G7 as the “developed world”). More specifically, the Great Convergence is the relative rise of China, Korea, India, Indonesia, Thailand, and Poland (the “Industrializing Six,” or I6). While a few other countries (Japan, Hong Kong, Taiwan, and Singapore) industrialized rapidly before 1990, the real proportional drop in the G7’s share of global income has come since 1990 (though half of the total shift went to China). Baldwin’s goal is to explain how this came about and what the implications are for the globe. The core of Baldwin’s book is therefore contrasting histories of two sequential globalizations. The “Old Globalization” was the result, mostly, of lowered costs of transport resulting from the First Industrial Revolution. The “New Globalization” is present-day economic structures that are creating today’s Great Convergence, mostly the result of cheaper communications. Baldwin begins with well-worn history, outlining the slow economic development of the world until 1750 A.D. or so. The entire world lived in the classic Malthusian Trap, where per capita income never increased by much, and often went the wrong way. At that point, Europe’s share of the total world economy was small, simply because Europe’s population was a tiny proportion of the global whole. From here, Baldwin proceeds by outlining his framework of “three cascading constraints” to globalization—i.e., structural barriers that collectively prevent a true world market from existing. The first constraint was the constraint of transport distance, which was mostly eliminated by steam and rail in the First Industrial Revolution, thus permitting the G7 (minus Japan) to use comparative advantage to dominate global trade by manufacturing goods consumed by people far away. (Baldwin dodges the question of why this first unbundling happened in and benefited primarily Europe, and not other places, which seems highly relevant to his analysis. More on this later, though.) Baldwin calls this “globalization’s first unbundling—the physical separation of production and consumption.” The result was not just European wealth, but close physical clustering of manufacturing in Europe, since excellent high-bandwidth communications were necessary to industrial production and innovation, but were very costly over distance—thus distances for communication in production were shortened as much as possible. And the resulting increasing innovation (“spillovers from manufacturing”) further increased European comparative advantage, thus even more preferencing Europe (this “agglomeration” theory is Paul Krugman’s, who was a real economist before he became a fifth-rate political hack). So far this is mostly yet another straightforward explication of comparative advantage, with a giant statue of Ricardo taking center stage, along with a smaller one of Krugman. But Baldwin then turns to his “second unbundling.” (This is explicitly the same thing as the “New Globalization” and the “global value chain revolution”; Baldwin’s tendency to use multiple buzzwords for the same concept is annoying and makes the book often confusing to read.) This unbundling is removing the geographic tie between communication and production, which had resulted in clustering of manufacturing. It means removal of the second constraint, expense of long-distance communication, made possible and driven by the “ICT Revolution.” In essence, this is the technology of computers and communication, combined with the network effect (i.e., one fax machine is useless; many are useful), resulting in nearly universal, cheap, high-bandwidth communication. The drop in costs has been huge, as we can all personally attest. (Baldwin says, without citation, that just between 2006 and 2007, the volume of information transmitted increased by an amount 1.06 x 10^36 times the amount of all information collectively transmitted in the 1990s. This seems extremely unlikely and must be an error—that number is inconceivably large. It’s not quite the number of protons in the universe, but it’s not that far off either.) The ICT Revolution also included a few items that are not strictly technology, such as air cargo, which does not make transport cheaper, as in the Old Globalization, but is revolutionary because it means it is possible to do things quickly that simply couldn’t have been done quickly before. The result of this second unbundling, Baldwin says, was the Great Convergence, since production no longer had to be done in clusters in Europe, with expensive local labor, but could be outsourced instead to countries with cheap labor, and necessary “know-how” exported via newly cheap communications, cutting expensive European labor mostly out of the equation. This meant economic boom times for the countries which were new production centers. Thus, the I6 grew rapidly since 1990, and took global GDP share from the G7. But they did not fully industrialize, as had the G7. Instead, they joined “regional production networks.” And what are “regional production networks”? They are a consequence of the third constraint, the high cost of actual face-to-face connections. This still exists, even with videoconferencing and Skype, since those are not the same thing as being present with another person. Baldwin thinks that this constraint may disappear, leading to a “third unbundling,” if telepresence ever becomes a reality. But for now, this third constraint means that that in practice offshoring made possible by cheap communications still is optimally done where face-to-face communication is most easily possible—that is, where travel to the offshore site from the country with technology is easy. This creates Baldwin’s “regional production networks,” which means low-wage offshoring in Central and Eastern Europe (for Western Europe); Mexico (for the United States); and East and Southeast Asia (for Japan). Africa and South America, located farther away from the G7, got and get nothing. So, according to Baldwin, the ICT Revolution caused the Great Convergence, by lowering “the cost of coordinating complex processes across great distances,” which resulted in Western companies “moving labor-intensive stages of production from high-wage nations to low-wage nations.” That is, the ICT Revolution allowed the I6 to industrialize, given that earlier efforts to duplicate the success of the West had failed (although Baldwin never addresses why only six countries really benefitted, given that his “regional production networks” could include a lot more countries than six). Another way to view this is that the second unbundling meant a change in comparative advantage, which could now be sliced in new ways not requiring whole-country industrialization to compete on a global scale. Thus, Vietnam (not an I6 country, but no matter) didn’t have to fully industrialize to advance its economy—it could advance through using “Japanese management know-how and Vietnamese labor.” (Baldwin never defines “know-how,” which must mean to him some combination of technology and managerial capability.) Where the Japanese had to obtain both themselves, Vietnam (and more relevantly, the I6 members) could jump start their competitiveness, and thus their industrialization, by using outside know-how, rather that developing it themselves. Among all this talk about technology and communications, every so often Baldwin throws off an orphan reference to “commodity super-cycles,” which are a “boom in commodity exports and prices” resulting from “the soaring income growth in the rapid industrializers.” Allegedly this has “sparked takeoffs” in unnamed countries. This is not well developed, but his basic point seems to be that such “super-cycles” add to the Great Convergence formerly poor countries that are now relatively richer, even though they are not part of the “global supply chain revolution.” But Baldwin names no such countries, doubtless because no countries have taken off based on commodities if they have otherwise deficient cultures or institutions—Africa, with its “curse of resources,” is the best example of that. And as the saying goes, Brazil is the country of the future—and always will be. The New Globalization has two key implications. First, as long as the know-how is external, there is a cap to how far a country can rise in global trade using its new-found comparative advantage, since cheap labor will not remain cheap forever. Thus, if the I6 is ever to approach the G7 in per capita income, they will have to develop, or steal, know-how, and be able to make such know-how internally self-perpetuating. Of course, the only way that can happen is if the country’s culture is able to use external know-how to jump-start its own know-how and managerial competence. The key question is the permanence of the local know-how, which is only possible to create if the receiving country is receptive and capable. But the know-how of the West has been globally available for hundreds of years, at little or no cost, and very few countries have taken any advantage of it. This suggests that some factor specific to each country ultimately determines if it can reach true, G7-type development, or will instead either not develop at all or remain stuck as second-tier value chain suppliers to G7 countries. But Baldwin ignores all this, other than the existence of a potential cap to growth as labor costs rise. Second, and very importantly for the United States and the rest of the G7, the country exporting know-how is reducing the relative competitive advantage of the exporting country—thus, the old Ricardian belief that comparative advantage magically lifts all national boats no longer holds true. The owners of the know-how profit; the workers, not so much. Baldwin uses the clever metaphor of a top soccer coach who coaches the players of another country’s team in the off-season—the coach profits, and the other country profits, but not the coach’s country. As Baldwin says, therefore, now “what is good for GM may not be good for America.” The necessary conclusion is that American critics of globalization have a point, which is often ignored by free market boosters. Baldwin ends by offering “rethinking” of G7 policies. “The main point is that wise governments should distinguish carefully between factors of production that are internationally mobile and those that are internally immobile.” The latter should be encouraged, because the former can be, and will be, exported, which will be to the detriment of most of the people of the country that encouraged and helped created those factors of production. This implies that items that have received a lot of public support in the past, such as basic science, patents, and financial capital should (possibly) be de-emphasized, and high-skilled labor and human capital emphasized. At the same time, though, Baldwin very much objects to policies that actually act to keep advantages home. The author’s ideal solution, or optimal solution under modern circumstances, is exemplified by the British manufacturer Dyson. That company cut local manufacturing jobs and shipped them to Malaysia in 2003; then boosted employment back in England a decade later by hiring lots of “engineers, scientists, and people running the business.” The alternative to this, says Baldwin, would have been for Dyson to lose all the jobs, so this is a good outcome. Maybe. Or maybe not—perhaps Sir James would just not be as rich (he is roughly eight times as rich now as he was in 2003). But whether it was necessary or not, such actions imply an ever-increasing stratification. Why did a majority of English voters choose Brexit? In part, because they are tired of the “professional and managerial elite,” in the words of Joan Williams, that is, the types of people newly hired by Dyson, getting richer while they get poorer due to the New Globalization. (On the other hand, Sir James supported Brexit, so maybe there is more to the story.) Baldwin concludes that no matter what, “there will be factory jobs in G7 nations for high-skill workers and robots. Low- and medium-skill workers will see their jobs eliminated or offshored.” Baldwin’s “rethinking” is less fresh thought and more a placid acceptance of serfdom for most American workers, which is not likely to be a palatable political option. The probable result is more Trump and more Brexits, whether or not that makes economic sense. After all, there are many obvious ways a government could reverse the course of the New Globalization—among them, forbidding the export of know-how, or taxing profits upon their return. Baldwin ignores these solutions, though, presumably because he believes they would be Neanderthal and economically inefficient—he says we must not “resist the changes,” though he never says why we must not. Baldwin does a good job of laying out his thoughts. It’s the things he omits from his thoughts that are my problem with the book. The big omission is the one I identified in the first paragraph of my review. It is a fundamental error to believe that all countries and cultures are basically the same and therefore are amenable to the same policies, which will necessarily produce the same results if applied in the same way across countries. Baldwin does see that it is a critical question why the rest of the world failed to industrialize before the ICT Revolution was created by the G7. He doesn’t seem to want to answer the question, though, and he most definitely doesn’t want to address any cultural reason that might imply European inherent superiority. As a result he meanders. First, he mutters about the West having, in effect, a first mover advantage for no stated reason—he repeatedly uses the evasive phrase “As history would have it,” which implies random chance. He seems to think that it’s just coincidence that as transport costs declined, that Europe specialized in industry, while everyone else specialized in producing raw materials, or just stayed at subsistence level. Realizing this is silly, and that given population shares Asia should have dominated the world, he then expresses sympathy for the idea that “colonialism and imperialism” kept those countries that would otherwise have led the world from leading the world. This is also silly, of course, for many reasons, among them that if that’s true, why was the industrial might that allowed colonialism already solely held by Europe, at the beginning of this alleged process of deciding who was going to lead? If there was a race, it was over before it began, and that must be for some other reason. Baldwin notes that earlier industrialization efforts outside European cultures all failed. He does not mention Australia, though, which did just fine, after all, even though it was very far away and thus transport and communications costs were highest of all there, so its success which must be due to its European culture. Instead, he makes the wild claim that “Historically, all industrialization and growth takeoffs were government engineered—all except the first one (in the United Kingdom).” He says all industrialization and growth in the G7 was due to a “standard set of four [government] policies”: internal tariff elimination, (initial) imposition of external tariffs; chartering banks; and mass education. Then he tell us, “[M]ost developing nations implemented this standard four-pack once the yoke of colonialism was lifted.” But this does not answer the question—in fact, it highlights it. Why did none of these developing nations get industrialization and growth in return, if it was so easy for nations with European cultures? Ultimately, after some more evasive burbling, mostly about tariff policy, Baldwin weasels out, claiming “Surely the full answer lies in a combination of the political, economic, and geographic factors.” At no point does he, even once, mention cultural factors as possibly relevant. Baldwin would have done well to work in the thought of Thomas Sowell, or Toby Huff, Kenneth Pomeranz, or Francis Fukuyama. Those thinkers offer detailed explanations that would fill in the gaps in Baldwin’s work. But, as I say, a believer in Economic Man as the basic building block of the world simply won’t, or can’t, see that there is more to the story than the cost of transport and communications, and that ultimately substantially undermines the value of this book.

  8. 4 out of 5

    Jon Norimann

    Baldwin has here written a solid up to date book, as of 2018, on globalization. Although he seems to have tried hard to avoid it, Baldwin falls into the trap of spending too long on the past. Still that's an all too common error for such books and other authors have done much worse in that regard. Spending the 5-6 hours it takes you to read this book brings you reasonably up to date on the academic view of globalization. Assuming that's what you want and you can stand basic history on the subject Baldwin has here written a solid up to date book, as of 2018, on globalization. Although he seems to have tried hard to avoid it, Baldwin falls into the trap of spending too long on the past. Still that's an all too common error for such books and other authors have done much worse in that regard. Spending the 5-6 hours it takes you to read this book brings you reasonably up to date on the academic view of globalization. Assuming that's what you want and you can stand basic history on the subject, read Baldwin's book.

  9. 4 out of 5

    Dave Schoettinger

    The harnessing of steam power in the 18th century made it possible for resources and materials and finished products to be transported at a small fraction of the previous cost. Therefore, in the 19th century manufacturing enterprises began locating in areas where there was the technical knowledge necessary to accomplish such manufacturing activities. Because they were able to buy raw materials low and sell finished products high, these areas became much wealthier. This was known as The Great Div The harnessing of steam power in the 18th century made it possible for resources and materials and finished products to be transported at a small fraction of the previous cost. Therefore, in the 19th century manufacturing enterprises began locating in areas where there was the technical knowledge necessary to accomplish such manufacturing activities. Because they were able to buy raw materials low and sell finished products high, these areas became much wealthier. This was known as The Great Divergence. With the invention of the internet, the cost of moving technical knowledge became essentially zero. This took away much of the advantage of the areas with greater technical knowledge and allowed those areas that had been left behind by the The Great Divergence to leverage their lower wage costs to become the favored areas for manufacturing. As a result, their wealth, relative to previously industrialized, began to increase. Therefore, we are now witnessing The Great Convergence. The preceding paragraph is essentially the book, however it's more complicated than that or Richard Baldwin could have made the book much more succinct. His arguments are presented very simply so that even I could understand them and provide insights for non-economists to understand the current world economy.

  10. 5 out of 5

    Mark Lawry

    Globalism has given us the rising billions. Human existence has improved more from 1945 to present than the previous 1,000 years. Baldwin has somehow understated how fast 100s of millions at a time are being lifted out of poverty and how and where lives are being improved. This book is entirely focused on manufacturing, which I find to be literally the least interesting aspect of globalization. Globalization is not just moving factories around. Years ago I met a fellow American in South Korea at Globalism has given us the rising billions. Human existence has improved more from 1945 to present than the previous 1,000 years. Baldwin has somehow understated how fast 100s of millions at a time are being lifted out of poverty and how and where lives are being improved. This book is entirely focused on manufacturing, which I find to be literally the least interesting aspect of globalization. Globalization is not just moving factories around. Years ago I met a fellow American in South Korea at a club who teaches English. Since then I have moved to Germany. He moved to Russia for a few years and has more recently moved to Estonia. He visited us in Europe during his last move where he explained to me he teaches English to Chinese clients online. He uses his earnings to bus around the Eurasian continent exploring UNESCO sites and national parks. It doesn't matter where he is sitting on the Earth's surface to make money. It doesn't matter where his clients are. He can make money while bussing to his next country. This new freedom for all of us is globalization. The International Space Station represents globalization. As I write this in 2020 we're about to launch a woman to Mars. We're building out the technology to send a colony to Mars. This is globalization. This book is entirely focused on moving factories around. We should remember in the last few 100 years farming has gone from over 90% of the human population to now well under 2% of the population, and falling. While this falling percent has grown continually more productive. Manufacturing in recent decades has had a similar stunning fall. One city in China can produce a billion iPhones for all of the people of India in a stunningly short time. Ever better and cheaper phones for everyone are great. Yet, we do not need every city on Earth producing a billion iPhones. Manufacturing jobs will not the future for most people. This is entirely ok, the great convergence is not a function of just manufacturing.

  11. 4 out of 5

    Patrdr

    This is a very solid book by a careful, competent and knowledgeable economist. I'm not going to attempt a thorough going review, at least for now. A couple of points: From the vantage point of Spring 2018 with President Trump's attacks on global trade in full blossom, it's hard to be as optimistic as the author abour the low chances of a retreat to the dark ages of protectionism. But perhaps it will turn out to have been mostly posturing? The second point is a question that rose in my mind about the This is a very solid book by a careful, competent and knowledgeable economist. I'm not going to attempt a thorough going review, at least for now. A couple of points: From the vantage point of Spring 2018 with President Trump's attacks on global trade in full blossom, it's hard to be as optimistic as the author abour the low chances of a retreat to the dark ages of protectionism. But perhaps it will turn out to have been mostly posturing? The second point is a question that rose in my mind about the role of firms and the genesis of future firms. In the latest unbundling of locational advantages, firms can combine their know-how with low cost labour, controlling the process through the capacities offered by ICT, capacities that will continue to strengthen. Comparative advantage, the driver of trade and the source of the benefits, belongs to the firm, rather than to the Portugals and Englands (as per Ricardo's original example), i.e. to the nation. But in the future unfolding of globalization (assuming no dark ages) what scope will there be for new firms with new products, ideas, technologies to emerge? And coulld they emerge anywhere in the connected world? Or do the old industrial economies (and maybe China) have an insurmountable advantage? Does Baldwin's analysis suggest there is scope for a nation's policy to promote 'national champions'?

  12. 4 out of 5

    Steven De Landtsheer

    Books come in all varieties and this one sits in my 'fundamental academic' category. Richard Baldwin tries to make us better understand how gloabilsation came about, how it evolved the way it did, based on some fundamental drivers in our societies. In doing so, he tries to tell us something about the current wave of globalisation that is hitting our economies right now. Probably my choice of wording already indicates that many of us feel like we are on the receiving end of the punches. My person Books come in all varieties and this one sits in my 'fundamental academic' category. Richard Baldwin tries to make us better understand how gloabilsation came about, how it evolved the way it did, based on some fundamental drivers in our societies. In doing so, he tries to tell us something about the current wave of globalisation that is hitting our economies right now. Probably my choice of wording already indicates that many of us feel like we are on the receiving end of the punches. My personal drive to read the book was more on a positive note: let's try to understand better the world we live in, so we are better equiped to ride the waves. And the world and economy has changed a lot since the nineties when I took up my first job. A lot of this change is welcomed, positive and we can't wait to get our hands on it, but a lot (all) carries consequences we don't always aknowledge immediately. I can only recommend this book, for those who are interested in seeing the patterns unfolding in our globalising world. There's a lot op people who are eager to understand why part or whole of their job suddenly evaporated and their crucial competencies suddenly don't seem to matter anymore ...

  13. 5 out of 5

    Paul O'Leary

    Yet another book on the affects of globalization? Yes, I'm afraid so. But this one is worth a gander. Baldwin's book, The Great Convergence, elucidates how things are made in business today, how information and communication technology has radically changed production, and, lastly, what this now means for jobs. If you instinctively imagine this to be a jeremiad, as most books on globalization and jobs are, you're mostly correct. Baldwin declares without equivocation that the hoary mercantile vie Yet another book on the affects of globalization? Yes, I'm afraid so. But this one is worth a gander. Baldwin's book, The Great Convergence, elucidates how things are made in business today, how information and communication technology has radically changed production, and, lastly, what this now means for jobs. If you instinctively imagine this to be a jeremiad, as most books on globalization and jobs are, you're mostly correct. Baldwin declares without equivocation that the hoary mercantile view of economics not only is quite dead, but can inflict substantial damage through its misconceptions of the present world economy. The old view that nations sponsor and nurture their internal businesses much like their military so its products can be imagined, constructed, and sold across borders like an offensive conquest has become a thing of the past. The nation has been quietly removed from the economic battlefield, often without it even knowing as much. Baldwin views the dynamic of the economy as a process of bundling and unbundling. Production and consumption were once necessarily joined at the hip by force of man's circumstances. Innovations in travel allowed for its unbundling. Rebundling occurred as a result of advances in information & communication technology. He details the history of this process, perhaps with too much repetition. A minor complaint could be directed at this book for its repetition. The book's chapters each have a bit of the feel of the single essay and material is returned to again and again as the reader moves on to the next one. Baldwin claims our present-day globalization is very distinct from the old version. Old version basically utilized a North-south dichotomy which entailed an industrialized north using its advanced development in manufacturing goods for selling to less developed southern neighbors in exchange for primary materials, and perhaps light goods. Manufacturing and trade in goods across borders was still relatively simple. This lopsided dichotomy allowed for workers of the "north"(G7) to be paid a premium for their labor. In response to this, some northern manufacturers would seek to utilize the cheap southern labor available by moving factories to such fiscally salubrious locations where cheap labor ran free and plentiful. Mostly this outsourcing only encompassed easily performed tasks of production, assemblage and its like. This was a bundling of low wage labor with low skill work. An "add labor and stir" approach. Because of this, countries that sought patronage from northern businesses generally did so with the end goal of eventually substituting their own national product after enough northern know-how had been accumulated. Baldwin goes over some historical success and failure stories of this strategy. With the emergence of information communication technology(ICT), however, thinking about the economy in narrow nationalistic terms can severely penalize a nation. Baldwin explains that the revolution of goods efficiently and expediently crossing borders has been surpassed by the revolution of complex information passing across borders, thus allowing "southern" developing states to become part of a Global Value Chain where goods and parts can pass accords borders many times in coordination with the needs and profit-seeking of the northern corporations. Parts of a product can be made in Mexico, enhanced in Taiwan or wherever, then shipped to China for final assemblage, from where it then may enter the United States or European marketplace to be sold. Each international stop in the chain adds value to a product efficiently and inexpensively, until it's ready to be sold. Cheap labor has now been bundled with relatively high skill jobs created through transfer of know-how information across borders. A country fixed upon creating its own rival product can find itself completely shut out from these global value chains, according to Baldwin, thereby damning it to economic insignificance in today's global marketplace. Countries already in the club have multiple advantages over those who are not. Success at selling your country for its cheap labor, amenable customs practices for clients, and readiness to meet the needs through construction of physical plants as well as honoring corporate property rights will undoubtedly attract more business, such as China has managed to do in the past two decades. Spillover of technical know-how is possible for club member nations, virtually impossible for those outside it. And, of course, rising income for those affected workers of chain countries prompt local development and allied internal business growth. Baldwin goes into the "smile" curve a bit, stating a reduction in the cost of manufacturing which outsourcing allows actually creates higher paying jobs in G7 countries. Money that would otherwise be spent on expensive and budgetary-inefficient labor can be allocated instead to R & D, innovation, and service related marketing of an end product in a "northern" country. Baldwin insists that due to the ICT revolution certain jobs will undoubtedly be gone for good in G7 countries. Those companies which refuse to outsource will find themselves likely out of business; or at least non-competitive against rivals. Baldwin hints that even manufacturing jobs overseas may be a thing of the past if 3D printing ever becomes inexpensive. If it were to reach that point, Baldwin warns, people will basically assist machines rather than the reverse. A disturbing thought for the future. Baldwin predicts the next great revolution will be one that allows people to travel quickly and efficiently across borders. Baldwin plumps for the coming of telepresence through either holograms or even robots, where meetings can occur and actions can be performed though participants exist across separate borders. One item that is conspicuously absent in Baldwin's book is the big F word: Finance. It's complete absence in Baldwin's book feels eccentric, though, admittedly, it is generally aside from Baldwin's subject matter. This is basically a book about how widgets are made in the today's world marketplace, and only pending the next revolution....

  14. 5 out of 5

    Ethan Cramer-Flood

    The most significant and important social science/economics monograph I've read in the past decade, with the exception of the Picketty book. Globalization 2.0 is not what we think it is, and we're not even using the right words when we talk about it. Socially and politically we'll never cope with the nature of the global economy if we don't understand what's really happening. This book does a better job of illuminating how economies have changed since the 1990s than anything else I've read. More The most significant and important social science/economics monograph I've read in the past decade, with the exception of the Picketty book. Globalization 2.0 is not what we think it is, and we're not even using the right words when we talk about it. Socially and politically we'll never cope with the nature of the global economy if we don't understand what's really happening. This book does a better job of illuminating how economies have changed since the 1990s than anything else I've read. More importantly, it changes the entire conversation, for the better, by explaining how and why the old vocabulary and the old debate don't make any sense anymore. Highly recommend. I only gave it four stars instead of five because it was dense at times; and although Baldwin is a clear, precise and 'readable' author, he doesn't provide much flair or elegance in his writing.

  15. 5 out of 5

    Budd Margolis

    A solid academic look at the two main periods of global economic development and some thoughts on the next stage. The last phrase sums up: The book brings the story on why todays globalisation differs from our parents' globalization. Lowering trade costs caused a first worldwide unbundling, which triggered a drop in the transfer of ideas and knowledge through ICT as basis for a second unbundlin. In the future, the virtual presence revolution (being the drop of costs for physical presence) will c A solid academic look at the two main periods of global economic development and some thoughts on the next stage. The last phrase sums up: The book brings the story on why todays globalisation differs from our parents' globalization. Lowering trade costs caused a first worldwide unbundling, which triggered a drop in the transfer of ideas and knowledge through ICT as basis for a second unbundlin. In the future, the virtual presence revolution (being the drop of costs for physical presence) will cause a further natural evolution of the manufacturing market, but cause a true revolution in the service sector.

  16. 4 out of 5

    Salome Pachkoria

    I had to read this book as a part of the class assignment and it did not disappoint. The same things are explained and mentioned (sometimes too) many times, but exactly that made it easier for me to read the book and make sense of things. Baldwin talks about the mental models - "people use abstractions and simplified thought-patterns to streamline reality down to something they can get their minds around," and I think Baldwin made a pretty good job putting together a nice mental model about the I had to read this book as a part of the class assignment and it did not disappoint. The same things are explained and mentioned (sometimes too) many times, but exactly that made it easier for me to read the book and make sense of things. Baldwin talks about the mental models - "people use abstractions and simplified thought-patterns to streamline reality down to something they can get their minds around," and I think Baldwin made a pretty good job putting together a nice mental model about the globalization.

  17. 4 out of 5

    Veselin Nikolov

    Data driven look on the history of globalization. A framework of how to think about globalization is also presented. Globalization is seen as a process of separating(geographically at first) the production and consumption of goods. The Industrial and the IT revolution are refracted through this mindset. I loved the whole structure of interpreting data -> building a hypothesis/theory -> looking at the history through the lens of the new hypothesis/theory.

  18. 5 out of 5

    Parker Pavlicek

    There wasn't much of a clear direction to the whole book, the order of the chapters made sense but within each it was pretty random. Also there were a ton of graphs in the book, I usually love graphs but NONE of the graphs in this book had the axes labeled so you had to resort to reading the adjacent paragraphs to understand what was going on and even then sometimes it was rather unclear. Label your axes!! There wasn't much of a clear direction to the whole book, the order of the chapters made sense but within each it was pretty random. Also there were a ton of graphs in the book, I usually love graphs but NONE of the graphs in this book had the axes labeled so you had to resort to reading the adjacent paragraphs to understand what was going on and even then sometimes it was rather unclear. Label your axes!!

  19. 4 out of 5

    Jason Furman

    The opening line of this book sets out its ambition: "This book aims to change the way you think about globalization." And I would say it largely succeeds through a combination of economic history, trade theory, well deployed descriptive statistics, observation, and--in the conclusion--a certain amount of imagination. The opening line of this book sets out its ambition: "This book aims to change the way you think about globalization." And I would say it largely succeeds through a combination of economic history, trade theory, well deployed descriptive statistics, observation, and--in the conclusion--a certain amount of imagination.

  20. 4 out of 5

    Ferhat Culfaz

    Excellent overview of globalisation of the last 1000 years. Specific analysis on how production and parts of production have changed and gone off-shore. Interesting future conjectures on impacts for future of robots and high speed communications and introduction to labour force of people from developing nations via this technology.

  21. 4 out of 5

    emtee

    Interesting and well written book for an introduction on globalization. There is a frightening lack of its negative impact on human capital. It tries to treat globalization in a neutral way but implicitly presents it as if it has no drawbacks other than poor economic performance. A good book, for someone who's looking to get started on the topic, rather than to stop here. Interesting and well written book for an introduction on globalization. There is a frightening lack of its negative impact on human capital. It tries to treat globalization in a neutral way but implicitly presents it as if it has no drawbacks other than poor economic performance. A good book, for someone who's looking to get started on the topic, rather than to stop here.

  22. 4 out of 5

    Laurent Franckx

    Anyone who has the ambition to participate in an intelligent discussion of how globalisation has unfolded over the last two decades and what it implies for both developed and developing countries, should read this book.

  23. 5 out of 5

    Nikolas Erdmann

    Regardless of the insufficient consideration of cultural aspects and the advances of artificial intelligence (it does consider automation and remote intelligence) , this book was very insightful about globalization's history and economics. Regardless of the insufficient consideration of cultural aspects and the advances of artificial intelligence (it does consider automation and remote intelligence) , this book was very insightful about globalization's history and economics.

  24. 5 out of 5

    Amber

    This book is sort of a "Guns, Germs, and Steel" of globalization - a bit repetitive, and very nerdy. (It was a text for our doctoral program.) But approachable for non-academics and worth understanding, conceptually. This book is sort of a "Guns, Germs, and Steel" of globalization - a bit repetitive, and very nerdy. (It was a text for our doctoral program.) But approachable for non-academics and worth understanding, conceptually.

  25. 5 out of 5

    Alessandro Mammana

    very poorly written book. It's very typical of authors busy with academia to just put together all their papers in a confused manner and put them into a book. The chapters are highly redundant, the main message was clear from the introduction. very poorly written book. It's very typical of authors busy with academia to just put together all their papers in a confused manner and put them into a book. The chapters are highly redundant, the main message was clear from the introduction.

  26. 4 out of 5

    Brian

    Interesting look at history and predictions for the future. Progress enabled by the swift movement of goods around the world followed by ideas. Are people next--i.e. can someone in China cut my hair using telepresence and robotics? Can't wait to find out. Interesting look at history and predictions for the future. Progress enabled by the swift movement of goods around the world followed by ideas. Are people next--i.e. can someone in China cut my hair using telepresence and robotics? Can't wait to find out.

  27. 4 out of 5

    Vikas

    A great read to understand the history and the implications of Globalization in the world today. Would recommend to anyone that is remotely curious to understand the economic situation today and wants to understand the possibilities in the future

  28. 4 out of 5

    Kumar Raghavendra

    Richard has an interesting theory on globalization and if things play out the way he predicts, governments would do well to take his policy recommendations. It is a good historic account of the evolution of globalization and the forces that drive it.

  29. 5 out of 5

    Vikas Erraballi

    Useful mental models.

  30. 4 out of 5

    Frank Ashe

    Great insights into the various stages of globalisation from the distant past to the near future. I need to integrate this into my thinking.

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