The world is not flat: putting globalization in its place

Since the 1990s, the term ‘globalization’ has become an increasingly prominent feature of economic, social and political discourse, not just within the academic community, but also in the popular press and in the world of policy making. It is, however, a notion that is far from straightforward. Definitions and debates have proliferated around the syndrome of processes and outcomes alleged to characterize globalization.1 Everyone agrees we live in a more ‘globalized’ world, but views differ as to what this means and whether it is a trend for good or ill. Those on the neoliberal right are typically pro-globalization, arguing that it has opened up markets across the globe, that it is a force for spreading opportunity and wealth across nations and that the intensification of competition it engenders stimulates innovation and productivity. Those on the political left tend to be anti-globalization, arguing it is a process dominated by global corporations that have become more powerful than nation states, that it increases inequality within advanced economies and undermines the ability of the world's poorer countries to improve social welfare or protect their natural environment. To this day, debates continue over the causes, historical antecedents and consequences of globalization (e.g., Crafts and Venables, 2003; Gray, 1998; O'Rourke and Williamson, 1999; Steingart, 2008; Stiglitz, 2002, 2006; World Bank, 2002, 2008). One of the contested aspects of globalization concerns its geographies and especially whether globalization is rendering the significance of location and place redundant and irrelevant. Several writers have argued that globalization—especially as driven by the revolution in information and communications technologies (ICT)—marks the ‘end of geography’ (O'Brien, 1992), the onset of the ‘death of distance’ (Cairncross, 1997), the emergence of a ‘borderless world’ (Ohmae, 1995), of ‘de-territorialization’ or ‘supra-territorialisation’ (Scholte, 2000) and the ‘vanishing of distance’ (Reich, 2001). The most provocative—certainly the most colourful—of these claims is Thomas Friedman's recent pronouncement that as a consequence of globalization, ‘the world is flat’ (Friedman, 2006). He contends that the ICT revolution, the deregulation of markets by states and increasing economic integration have contributed to a marked time–space compression of economic processes. The alleged result is that there is no longer any ‘friction of distance’ in economic relationships. It is clearly beyond the purpose of our editorial to give a full-fledged summary of Thomas Friedman's book. Briefly stated, in the The World is Flat Friedman identifies up to 10 structural changes or, in his terminology, 10 flatteners in the world economy that have all come into play over the past two decades (see Table 1). He argues that these changes, driven by the revolution in information and communications technologies, will ensure that globalization will have a ‘flattening’ impact on the world economy in the years to come: It is my contention that the fall of the Berlin Wall, the rise of the PC, Netscape, work flow, outsourcing, offshoring, uploading, insourcing, supply-chaining, in-forming, and the steroids reinforced one another, like complementary goods. These flattening forces needed time to start to work together in a mutually enhancing fashion. That tipping point was reached somewhere around the year 2000 when the ten flatteners converged on such a scale and with such intensity that millions of people on different continents suddenly started to feel that something… was new. They couldn't always describe quite what was happening, but by 2000 they sensed that they were in touch with people they'd never been in touch with before, were being challenged by people who had never challenged them before, were competing with people with whom they had never competed before… What they were feeling was the flattening of the world. The convergence of the ten flatteners had created a whole new platform… This platform now operates without regard to geography, distance, time, and, in the near future, even language. Going forward, this platform is going to be at the centre of everything (Friedman, 2006, p. 205). Friedman's 10 forces that have ‘flattened’ the world Source: Friedman (2006), Chapter 2. Friedman's 10 forces that have ‘flattened’ the world Source: Friedman (2006), Chapter 2. The basis of Friedman's ‘flat world’ thesis, then, is that there now exists a global information–communications platform that transcends distance, place and geography, a platform that connects users anywhere, irrespective of their location. Yet even if the world is becoming ‘flatter’ in this sense, it by no means follows that the global economy more generally is becoming a flatter landscape. The closest Friedman comes to acknowledging this is when he admits that: not everyone has access to this new platform, this new playing field.… When I say the world is being flattened, I don't mean we are all becoming equal. What I do mean is that more people in more places now have the power to access the flat world platform—to connect, compete, collaborate… (Friedman, 2006, pp.205–206). Beyond this statement, however, Friedman has relatively little to say about whether the advent of a ‘flat platform’ is likely to reduce or intensify socio-economic inequalities among groups, regions or countries. In fact, there is a sizable body of opinion and evidence that globalization is not flattening the world economy but accentuating its unevenness. It is even arguable whether the global ICT ‘platform’, as Friedman calls it, is itself flat. Indeed, both the architecture and the flows of Internet and telephonic communication are highly spatially skewed and concentrated, being overwhelmingly focussed on and dominated by major ‘global’ cities (see, e.g. www.telegeography.com). In this respect, not all socio-economic groups or local communities have equal access to or control over this platform. Beyond this, what matters is whether there are forces that channel the benefits of access to and use of this platform disproportionately to particular socio-economic groups and particular places (cities, regions and countries). Even having equal access to a ubiquitous and flat ICT ‘playing field’ does not imply an equal outcome among the ‘players’—firms, workers, cities, regions and countries—in terms of wealth creation, prosperity and welfare. And some actors and networks have more access to information than others (Leamer and Storper, 2001, Storper and Venables, 2004). Key factors determining the production of wealth (investment capital, innovation capacity, talented labour) are still very unevenly distributed among places. Indeed, those who contest the world is flat hypothesis claim that the geography of the global economy contains a dynamic of centralization and agglomeration as well as one of dispersion. These authors claim that the spatial agglomeration of economic activity, including key businesses, talented labour and innovation and creativity, is actually increasing and that the global economy is now being driven by key cities and mega city-regions (Sassen, 2000). According to these observers, rather than becoming ‘flatter’, the global economic landscape is becoming ‘lumpier’. Further, while globalization has enabled and involved the rapid rise of new national economies (notably in the BRIC countries), it has simultaneously exposed other countries to worsening poverty (Stiglitz, 2002, 2006; World Bank, 2002). Though geographers have been slow to enter into the debates surrounding globalization (Dicken, 2004), they consistently emphasize that it is inherently spatially uneven both with respect to its causes and motive forces and its implications for places, regions and countries (Harvey, 2006). There is, then, an important debate to be had as to whether, and to what extent, the sort of processes identified by Friedman as ‘flatteners’ are promoting the spatial concentration or dispersion of economic growth and wealth. As Leamer (2007) rightly stresses in his extensive review of Friedman's book, the claim (or slogan) that the ‘world is flat’ undoubtedly has a deliberately contentious geographical ring to it.2 Leamer acknowledges that the revolutions in ICT and related systems of socio-economic interaction and exchange increase the freeness of trade and promote the production and transmission of information and knowledge. In short, they increase economic integration. Yet, as Leamer demonstrates, it is possible, analytically, to show that increasing economic integration can lead to spatial agglomeration of economic activity rather than to a geographically ‘flatter’ pattern. For their part, while accepting that the process of globalization may annihilate space and distance, economic geographers argue that it also heightens the role played by ‘place’ and especially place-specific socio-cultural-institutional factors (including face-to-face contact, localized social networks of knowledge spillover and other ‘untraded interdependencies’) in fostering and sustaining the spatial agglomeration of economic activities—particularly the creative and cultural industries that now dominate our major cities. In a similar vein, Porter (1998) has argued that in the global economy, competitive advantage is becoming more rather than less place dependent: In a global economy—which boasts rapid transportation, high speed communications and accessible markets—one would expect location to diminish in importance. But the opposite is true. The enduring competitive advantages in a global economy are often heavily localised, arising from concentrations of highly specialised skills and knowledge, institutions, rivalry, related businesses, and sophisticated customers (Porter, 1998, p. 90). From a theoretical perspective, a priori it is not clear how the ‘flatteners’ that Friedman talks about will affect the growth and allocation of economic activity across space. In modern location theory of the sort found in the so-called ‘new economic geography’ (new spatial economics), the answer to the question of how innovations and changes in organizational behaviour like those enumerated by Friedman will change the economic geography in the real world is that ‘it depends’. It depends on the exact nature of the changes concerned, the (initial) level of economic integration, the initial spatial configuration of the economic landscape and the geographical scale being considered. Globalization as approximated by increasing economic integration can lead to a more agglomerated or uneven world as well as to more spreading or a more even spatial distribution of economic activity (Baldwin, 2006; Crafts and Venables, 2003; Krugman and Venables, 1995). Interestingly, however, most such models tend to predict a geographically uneven outcome. And at the other theoretical extreme, invoking the theoretical apparatus of (Marxian) political economy, geographers such as Harvey (2006) see no reason why the increasing integration and interconnectedness of the world economy should change the historical, law-like tendency for capitalism to develop unevenly geographically: Reducing the friction of distance, in short, makes capital more rather than less sensitive to local geographical variations. The combined effect of freer trade and reduced transport costs is not greater equality of power through the evolving territorial division of labour, but growing geographical inequalities (Harvey, 2006, pp. 100–101). This seems to echo a similar point made earlier by Gray, albeit from a different ideological-cum-theoretical position, in his critical account of globalization thinking: [globalisation] does not require that economic life throughout the world be equally and intensively integrated… A universal state of equal integration in world-wide economic activity is precisely what globalisation is not. On the contrary, the increased interconnection of economic activity throughout the world accentuates uneven development… (Gray, 1998, pp. 55–56). This issue of the Cambridge Journal of Regions, Economic and Society brings together several papers stemming from various disciplines that, while differing in their specific focus, take up the issue of the continuing importance of location and place in a globalizing world. What they show is that the terrain of wealth creation, innovation and trade remains distinctly ‘bumpy’. The papers argue that flatness is not the inevitable outcome of the forces that are driving the globalization process. To create some common ground, all the papers took Thomas Friedman's highly influential book The World is Flat as their point of departure. In doing so, and despite being critical of the book, the authors acknowledge that Friedman's central arguments call for a serious response. What distinguishes this issue special is the breadth and (spatial) scope of the analyses. This not only applies to the analytical frameworks and methodologies used, ranging from international economics, urban and regional economics, economic geography and Marxist political economy, but also applies to the spatial scales covered (global, national, regional, urban) and the richness of the examples and empirical material deployed. Based on both theory and empirics, most of the authors in this issue turn Friedman's flat hypothesis on its head and argue that it is as likely or even more likely that globalization will lead to a more ‘spiky’ or ‘bumpy’ world: spiky, in the sense that at various spatial scales the geographical allocation of economic activity is likely to become more uneven and more differentiated. This prediction is not only made at the global level with respect to between-country unevenness but also with respect to inequalities and disparities among city-regions. The first three papers deal with the theoretical foundations (or the lack thereof) of the world is flat thesis. McCann (2008) carefully discusses how this hypothesis should be seen from the perspective of location theory and dismisses the claim that the forces mentioned by Friedman could only work in the direction of rendering geography less important. There are sound theoretical arguments to conclude that both a more even and an uneven spatial allocation are possible: it indeed depends. McCann (see also McCann, 2005) also points out that one should be very careful in distinguishing among various alleged structural changes: while the actual transport costs of shipping goods or information may have fallen spectacularly, this is not necessarily true for the transaction costs involved in making or setting up a transaction. Rodriguez-Pose and Crescenzi (2008) come to similar conclusions. They survey and discuss modern location theory to see whether and how the flat prediction can be backed by theory. In the end, the authors conclude that such a theoretical foundation is hard to come by. The third paper by Cox (2008) approaches the topic from a somewhat different angle. Applying a Marxist-inclined political economy perspective, Cox casts the flatteners identified by Friedman within a long-term analysis where globalization and its drivers are seen as the latest phase in a never-ending attempt by capital in order to use space in new-and uneven - ways in order to sustain profitable accumulation. The remaining four papers, though not ignoring theory, explicitly or implicitly take on Friedman's challenge that the world is flat by looking at the empirical evidence. They do so for different spatial scales and locations. Brakman and Van Marrewijk (2008) look at the flat-world hypothesis from the point of view of the global economy. They do not find much evidence of economic convergence between countries at the global level. In addition, they do not find that the importance of distance in cross-country economic relationships is falling over time. The most prominent relationship in this respect is (bilateral) international trade. Linders et al. (2008) also show that distance, ranging from physical to mental distance, remains important, as well as demonstrating that despite the revolution in communications, many countries still do not trade with each other at all. Their message is that large parts of the world economy are still rather ‘empty’. Switching to regions, Florida et al. (2008) use a new, if provocative, data technique to show how the new global economy consists of a fairly limited number of mega-regions that make up for the bulk of the globe's GDP, population and employment. These regions often include (parts of) different countries and their rise not only suggests that the world is becoming more spiky (instead of flat) but also poses important questions about (regional) economic policy. The final paper by Van der Ploeg and Poelhekke (2008) moves attention to mega-cities and to urban growth, particularly in the developing world. Here too, and in line with recent evidence by the World Bank (2008), the dominant trend is one of increased urbanization: the integration of developing countries into the world economy seems to go along with a sharp increase in the degree of spatial unevenness within such nations. After reading the seven papers that make up this issue of the Cambridge Journal of Regions, Economic and Society, one could argue that there are two basic and very fundamental problems with Friedman's book. And this criticism also applies to other ‘death of distance’ claims that foretell the end of (economic) geography. The first problem is a conceptual or theoretical one. The notion that the changes or flatteners identified by Friedman naturally lead to a flat or geography-free world is misleading. It is very much an open question what the impact of these changes will be. The second and related problem is that systematic empirical evidence is needed to back up Friedman's claims, but the book simply does not provide this kind of evidence. Taken together, the papers in this issue of the journal go to the heart of this criticism by addressing both problems. Having said this, the goal is not debunk Friedman's ideas outright. On the contrary, as stated above, his is an important book that calls for a serious response. Many of the changes and forces that are emphasized throughout The World is Flat are clearly very relevant and pose important (new) challenges for researchers and policy makers. Friedman is correct, for example when he points out the importance of changes like the rise of India or China, the spatial fragmentation of the production process through offshoring or the lowering of transaction costs that makes more and more services tradable. Rather, the message that comes through from the contributions that follow is two-fold: Friedman is wrong to equate the emergence of a world of increasing interconnectedness with a ‘flat’ global economy and the empirical evidence does not in any case back up the idea that the global economy is becoming flat.