Literature Review 1

Trends in the Global Business Environment

Individual Assignment

Amit Aneja
EMV8526

Holmes Institute

3rd May 2019

Literature Review 2

Table of Contents
Introduction:....................................................................................................................................3

Article Summary:.............................................................................................................................3

Four Research Questions:................................................................................................................4

Article 1: The world is not flat: putting globalization in its place...................................................4

Article 2: Why the World Isn’t Flat.................................................................................................5

Article 3: The Perils of Economic Nationalism and a Proposed Pathway to Trade Harmony........6

Article 4: The globaliser dragon: how is China changing economic globalisation?.......................6

Conclusion:......................................................................................................................................7

Bibliography:...................................................................................................................................8
Literature Review 3

State of Globsalisation in 2019 by Pankaj Ghemawat & Steven A. Altman

Introduction:
The article briefly defines the journey of globalisation. The writers believe that collapse of
globalisation is just another hoax like flat world. Brexit and Trump shocks are shaping the new
future of the regions based on economic nationalism. According to the writers of the article and
Phillip Bastian, DHL Global Connectedness Index depicts that 2017 has been the most
globalised year of the world. 2018 has been a mix year as on the one side it has seen emergence
of new obstacles like tariff tiffs, blocked acquisitions and harmful business-political nexus. The
obstacles and dents in the global connectedness doesn’t mean an end to global business
competition but a shifting playing field. On the other side, 2018 has seen streamlining of major
trade agreements including; African Continental Free Trade Agreement (AfCFTA), European
Union-Japan Economic Partnership Agreement, China-Pakistan Economic Corridor (CPEC) and
One Belt One Road (OBOR) have been streamlined.

Article Summary:
Globalisation has not only promoted business activities but also has increased business
competition. Henceforth, businesses must follow smart business decisions based on trends of
globalisation measures. In 2017, the flow of capital, information, goods, services, trade,
technology, and people have risen unprecedentedly. However, succeeding in foreign and
international markets is still not an easy feat. In 2018, disputes occurred between China and
United States as Trump increases the tariffs for Chinese imports and started implementing
economic protectionism. As a result, foreign corporate takeovers had to face tight scrutiny, and
immigration clamped down. US actions has begun to affect the international flows which will
have direct impact on growth and foreign direct investment. Pankaj Ghemawat and Steven A.
Altman argue that trade is growing at a slower rate and foreign direct investments are decreasing
due to re-emergence of economic nationalism. Despite loud claims, market integration is limited
in absolute terms. The striking juxtaposition reflects that globalisation offers both opportunities
and challenges to firms, people and states.

Lastly, the writers of the article acknowledge the globalisation’s turbulence and offer 4
suggestions to business leaders including strategy, presence, architecture and non-market
strategy. As there are mounting threats to globalisation and policy shifts are occurring, the
Literature Review 4

businesses must not respond to short-term development as it can expose their vulnerability. The
writers prefer, strategic retreat over optimistic venture. On one side, trade and investment
between strong economies is in the crosshairs and on the other side, trade barriers are being
reduced between small and medium economies. Moreover, the writers stress the significance of
prioritising and exploiting markets based on Pankaj Ghemawat’s CAGE Framework as they
believe administrative/political distances are changing at the faster pace than ever. The writers
have rightly argued that crimping global growth and escalating tariff will be serve as an
opportunity for few firms and countries. Last but not the least, the big economies must engage in
adjusting domestic policies rather than adjusting international economic policies. Global
connectedness has intertwined many socio-economic and political factors. Henceforth, the
writers rightly argue that it isn’t possible to predict whether levels of globalisation will be higher
or lower in the coming years. In a gist, the winners will embrace complexity of globalisation
rather than having cautionary behaviour.

Four Research Questions:

I have identified following 4 questions vis-à-vis globalisation;

1- Why globalists believe the world is flat?

2- Why the world isn’t flat?
3- Is the emergence of economic nationalism good for the world?
4- Is China benefitting the most from globalisation?

Article 1: The world is not flat: putting globalization in its

place
The article highlights the increased usage of globalisation in academic, press and policy making
spheres. The neoliberals are pro-globalisation and argues in favour of the concept as it has
opened up markets, stimulated innovation and productivity. Whereas, the political left is anti-
globalisation and argues that it has paved way for exploitation where corporations have become
more powerful than the states. Moreover, anti-globalist argues that the divide between Global
North and Global South has increased and globalisation has resulted in crony capitalism and
environmental degradation. Interestingly, there is a new debate whether or not globalisation is
limiting the significance of location and place (Christopherson, Garretsen and Martin, 2008). The
writers of the article claim that the revolution in information and communication technologies
Literature Review 5

marks the end of the geography and is the onset of death of distance. Moreover, the vanishing of
distance is signalling towards the emergence of a borderless world and de-territorialization. The
writes support their argument by referring to Thomas Friedman’s view who consider ICT
revolution and deregulation of markets, economic integration are contributing factors for a ‘flat
world’ where friction of distance has no scope in economic relationships. Likewise, the writers
have highlighted the significance of 10 structural changes which has occurred in the past two
decades. The 10 flatteners include; fall of Berlin Wall, rise of world wide web, workflow,
outsourcing, offshoring, uploading, supply chaining, insourcing, in-forming and steroids
(Friedman, 2005). The writers agree with Thomas Friedman views on rise of China and India and
significance of offshoring. However, writers disagree with Thomas Freidman that increasing
inter-connectedness and economic integration cannot be equated with flat global economy as
empirical evidence shows a darker side to inequality, poverty and increased gap between Global
North and Global South.

Article 2: Why the World Isn’t Flat

Pankaj Ghemawat presents an anti-thesis to Thomas Friedman’s ‘flat world’ and supports himself
with statistical data. He is of the opinion that the world can be considered as semi-globalised and
people and countries still have to reap benefits from globalization. However, he feels countries
form alliances based on their foreign policies which has direct impact on their trade. He supports
his views with empirical data where 90% of all phone calls, web traffic, investment is local.
Moreover, the number of international friends at social networking websites, diaspora of
international students is also meager. Pankaj Ghemawat warns that the even the small level of
globalization can slip away which bring global crisis. He criticizes the mantra of globalists,
‘investment knows no boundaries’ as foreign direct investment (FDI) just makes 10% of major
economies and 90% fixed investment remains domestic. Although merger waves can pus ration
of FDI above 10% but still it has never reached 20% (Ghemawat, 2009). Moreover, Pankaj
Ghemawat thinks level of internationalization is too meager in cross-border migration, telephone
calls, management research, education, patenting, stock investment and trade. He mocks
globalists that it is a deci-globalised world. He also criticizes the Thomas Friedman’s infatuation
with globalization by arguing that the success of businesses and industries aren’t exempt from
political and geographic constraints. Lastly, he acknowledges four basic distances and
Literature Review 6

differences including cultural, administrative/political, geographic and economic which still

hampers the international connectivity, growth, and trade. He believes since Trump elections
campaign, the delusions of globalization has begun to erode and fade in United States
(Ghemawat, 2017).

Article 3: The Perils of Economic Nationalism and a

Proposed Pathway to Trade Harmony
The article highlights the impact of economic nationalism on trade harmony. The writers argue
that United States economic policy has taken a sharp deviation from trade liberalisation to
economic nationalism. The writers consider political populism to be the main culprit behind
implementation of economic nationalism. Resultantly, US economic protectionism will promote
strict border controls and affect the economic policies of other countries. Economic nationalism
aims at protecting national security by changing balance of trade to favour US. However, in
reality its contradictory with multilateral system of trade and investment espoused by America
itself. The authors of the article believe American policy of economic nationalism will negatively
effect the traditional trading partners of United States including, Canada, European Union and
Japan. America is suffering from international economic imbalances as well as from China’s
emergence as great economic and political power. However, unilateral actions of United States
will fetch no desired results and will further alienate partners of US. Lastly, the writers suggests
that rise of China can be curtailed by; renewing rules of multilateral trading system, forming new
regional trade and investment alliances, renegotiations at World Trade Organisation and
continued bilateral engagement (Schoenbaum and Chow, 2018).

Article 4: The globaliser dragon: how is China changing

economic globalisation?

China has benefitted the most from globalization and it has emerged as not only the largest
exporter but also 3rd largest provider of foreign direct investment. Moreover, China is actively
playing the role of economic globalizer in the present century. The writer argues considering
China’s potential as second largest importer it will be not beneficial for developed economies to
challenge China economically as well as politically (Trindade d’Ávila Magalhães, 2018). The
magnitude of reliance of many small and medium economies is on China as it is one of the major
Literature Review 7

supplier of high-tech goods. Moreover, the global grand strategy of China aims at linking various
regions for trade and investment purpose to mutually benefit from it (Friedberg, 2018). China has
undertaken One Belt One Road (OBOR) initiative, China-Pakistan Economic Corridor (CPEC)
and aims at connecting Central Asian Republics with such initiatives.

Conclusion:
The concept of globalization is not only attractive and promising but also enriched with diverse
opinions. In short, globalization is meant to carry out trade and investment for mutual benefits.
However, in reality many distances including politics, policy, culture, geography exists which
limit the scope of globalization. Globalisation has created many opportunities for small and
medium countries and industries. The world at the moment isn’t flat but has a tendency to
become flat in future if countries are able to tackle challenges like Brexit and economic
protectionism. In my opinion, it is evident that China is the driver of present day globalization
and it will not budge to America’s trade and tariff strictness. Moreover, it will be interesting to
see whether US snubs it economic protectionism or not.
Literature Review 8

Bibliography:

 Christopherson, S., Garretsen, H. and Martin, R. (2008). The world is not flat: putting
globalization in its place. Cambridge Journal of Regions, Economy and Society, 1(3),
pp.343-349.
 Friedberg, A. (2018). Globalisation and Chinese Grand Strategy. Survival, 60(1), pp.7-40.
 Friedman, T. (2006). The world is flat. 1st ed. New York: Farrar, Straus and Giroux.
 Friedman, T. (2005). It's a Flat World, After All. [online] Nytimes.com. Available at:
https://www.nytimes.com/2005/04/03/magazine/its-a-flat-world-after-all.html?
mtrref=www.google.com&gwh=087811BA907F1FC4DBA27565EB152219&gwt=pay
[Accessed 3 May 2019].
 Ghemawat, P. (2009). Why the World Isn't Flat. [online] Foreign Policy. Available at:
https://foreignpolicy.com/2009/10/14/why-the-world-isnt-flat/ [Accessed 3 May 2019].
 Ghemawat, P. (2017). Globalization in the Age of Trump. [online] Available at:
https://hbr.org/2017/07/globalization-in-the-age-of-trump [Accessed 3 May 2019].
 Ghemawat, P. (2018). Redefining Global Strategy. La Vergne: Harvard Business Review
Press.
 Schoenbaum, T. and Chow, D. (2018). The Perils of Economic Nationalism and a
Proposed Pathway to Trade Harmony. SSRN Electronic Journal.
 Trindade d’Ávila Magalhães, D. (2018). The globaliser dragon: how is China changing
economic globalisation? Third World Quarterly, 39(9), pp.1727-1749.