[Vnbiz] Peeking under the surface of globalization

[Craig Stevenson]

Chuck:

I neither posted the article nor know where it was exactly sourced but I
think it is excerpted from Altman's book. I assume the book to be called:
"Connected: 24 Hours in the Global Economy"

It is stated at the very end of the article: ">From "Connected: 24 Hours in
the Global Economy" by Daniel Altman, published this month by Farrar, Straus
and Giroux. Copyright Â(c) 2007 by Daniel Altman. All rights reserved"

For other books, articles, and interesting datasets on Globalization, see
the following, which offer a more balanced perspective:

Chua, A. (2004). *World on Fire*. New York: Anchor Books.

(BOOK, G is leading to inequality and ethnic conflict.)

Dreher, A. (2006). Does Globalization Affect Growth? Evidence from a New
Index of Globalization. *Applied Economics*, 38(10), 1091-1110. Retrieved
from http://globalization.kof.ethz.ch/.

(a dataset that creates an index of globalization from social, economic and
political factors)

Firebaugh, G. (1999). Empirics of World Income Inequality. *American Journal
of Sociology, *104(6), 1597–1630. Retrieved  from the EBSCO database.

(Looks at different perspectives, and methodologies for testing whether
Inequality is rising or declining)

Firebraugh, J., & Goesling, B. (2004). Accounting for the Recent Decline in
Global Income Inequality. *American Journal of Sociology, *10(2), 283-312.
Retrieved  from the EBSCO database.

(Finds Inequality to be converging, or falling, mostly due to growth in Asia
among populous nations)

Friedman, T. (2005).  *The World is Flat: A Brief History of the
Twenty-first Century.* New York: Farrar, Straus and Giroux.

(Champions G. for, as name implies, creating level playing ground and
converging income equality.)

Jones, C.I. (1997). On the Evolution of the World Income Distribution. *The
Journal of Economic Perspectives*, 11(3), 19-36. Retrieved  from the JSTOR
database.

(Looks at how measures of income distribution between and within nations are
composed)

Morgan, J. (Aug/1962).* *The Anatomy of Income Distribution. *The Review of
Economics and *

*Statistics*, 44(3), 270-283. Retrieved from the JSTOR database.

(Same as above, but looking at older models)

Sala-I-Martin, X. (2006). THE WORLD DISTRIBUTION OF INCOME: FALLING POVERTY

AND CONVERGENCE, PERIOD. *The Quarterly Journal of Economics, *71(2),
351-397.

(Very comprehensive, champion of income convergence.  Look at this one)

Shorrocks, A.F. (Sep/1995). Revisiting the Sen Poverty Index. *Econometrica*,
63(5), 1225-1230. Retrieved  from the ABI/Inform database.
(Sen is the grand master of inequality and poverty literature. Interesting)

Steger, M.B. (2003). *Globalization:  A Very Short Introduction*. New York:
Oxford University Press.

(Good, general, brief, look at the phenomenon)

Stiglitz, J.E. (2003).  *Globalization and its Discontents*. New York:  W.W.
Norton & Company.

(Written by the Nobel Prize Winning Economist.  Interesting. Perspective as
name implies)

Summers, R. & Heston, A. (1991). THE PENN WORLD TABLE (MARK 5): AN EXPANDED

SET OF INTERNATIONAL COMPARISONS, 1950-1988. *The Quarterly Journal of *

*Economics*, 106(2), 327-368. Retrieved  from the JSTOR database.

*(Speaks to the primary database for GDP PPP measures for testing the
issues)*

Wade, R.H. (Dec/2001). The Rising Inequality of World Income
Distribution. *Finance
and Development*, 38(4). Retrieved from
http://www.imf.org/external/pubs/ft/fandd/2007/03/index.htm
(An opposing view to Sala-I-Martin)



Enjoy,

Craig





On 5/7/07, Chuck Searcy <chucksearcy at yahoo.com> wrote:
>
> [ Vietnam Business Forum ]
>
>
> Thanks very much for this, but *please*, in the future, indicate the
> source.  *Wall St. Journal*?  Deutsche Press?  Altman's blog?  The place
> where an article appeared is sometimes a good indication of why a certain
> tone or choice of terms is conveyed.  Thanks again.
>
> Chuck Searcy
>
> *"Phan, Tai" <Tai.Phan at ed.gov>* wrote:
>
> [ Vietnam Business Forum ]
>
> Peeking under the surface of globalization
> Intel's experience in Vietnam shows the web of connections behind the
> global economy.
>
> By Daniel Altman
> Published: May 4, 2007
>
> Every day, newspapers and television broadcasts are full of numbers that
> supposedly tell the public how the global economy is doing. Like the
> markings on a thousand thermometers, the numbers go up and down: stock
> market indexes, payroll data, interest rates, quarterly earnings, trade
> deficits, you name it. The problem is, none of these numbers tells you how
> the global economy actually works.
>
> But what if you could go behind the scenes - freeze the global economy for
> a sliver of time, just long enough to get a really good look at it? Then
> you'd have a pretty good idea of what was connected to what and who relied
> on whom. You'd see how the global economy is like an enormous machine
> crammed with six billion interlocking cogs and wheels - one for every person
> inside. Unfreeze the action, and the cogs and wheels whirl away as the
> world's workers spring back into action.
>
> Not everyone's wheel is the same size, but everyone's wheel matters. To
> use another metaphor: Think of the proverbial butterfly that beats its wings
> in the air over Australia and helps to cause a hurricane thousands of miles
> away in the Gulf of Mexico. Like the earth's own atmosphere, the economy is
> a closed system - everything's connected, and every individual's actions
> instantly affect everyone else.
>
> Sometimes this fact is lost in the countless hours of commentary on
> television and radio, to say nothing of the endless articles and books,
> about a topic vaguely called globalization. Yet much of the resulting debate
> amounts to "globalization good" or "globalization bad." And that kind of
> name-calling doesn't do much to help you cope with the changing world.
>
> The only empirically obvious truth is that the forces often labeled
> "globalization" - the integration of markets, the spread of ideas, the
> formalization of the world trading system, and whatever else you care to
> place under the umbrella - are here to stay. Wouldn't it be better - and
> more interesting - to take a broad sampling of facts and judge for yourself?
>
>
> A nighttime drive along Nguyen Van Troi Street - Ho Chi Minh City's
> version of the Las Vegas strip - is a study in outrageous contrasts. The
> graceful colonial villas that house official offices behind forbidding metal
> fences have been swamped by trendy cafÃ(c)s, bars, restaurants, and shops open
> until the wee hours. The patriotic banners hanging nearby, all in gold
> letters on a red background, are barely legible in the blinding light of
> thousands of tubes of neon.
>
> Is this really a Communist country? Not on your life. The entrepreneurial
> tradition is just too deeply rooted. Dozens of private businesses dot the
> sidewalks. New storefronts selling everything from silk bathrobes to spa
> treatments are popping up all over Ho Chi Minh City. Likewise, the old Honda
> Dream mopeds are quickly giving way to racy new Yamaha scooters. Entire
> families still pile on, just like they used to, but they're not wearing
> plain white shirts and dark trousers anymore - now it's tight jeans,
> designer tops, and plenty of makeup.
>
> Vietnam didn't get this way all by itself. Foreign companies have had a
> hand in the country's growing prosperity. Naturally, they didn't get
> involved out of charity. They're trying to find cheaper places to make their
> products, or new people who might buy them.
>
> It's a mission that has often led to controversy, with accusations raging
> from substandard treatment of workers to wrecked indigenous cultures. But
> arguments against companies reaching around the world to produce or sell are
> being washed away, if not always answered, by the twin tides of trade and
> investment. The more relevant question today is whether these multinational
> relationships can be managed in a way that benefits both guests and hosts.
>
> Intel, the microchip maker, would respond with an emphatic yes. The
> company has been operating in Vietnam since 1997, the year when several
> countries in the region experienced financial crises that deterred many
> other businesses from investing. In 2000, the United States opened trade
> relations with Vietnam for the first time since the two countries stopped
> fighting. And it was then that Intel sent Than Trong Phuc home.
>
> Phuc left Ho Chi Minh City on the last night it was called Saigon, in one
> of the last helicopters to take off from the roof of the American Embassy.
> Soon afterward, he was adjusting to life as a newly minted California
> teenager. Today, three decades after he fled Vietnam, he is the living
> embodiment of Intel's shrewd strategy for expansion into developing
> countries
>
> It's a sweltering summer day outside, but Phuc and Le Quoc Anh, a
> Vietnamese-American born in Virginia, are sitting at a conference table in
> the cool comfort of Intel's air-conditioned offices. Phuc, a trim man with a
> gray-flecked mustache who runs the operation, is flipping through a slide
> presentation on his laptop while Anh, his jovial public relations manager,
> takes notes.
>
> As each slide pops up on the projection screen, Phuc's steady gaze checks
> with his audience to make sure his explanation has sunk in. One slide
> elicits a special mention, though. "This is the Communist Party of Vietnam
> Web site," Phuc says brightly as the projector shows an image taken from a
> Web browser. "We made the headline!" And indeed, there on the screen is
> Intel's name, in an announcement of the deal that is supposed to bring
> Vietnam to the cutting edge of the digital era. "I thought the day would
> never come," Anh adds.
>
> Phuc and Anh agree that if they brought this slide to their immigrant
> friends in the United States, they would not believe it. But cooperation
> with the government is the name of Intel's game in Vietnam.
>
> In a way, it has to be. Foreign companies' access to Vietnam is still
> tightly controlled by the government, and the government has a profound
> involvement in the lives of Vietnamese. "The government's role in Vietnamese
> society is pervasive," Phuc says. "Their influence and their mind share is
> everywhere." Rather than seeing this unusual situation as a handicap,
> however, Intel has tried to exploit it.
>
> >From the moment Phuc arrived in Ho Chi Minh City, he set about
> cultivating government officials. His initial step was to understand their
> goals. The first, he says, is to increase the use of personal computers and
> the Internet. The second is to make Vietnam an exporter of high-tech items,
> and preferably those that don't require a lot of equipment to produce.
>
>
> "In manufacturing on the hardware side, the capital cost is big," Phuc
> explains, adding that Taiwan already has the upper hand in that market.
> Instead, he says, "the government wants Vietnam to be an exporter of
> information technology. All you need is a brain." With a million graduates
> entering the work force every year, the need for these jobs couldn't be
> plainer.
>
> Intel's goal is clear, too, and Phuc makes no bones about it: sell more
> chips. But rather than simply hanging out a shingle and waiting for
> customers to arrive, Phuc spends most of his time actively working to
> develop the market. That means coming up with an endless stream of ideas for
> putting people together with computers, since more demand for computers
> implies more chips.
>
> And so it came to pass that Intel, with just a handful of people working
> out of an office in Ho Chi Minh City, became the driving force for Vietnam's
> entire computer industry.
>
> Phuc divided the market into three segments, separated by income. The high
> end presented no challenges; they'd buy whatever computers they wanted. The
> low end probably couldn't afford to buy any computers, so the question was
> how to give them access to software and the Internet in a community setting.
> That's when Phuc got to know Vu Duc Dam.
>
> Vu was vice chairman to the people's committee in Bac Ninh, an inland
> farming province in the north. He had studied abroad and was interested in
> promoting Vietnam's digital future. But what would Bac Ninh's poor farmers
> do with computers?
>
> The answer, in part a product of Intel's constant brainstorming, is now on
> show at 200 community centers across Bac Ninh. Each one houses five personal
> computers and one printer. A local Web site created by the Agriculture
> Ministry offers daily crop prices. In addition, online maps clearly show the
> boundaries of land allotments, previously a frequent topic of disagreements.
> The system can also be used to set up distribution routes.
>
> For farmers, it's a valuable resource. For Intel, it's 1,000 chips sold.
>
> Though farmers sharing computers is all well and good, Intel's prime
> target was always the middle segment of the population, a group Phuc now
> estimates at about three million households with income from $2,000 to
> $6,000 annually. How could Intel encourage these people to stretch their
> budgets and become new customers?
>
> Working with the government's Communist youth group, Intel developed a
> program under the brand Thanh Giong, the name of a legendary Vietnamese hero
> who magically overcame disability to beat back the enemy of his people. To
> beat back the enemy of illiteracy (and thus unemployment), the program would
> sell computers costing $265, $320 and $420. Intel acted as matchmaker
> between suppliers in Taiwan and Vietnamese assemblers, whom it also helped
> with testing, debugging and quality control.
>
> So far, the Thanh Giong systems have been selling at a rate of 3,000 a
> month. "Intel doesn't do this for free," Phuc says. "We don't even take a
> loss." though the program began in just a few provinces, now all 64 have
> followed the Thanh Giong lead. "And of course," Phuc adds, "we helped
> everyone."
>
> Phuc's approach, which he credits in part to the ideas of Intel's
> chairman, Craig Bennett, has become a model for Intel divisions throughout
> Southeast Asia and Eastern Europe. The government is planning another Thanh
> Giong program to reach small businesses, which it hopes will triple in
> number in the next five years. The "digital Vietnam" agreement that Intel's
> chief executive, Paul Otellini, signed June 15 includes a stunning plan for
> the future: computer labs in all schools, e-government programs in all
> provinces, personal computers in all 900 hospitals and 260 universities,
> rural Internet rollouts, and even wireless Internet covering entire cities.
>
> Intel has succeeded in Vietnam because its goal and the government's are
> roughly the same: more Vietnamese using more computers. Essentially, Intel
> gave the government a menu of options - all of which were good for Intel -
> and followed up on the ones the government liked. The company has taken
> advantage of cheap marketing and played up to local traditions. At worst, it
> can be accused of encouraging people to spend their money on computers
> instead of other things, perhaps including necessities. The situation could
> hardly be better.
>
> Intel hasn't always been able to avoid controversy, however. Like other
> companies, it has been blamed for being a badly behaved guest. For instance,
> by building a large plant in Kiryat Gat, an Israeli town that belonged to
> Palestinians before 1948, Intel became the target of boycotts from
> pro-Palestinian groups. They accused the company of helping Israel to limit
> Palestinian families' ability to regain their ancestral homes. There is no
> shortage of other stories, especially involving American businesses.
>
> Things are changing, though. Ironically, the same corporations that
> activists used to castigate for using sweatshops in poor countries may now
> be the entities most responsible for spreading progressive labor practices.
> For example, Gap Inc., which was once criticized for using exploitative
> clothing suppliers on three continents, has more recently been praised for
> coming clean about its violations of labor laws, pledging to reverse them,
> and even solving a dispute between workers and local bosses in Cambodia.
>
> The company only changed its ways after years of sustained pressure from
> activists and consumers. But the case proved that under their watchful eye,
> multinational companies can bring progress as well as problems. When the
> activists' voices and consumers' pocketbooks make visible examples out of
> offenders, it's much less likely that others will test the limits of
> acceptable behavior.
>
> >From "Connected: 24 Hours in the Global Economy" by Daniel Altman,
> published this month by Farrar, Straus and Giroux. Copyright Â(c) 2007 by
> Daniel Altman. All rights reserved.
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