The World Isn't Flat: Challenging the Myths of Hyperconnectivity

In an era defined by rapid technological advancements and interconnected economies, the notion of a "flat world" has become increasingly prevalent. This perspective suggests that national borders are becoming irrelevant, and that ideas, goods, and people flow freely across the globe. However, Pankaj Ghemawat challenges this widely held belief, presenting compelling data that reveals a significant gap between perception and reality.

The Illusion of a Borderless World

The idea that national borders don't matter is pervasive, influencing both proponents and opponents of globalization. Some celebrate the seamless integration of markets and cultures, while others fear the disruptive consequences of a globalized tsunami. But how accurate is this view?

Ghemawat argues that we may not be as globalized as we think. To illustrate this point, he presents data on various aspects of cross-border integration:

• Communication: Only a small percentage of voice calling minutes are cross-border.
• Migration: The percentage of the world's population accounted for by first-generation immigrants is also relatively low.
• Investment: Foreign direct investment accounts for a fraction of total real investment.
• Trade: Official statistics on exports as a percentage of GDP are often inflated due to double counting.

These data points suggest that internationalization levels are far from the "no border effect" benchmark, where cross-border activity would dominate.

Globaloney: The Overestimation of Globalization

Ghemawat introduces the term "globaloney" to describe the widespread tendency to overestimate the extent of globalization. Surveys reveal that people often overestimate key indicators of cross-border integration by a significant margin. This overestimation can be attributed to several factors:

• Lack of Data: The debate on globalization is often characterized by a scarcity of reliable data.
• Peer Pressure: Questioning the notion of a flat world can be met with skepticism and disbelief.
• Techno-trances: Exaggerated conceptions of technology's ability to overcome cultural, political, and geographic barriers can distort our perception of globalization.

Even seemingly global platforms like Facebook demonstrate the limitations of hyperconnectivity. A relatively small percentage of people's friends on Facebook are located in countries other than their own, highlighting the persistence of local and national relationships.

The Dangers of Globaloney

Overestimating the extent of globalization can have detrimental consequences. It can lead to complacency, hindering efforts to promote further integration and maximize global welfare. Additionally, it can exacerbate fears about globalization, fueling protectionist sentiments and hindering international cooperation.

For example, in countries like France, inflated perceptions of immigration levels can intensify debates and fuel anti-immigrant sentiment. Similarly, in the United States, overestimations of foreign aid spending can undermine support for international development initiatives.

Embracing Incremental Openness

Ghemawat advocates for a more nuanced understanding of globalization, recognizing both its potential and its limitations. By acknowledging that the world is not as flat as we might think, we can identify opportunities for further integration and address the challenges that globalization poses.

Even incremental progress towards greater openness can yield significant benefits. For instance, reducing the disparity between aid to domestic and international populations could help achieve global development goals.

Conclusion

While the allure of a borderless world is undeniable, it's crucial to ground our understanding of globalization in reality. By challenging the myths of hyperconnectivity and embracing a more data-driven perspective, we can unlock the full potential of international cooperation and create a more prosperous and equitable world.