The Third Great Power Shift in Modern History: The Post Western World as Globalization Gains Depth a

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The Third Great Power Shift in Modern History
The Post Western World as Globalization Gains
Depth and Breadth
VCU School of Business 15th Annual International
Business Forum Sponsored Through a Generous Grant
from Universal Corporation Co-Sponsored by the
VCU School of World Studies February 24
(Tuesday), 2009 (300 - 530 pm) VCU Student
Commons Ballroom Richmond, Virginia, USA
http//www.business.vcu.edu/internationalforum
     

• Moderated by
• Van R. Wood
• Professor of International Marketing and
• Philip Morris Endowed ChairVirginia Commonwealth
  University
• Richmond, Virginia USA
• vrwood_at_vcu.edu

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Reality-wise!

• Sometimes size does matter.
• If youre one in a million in China
• There are 1,300 people just like you.
• In India, there are 1,100 people just like you.
• The 25 of the population in China with the
  highest IQs . . .
• Is greater than the total population of North
  America (US, Canada and Mexico). In India, its
  the top 28.
• Translation for teachers-
• They (the Chinese and Indians) have more honors
  children than most countries have children.

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Reality-wise!

• China will soon become the number one English
  speaking country in the world.
• If you took every single job in the Europe (27
  countries) today and shipped it to China . . .
• China would still have a labor surplus.

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Reality-wise!

• During the course of the next 8 minutes-
• 60 babies will be born in the U.S.
• 244 babies will be born in China.
• 351 babies will be born in India.

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Reality-wise!

• According to former US Secretary of Education
  Richard Riley . . .
• The top 10 in-demand jobs in 2010 didnt exist in
  2004.
• We are currently preparing students for jobs that
  dont yet exist . . .
• Using technologies that havent been invented
• In order to solve problems we dont even know are
  problems yet.

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Reality-wise!

• The amount of new technical information is
  doubling every 2 years.
• And that means for students starting a four-year
  technical or college degree . . .
• Half of what they learn in their first year of
  study will be outdated by their third year of
  study.

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Reality-wise!

• In 2006 China graduated 600,000 engineers,
  India graduated 350,000 and the US
  graduated70,000.
• For the cost of one chemist or engineer in the US
  or Europe, a company could hire 5 well-trained
  and eager chemist in China and 11 engineers in
  India.

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Reality-wise!

• We are living in exponential times.
• More than 3,000 new books are published . . .
  Daily
• Its estimated that a weeks worth of New York
  Times . . .
• Contains more information than a person was
  likely to come across in a lifetime in the 18th
  century.

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Did You Know What All This Means?

• Shift Happens
• And Some Believe the Third Great Power Shift in
  Modern History Is Upon Us

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Globalization and International Business A Brief
History

• China in the 14th Century should have ruled the
  world.
• The 15th century- late 20th century
• Modernity science, technology, commerce,
  agriculture and the industrial revolution
• The Enlightenment and Renaissance
• Prolonged political dominance of the West.

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• The Great Expansions of World Business
• 19th and 20th centuries
• The 1st great movements of capital
• Money from Europe poured into the New World
• 1950s and early 1960s
• The 2nd great movement of capital
• Money from the US poured into Europe and East
  Asia (Western Europe was rebuilt and Japan grew
  at over 9 a year for 23 years)
• We are now living through the 3rd great expansion
  of the global economy and by far the largest.

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• The Rise of the Rest
• Over the last 20 years many other countries
  (non-Western) have experience growth rates that
  are unprecedented
• From 2006 2007 124 countries grew at 4 or
  more
• 30 were from Africa (representing 2/3s of the
  continent)
• emerging markets now have 25 of the great 100
  multinational companies
• 4 each from Brazil, Mexico, S. Korean and Taiwan,
  
• 3 from India,
• 2 from China ,
• and 1 each from Argentina, Chile, Malaysia and S.
  Africa

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• The percent of people living on one dollar a day
  or less has dropped from 40 in 1981 to 18 in
  2004, and will be 12 by 2015.
• China has lifted 400 million out of poverty.
• Poverty is falling in countries housing 80 of
  the world population.
• The rise of productive and growing economies is
  unprecedented in China, India, Brazil Russia,
  Indonesia, Turkey, Kenya, South Africa and other
  countries.

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• From 2000 2007 the world economy grew at its
  fastest pace in 4 decades, and
• Income per person across the globe rose at a
  faster rate (3.2) than in any other period in
  history.

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• Over the last two decades, about 2 billion people
  have entered the world of markets and trade
  (driven primarily by western capital flowing to
  Asia and across the globe)
• Between 1990 and 2007 the global economy grew by
  22.8 trillion to 53.3 trillion and global trade
  increased by 133
• Emerging markets accounted for over half of this
  global growth, and they now account for over 40
  of the world economy

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• Increasingly this growth is powered by their own
  markets and not exports to the West and thus it
  is not an ephemeral phenomenon (it is not
  short-lived).
• China and India together have 2.5 billion people
  and their potential wealth in total is massive.

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• A long term global power shift is happening.

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• Today
• the tallest building in now in Taipei (soon to be
  Dubai)
• the richest man is Mexican,
• the largest public traded company is Chinese,
• the biggest plane is built in Russia and Ukraine,
  
• the leading oil refinery is in India
• the largest factories are in China
• London is the leading financial center
• the UAE has the richest endowed investment fund,
• the largest Ferris wheel is in Singapore,
• the worlds number one casino is in Macao
• the biggest movie industry is in Bollywood
  India
• the world largest mall is in China
• 10 years ago the US and Europe were top in many,
  if not most of these.

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• One hundred years ago
• We had a collection of European nations in
  charge,
• Then came the bi-polar cold war period,
• Then the American uni-polar world,
• Now power is shifting to the rest.
• And the rest is rising!!!

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• Goldman Sachs (an investment bank) predicts that
  by 2040
• five emerging-market countries
• China,
• India,
• Brazil,
• Russia and
• Mexico
• Will have a larger economic output that the G-7
  countries (the 7 Western nations that now
  dominate global affairs US, Canada, GB, France,
  Germany, Italy and Japan).

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So What does all this mean for nations,
companies and individuals in the beginning of the
21st century?
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VCU 15th Annual International Business Forum

• Mr. Hans Martens - Chief Executive Officer -
  European Policy Center (EPC)
• Mr. Bruce Thomas - Senior Vice President -
  MeadWestvaco Corporation (MWV)
• Mr. Paul Grossman - Director of International
  Trade and Investment -Virginia Economic
  Development Partnership (VEDP)

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For Nations It Means Putting on the Golden
Straight Jacket

• The primary engine of growth
• low inflation - price stability
• shrink size of state bureaucracy
• maintain balanced budget/surplus
• eliminate tariffs on imports
• remove foreign investment restrictions
• remove domestic monopolies
• privatize state owned enterprises
• deregulate capital markets
• make currency convertible
• eliminate government corruption

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The Golden Strait Jacket

• Some countries put it on part way
• India, China
• Some put it on and take it off
• Malaysia and Russia
• Some tailor it to their culture
• Germany, Japan, France
• Some resist it, due to natural wealth
• Iran, Saudi Arabia
• Some just wear a plain old straight jacket
• North Korea, Sudan, Cuba

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For Companies It Means an Embrace of the 4th
Democratization

• Democratization of Information flow - top down,
  bottom up and side to side
• Decision making dispersion
• The top will make strategic decisions
• where are we going?,
• what businesses are we going to be in?,
• what will be our core strategies and culture?
• The bottom will be empowered to make local and
  regional management and tactical decisions
  (quickly), especially those related to
• markets,
• competitor,
• product, place, price and promotion
• Shared knowledge the only thing that can
  distinguish you from your competitors
• The key is having people who can see the whole
  field and be a manager for their own team down on
  the ground.

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For Individuals It Means Education A Like
Breathing, a Life-Long Habit.

• Education and Training in
• Strategy (doing the right thing)
• Management (doing things right)
• Education and Training in
• Advance Business Foundation (marketing,
  accounting, marketing, finance, information
  systems)
• Team Building and Leadership
• Organizational Culture
• Productivity and Innovation
• Analysis and Decision Making
• Global Challenges

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• It means that majority of market and sources of
  goods and services lie outside ones own country.
• It means that competition is fierce and rising
  around the world.
• It means that opportunities for growth and
  prosperity have never been more promising.
• It means you no longer have to emigrate to
  innovate.
• It means that those with the knowledge, skills
  and attributes to play in the global game, can
  plan and can win - no matter where they live.
• It means that the rest is waiting for no one.

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Those that are successful in global business have
a number of characteristic in common, including -
- curiosity, - creativity, - a sense of
adventure, - ambition, ingenuity and problem
solving skills - the ability to connect the
dots, and - see both the trees and the
forest They tend to be boundary spanners
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What used to distinguish nations and
organizations was access to capital and labor
(these are now commodities available to almost
all). What distinguishes economies and
companies now are ideas. Partnering, learning
and growing with the rest of the world is not a
matter of morality or politics, it is a matter of
competitiveness, long-term growth and survival.
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Conclusion

• What does all of this mean for participants in
  this 15th Annual International Business Forum at
  VCU?
• It highlights
• The Importance of Knowledge as it relates to
  future growth and prosperity.
• The Reality of a Global Reach to gain and sustain
  such knowledge.
• The Fact that your market be only Richmond and
  Central Virginia, but you are in a Global
  Competitive Game

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Globalization

• It is not going away.
• Those countries, companies and individuals that
  understand and embrace it, will thrive.
• Those countries, companies and individuals that
  do not-
• Will see their standard of living stagnate
• Will not survive the competition

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• The Post Western World
• Discussion Questions
• A key point is not so much the decline of the
  United States in absolute economic and political
  terms, as the rise of the rest. If this position
  is correct, what will this new era look like in
  terms of war and peace, economics and business,
  ideas and culture?
• . If this theme is correct, then how does Europe
  and United States needs to change in their
  dealings with the world? What is the most
  important role of the leadership of Europe and
  the US in this new Posts America World?

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The Post Western World Discussion Questions
continued 3. Some observers contends that the
European and United States political systems are
broken that they have had a do nothing
government. How will this effect the way the
U.S. and Europe relate to the world? What might
bring about constructive changes in their
political systems?
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The Post American World Discussion Questions
continued 4. What role does education (both
primary/secondary and tertiary) play in this new
Post WesternWorld and how and why are the U.S.
and Europe positioned vis-à-vis other nations on
this education dimension? What does this all
mean for your career and those of your
children? 5. What are multinational corporations
(both US and European) doing to compete
effectively in this new Post Western World?
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• The Post Western World
• Discussion Questions continued
• 6. What opportunities are apparent for
  entrepreneurs and innovators (both U.S. and
  European based) in this new world?