The Great Convergence

I was looking for something to read on my commute, when I saw a tweet:


@KentBeck:I *knew* The Great Convergence was going to be awesome. 3% read and it’s already paid for itself. Tx @BaldwinRE

Of course I had to buy it! For what is in effect an economic text book, there are some fascinating insights.

Some snippets from the book:

In Phase One, globalization consisted of the gradual “humanization” of the planet. Globalization in Phase Two meant something quite different. The Agricultural Revolution allowed humans to settle down in villages, cities, and eventually civilizations, so globalization in this phase meant “localizing” the world economy.

Phase Three radically changed globalization yet again when the steam revolution launched a century-long sequence of developments that made humans the masters of intercontinental distances. Falling cost boosted trade, but moving goods hardly made the world flat—quite the contrary. By the late twentieth century, two-thirds of economic activity was clustered in just seven nations—the G7. Manufacturing was even more concentrated. To keep complex industrial processes working smoothly, manufacturing processes were microclustered inside industrial plants located in the G7 nations.

Phase Four has seen the economic foundation of this microclustering crumble as the ICT revolution lowered the cost of coordinating complex processes across great distances. Once it was possible to separate manufacturing processes internationally, firms pursued the option with gusto. They started moving labor-intensive stages of production from high-wage nations to low-wage nations.

Globalization was transformed by this North-South offshoring since advanced know-how accompanied the offshoring stages of production. It is these new knowledge flows that put the “New” in the New Globalization. They are what allowed a small number of developing nations to industrialize with a rapidity entirely out of line with historical experience, and this, in turn, reshaped the world economy in Phase Four.

The book goes into much more depth, and talks about the breaking of 2 constraints to globalisation (cheap transport, and effective long range communication)

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