Pankaj Ghemawat, one of the world’s top management experts, set out to define what he calls World 3.0, wherein he places his literary nemesis Thomas Friedman’s widely held beliefs of widespread globalization to bed for good. Friedman has sold millions of copies of The World is Flat in championing what Ghemawat describes as World 2.0 — a time period now in the distant past.

In his new book, aptly titled World 3.0: Global Prosperity and How to Achieve It, the author reveals that the third millennium will encompass business strategies that “adjust to, overcome and harness differences,” and reveals his theory of semiglobalization or partial global integration.

He argues that the inhabitants of World 3.0 have individual mindsets of rooted cosmopolitanism, with geographic structures centering around the proximity of mindsets but retaining physical distance. Ghemawat, a professor of global strategy at IESE Business School in Barcelona, uses a number of metrics to show how our world is not as connected as we think, such as equity, foreign direct investment (FDI), venture capital acquisitions as well as, but not limited to, exports. When one looks strictly at FDI and exports, one immediately thinks of large-scale cross-border trade. But in fact, the internationalization figures are close to 10% for FDI and are 20% for exports, therefore 90% of direct investment is domestic, while 80% of goods have never crossed a national boundary.

“The five purely financial measures of cross-border integration [government debt, venture capital, trade intensity, equity and bank deposits, show average internationalization levels of 21% and the other nine measures average 10%. Of the latter, the people-related measures both fall below 10%; the product market-related measures — FDI and adjusted exports — vary between 10–20%,” he writes.

If you’re surprised, don’t be. Most polls that Ghemawat does with audiences worldwide overestimate the aforementioned figures by more than 20%.

These are audiences that are at the top of their profession and leaders in their respective fields.

Still not convinced? The percentage of international calling minutes constitutes less than 2% of all telecommunications. Similarly, internet traffic routed internationally only accounts for 17–18% of the total.

Of course, the book digs much deeper, namely investigating the CAGE framework — empirical research that studies bilateral interconnectedness. CAGE, ‘cultural, administrative, geographic and economic’ distance, suggests differences in language and time zones must also be taken into account when discussing bilateral differences in politics and per capita — the resulting complex formulae displaying whether two countries can coexist in trade and partnerships.

The book is a solid read, backed by hard data and supplemented with easily understood illustrations. Ghemawat connects with his targeted audience of MBA students and his peers (the movers and shakers in the upper echelons of business). Often times distinguished academics are out of touch with their audience, making for laborious reads — not so in World 3.0. And don’t for a second think the title is only for CEOs and hedge-fund managers. Instead, it caters to a wide audience — think of it as The World is Flat with footnotes.

The book also includes a piece on his 15-year-old daughter’s experience as a global citizen living in Spain, but considering US and India “home.”

“I don’t think I will ever identify myself as being from one place or one culture or one type of people, and I’m glad,” Ananya Ghemawat writes.

“I wouldn’t change this for the world.”
Ghemawat and his daughter don’t aim to change the world, but they’ve done a superb job in making our differences more understandable. bt