The Lexus and the Olive Tree by Thomas Friedman
Written by the Pulitzer Prize-winning foreign affairs columnist of The New York Times, this book (published first in 1999) is about Globalization. Friedman provides a framework to think about what’s happening in the world around us, bridging the worlds of geography, politics, technology, economics and trade. The Great Game of today is indeed Globalization: no country or economy can afford to be isolated. The three democratizations – of technology, finance and information – are integrating the world ever more closely. And as this happens, there are tensions and conflicts between the “lexus” (the modernizing force of globalization) and the “olive tree” (the ancient forces of culture, tradition and community). Friedman brings it all to life with his wonderful collection of stories from around the world. Here is how he defines globalization:
It is the inexorable integration of markets, nation-states and technologies to a degree never witnessed before – in a way that is enabling individuals, corporations and nation-states to reach around the world farther, faster, deeper and cheaper than ever before, and in a way that is enabling the world to reach individuals, corporations and nation-states farther, faster, deeper and cheaper than ever before. This process of globalization is also producing a powerful backlash from those brutalized or left behind by this new system.
The driving idea behind globalization is free-market capitalism – the more you let market forces rule and the more you open your economy to free trade and competition, the more efficient and flourishing your economy will be.
The China Dream by Joe Studwell
Subtitled “The Quest for the Last Great Untapped Market on Earth”, this book by Studwell (who lived in China from 1990-2000, and wrote for The Economist) provides excellent insights into the Chinese market. China attracted USD 300 billion foreign direct investment in the 1990s, and continues to do so at the rate of nearly USD 50 billion a year. As companies rush into China to outsource low-tech and high-tech manufacturing and eye its domestic market of 1.4 billion people, Studwell has a cautionary note. The book argues that “the economic foundations of contemporary China have been laid on sand and constructed from the hubris that drove the Soviet Union in the 1950s. Among investors, expectations and reality are grossly out of kilter. At the rational, reductive level at which economists operate, it is a recipe for suffering and disaster. And yet, at the less rational level at which real life operates, one can never be certain of betting against the enduring power that is the China dream.”
Only time will tell how right (or wrong) Studwell is. From an Indian viewpoint, China is a threat and an opportunity. I believe that Indian companies have to look at China as an opportunity. This book helps in deepening an understanding of China and how it works.