GEOPOLITICS AND THE FLAT WORLD

1. GEOPOLITICS AND THE FLAT WORLD

2. Technological Determinism • Technology can facilitate globalization • Internet • Cell phones with cameras • Capabilities create intention • Technology CAN help flatten the world, but it is not a must • Everyone in the world use technology ?

3. Technological Determinism • Benefits of using technology • Able to communicate, compete, and collaborate farther and faster • More and more people will find more and more ways to use them • BUT no guarantee all people use it to create and grow their living standard • So no idea how flat the world will be

4. Flattening Process • World has been continuously flattening in a fast rate • Half of the world participates and benefits from the flattening process • In both direct and indirect aspects • Believed to be the most important trend nowadays

5. Flattening Process • Lots of people are left behind in the flattening process like • War • Economic disruption • Politics • Problems and forces that prohibit the process? • How to overcome?

6. Middle Class • Jerry Yang quoted a saying • Where people have hope, you have a middle class • Middle class believes • A pathway out of poverty or lower-income status • Looking for a higher standard of living and a better future for their kids • No hope, no chance to make into middle class • NO HOPE TO ENTER FLAT WORLD

7. Why no hope? • Two reasons for no hope • Too sick • Local governments are too broken

8. Too Sick • Case 1: In an Indian village • Everyday this group of people are suffered from • Diseases, such as AIDS or TB • Instable electrical and water supply • Bribe is the only way to have better life • BUT no money to do so • Fulfill their destiny, and live in this way • Rural areas have no chance to develop, e.g. India, China, Africa and Latin America

9. Local Governments are broken • Bribe to get electricity, water • Bribe the tax assessor to assess your home correctly • Poor people feel gloom and darkness • Do not trust the governments that can provide them a pathway

10. Too Disempowered • Half-flat – occasionally benefit from the flat world but who are not really living inside it themselves • Hope that globalization process become slower

11. Improvement of Flattening • Not by IMF, but local government • Proper actions • Invest in rural infrastructure • Invest in education • Root out mismanagement and corruption

12. Anti-globalization Movement • Originally it aims to help the poor people • Lost touch of with the true aspirations of the world’s poor • Five disparate forces • Upper-middle-class American • For wealth and power • Old Left-socialists • Claims to promote socialism to help poor, but actual purpose is not • More amorphous group • Foreseeing the trend of flattening world, so it gives support to anti-globalization • Anti-Americanism • It’s the main purpose, but not helping the poors • Environmentalists

13. Who alleviates poverty? • NGO • NGOs in India right for better local governance • Use of internet and other modern tools of the flat world • Aims to put a spotlight on corruption, mismanagement, and tax avoidance

14. Who alleviates poverty? • Multinational corporations • Hewlett-Packard (HP) • Rent some hi-tech equipment, like photo studio, to Indian women • Provide training for them • Raise the women’s confidence and income • Living standard increases a lot

15. Factors for unflattening of world: Too frustrated

16. Consequences of the flat world: • Greater direct contact in societies and cultures —sharpened their frustration • The most dangerous unflattening forces • suicide bombers of al-Qaeda • other Islamist terror organizations

17. Why attack ? • Dilemma • abandon the cherished religion • remain forever in the rear of human technical advance Faced with dilemma, people grow angry • They lash out

18. Why attack ? 2. Humiliation • Poverty of Dignity, not poverty of money • World get flatter, people see miles and miles • e.g. humiliation dished up to people fiber-optically

19. Unflattening the world No trust • No flat world • Because trust allows us to remove barriers and eliminate friction • E.g. Supply chains

20. Unflattening the world Cannot escape from unflat world • Treat Qu’ran as a divinely inspired text • not open to any literary criticism or creative reinterpretation • Culture not encourage creative thinking and critical thought

21. Unflattening the world • e.g. Between 1980- 1999, 171 international patents in Arab countries. South Korea alone registered 16,328 patents. • As a result, --Without open environment to attract international investment and stimulate local innovation.

22. Another factor:Too many Toyota(Natural resource constraint)

23. Wars Over Energy If India, China, Latin America and the former Soviet Empire enter the flat world, • demand for cars, microwave, refrigerator…….. • serious shortage of energy • unflattening effect on the world

24. China—Beijing • e.g. in Beijing, one thousand new cars added to roads a day From World Bank, • 16 out of 20 most polluted cities in the world are in China • Pollution and environmental degradation together cost China $170 billion a year • China surged ahead of Japan as the 2nd largest importer of oil in the world.

25. Oil Crisis • Could the world afford to have 1.3 billion people driving the same cars and using the same amount of energy?--another oil crisis? • In 1970, coincided with Japan and Europe rising, oil crisis appeared • Solved—Because we got smarter and equipment became efficient

26. Oil Crisis • But now, China, India and Russia come in the same period? • The demand is multiplied by a factor of ten! • Can it be solved again? • Therefore, they have to hold back and consume less for the greater global good

27. Unflattening effect 1. Gasoline prices will continue to trend higher 2. Very worst political systems in the world-like Sudan, Iran and Saudi Arabia become worse 3. Environment will be damaged more and more. • Species and ecosystems can’t adapt that fast - currently threatened species will be condemned to extinction and health damaged

28. Dell Notebook – Manufacturing Process • Order • Sales representative • Dell’s order management system • Parts manufacturing • Supplier logistics centers • Assembly & boxing • Dell’s factory • Shipping • UPS

29. Multiple Suppliers • Intel microprocessor • - Philippines, Costa Rica, Malaysia • memory • - Korea, Taiwan, Germany • graphics card • - China • cooling fan • - Taiwan • motherboard • - Shanghai, Taiwan • Keyboard • - Tianjin, Shenzen • LCD display • - South Korea, Japan • wireless card • – China, Malaysia • modem • - China • battery • - Malaysia, Mexico, China • hard disk • - Singapore, Thailand, Philippines • CD/DVD drive • -Indonesia, Philippines • notebook carrying bag • - China • power adapter • - Thailand, China • power cord • - China, Malaysia, and India • removable memory • – Israel, Malaysia

30. Demand Shaping • supply chain runs short at time t • signal is relayed to marketing department • provide promotion/upgrade • Using such promotions, Dell can reshape the demand for any part of any notebook or desktop to correspond with the projected supply in its global supply chain

31. Geopolitics and the Flat World • Interplay between the traditional global threats and the newly emergent global supply chains

32. McDonald's theory • Middle class • Network of McDonald's • McDonald's country • People in McDonald's countries didn't like to fight wars anymore. They preferred to wait in line for burgers. • Rationale: countries tied their economies and futures to global integration and trade, it would act as a restraint on going to war with their neighbors

33. Dell’s Theory • No two countries that are both part of a major global supply chain, like Dell's, will ever fight a war against each other as long as they are both part of the same global supply chain. • Don't: fight wars • Do: make deliveries of goods and services, and enjoy the rising standards of living

34. China and Japan • China: develop level of credibility • Japanese company: move low and middle range technical work and manufacturing to China • Strong Japan and strong China • Win-win

35. China and Taiwan • Taiwan: third-largest information technology hardware producer, Silicon Shield • China: hundreds of big American technology companies running R & D operations • Majority of Taiwanese voted against independence

36. India and Pakistan • Dell Theory is working on only one party - India • India: world's knowledge and service supply chain, back offices • American Express, General Electric, British Airways, Wipro • stable, predictable operating environment • International Firms: difficult to switch • Better future, no territory

37. Dell’s Theory • Governments whose countries are enmeshed in global supply chains will have to think three times, not just twice, about engaging in anything but a war of self-defense

38. Disadvantage of Flat World • Natural resource constraint • Pandemic disease • Terrorist attack

39. Pandemic disease • SARS in China • Spread to 5 countries within 24 hours • Further to 30 countries on 6 continents in several months • Cause billions dollars in economic loss • Reasons: • speed and intensity of air travel • Intense connectivity of people and goods

40. Pandemic disease • Fast transmission of disease • Inefficient mechanism to fight against • Set up barriers to stop interaction between countries • Delivery of life-saving vaccine and medical supplies are difficult • Not enough storage of inventories of medical supplies

41. Terrorist attack • Al-Qaeda used internet to organize terrorism • Cyber-terrorism • Small to act big • Fundraising • Recruiting members • Obtain flat world data