Book review Economics Recommended Read

Book Review | The World is Flat

I believe the hallmark of any good book, especially, the one having to do with a subject as diverse as Globalization, is the kind of research that goes into it. Another good point is the ability of the author to de-jargonize the content so that even a layman comprehend the subject matter. Friedman, to my satisfaction, is up to the mark on both counts with “The World is Flat”.

He has pieced together disjointed historical events and oversimplified what are otherwise quite complex arguments.

‘The World is Flat’centers around South Asia – particularly, India and China. In Friedman’s words, he was confronted with the flattening of the world while visiting India. He heavily uses the inputs from his rendezvous with numerous industry leaders, visionaries, and environmentalists etc. as drivers for advancing his arguments.

In particular, Friedman appears to be impressed with Nandan Nilekani, present Co-Chairman, Infosys, and Vivek Paul, former CEO, Wipro.

 After the burgeoning Internet era of the late 90s, many economies around the world invested massively into improving technology, laying underseas fiber cables, and building IT infrastructure. That gradually resulted in a world of today where the age-old demarcations between any two neighboring countries count for nothing. Access to intellectual capital has become far easier. For developing economies, this diffusion of technology has more deep-seated implications.

Friedman insists that the explosion of technological facets has changed the rules of engagement in a connected world, lending way for a ‘flat’ global, political and economic playing field. In the last one decade, due to radical innovations in the field of software, economies that have always been on the periphery suddenly found themselves in the center of the action. Friedman cites the example of India to prove his point.

He explains how India reaped substantial gains from the outsourcing of debugging of Y2K by US corporations back in the late 90s. Organizations such as TCS, Infosys, Wipro and a host of others, almost overnight took a quantum leap. Soon after the Y2K stint, IT bust forced several US organizations to slash their budgets and get more done for less.

With undersea cables laid out, India could not have asked for a better opportunity. Throughout the book, Friedman keeps coming back to success stories of India and China. It is as if he’s completely mesmerized by them both.

 ‘The World is Flat’ thrives on Friedman’s elaboration of the ten forces that triggered the flattening of the world –

  1. Collapse of the Berlin Wall in 1989. This was perhaps the initiating force towards flattening of the world. Friedman points out how the authoritarian states had started losing their proverbial grip on information due to the rise of computers. Hemorrhaging of information coupled with the freedom of expression brought about by Personal Computers sanitized the last pickets of totalitarian resistance. Today, Microsoft and Intel may have become the punching bags for many for monopolizing the markets but their role in evacuating the world of ‘suppression of information’ can hardly be overemphasized.
  2. Rise of Netscape and World Wide Web. Soon after the debut of World Wide Web in 1991, the world became witness to the birth of Netscape – the first internet browser. Without a browser, World Wide Web and the Internet might have ended up in the specialist’s domain. Netscape became the conduit between the Internet and people; a bridge that enabled people from diverse backgrounds to come together. Brand Netscape may be dead today but it would always be remembered for the revolution it set off.
  3. Workflow software. Friedman seems to have this knack of untangling technical concepts so that even a layman could get the hang of it. This section is a testimony to it. In this section, he underlines the role of software applications such as SMTP, HTML, HTTP, TCP/IP, XML, AJAX etc. in flattening the world as to how these applications first allowed us to communicate and collaborate with each other and then, gradually, enabled machines to talk to other machines.
  4. Uploading. While working on putting up my website, I was rummaging through a lot of stuff on the web. Most of it – freeware! Not surprisingly, I came across an open-source software bundle called LAMP, which stands for L- Linux (operating system), A- Apache (web server), and M – Mysql (database management), P Perl (programming language).  These four open-source software applications can get your website up and running, without you having to spend a fortune on it.  And all this has been made possible due to the unflinching passion of some geeks who wanted an alternative to monopolistic, proprietary software. Increasingly, this once-miniscule fringe of rebels has staggered the webscape and the movement has been gathering momentum. Consider Facebook. Until May 2007, Facebook was lagging way behind Murdoch-owned MySpace in terms of traffic. Around the same time, Facebook decided to open its source code for developers and gave them the liberty to tinker with it. Six months forward, as I type in, Facebook has emerged a true challenger to Myspace’s dominance, courtesy, open-source movement. There is an ugly side of it, too, however. From blogs creating the awareness and consciousness to geeks making a beeline to upload and edit content on Wikipedia to the propagandist use of this force by terrorists for spreading their obnoxious agenda. Assumingly, most of us would tend to agree with Friedman when he asserts that of all the ten forces, this one has the most potential to disrupt the world in ways more than one.
  5. Outsourcing. In the wake of IT bust in 2000, many technology companies, in order to keep their balance sheets in black and white, decided to outsource back-end operations consisting of mainly the standard operating procedures to countries like India and China. Since the Indian IT workers had already proven their mettle to the US corporations during Y2K crisis, India turned out to be the prime beneficiary of dot-com bust, as well. It was probably the bust only that catapulted then low-key Indian IT companies like Wipro, Infosys and TCS into the big league of IT giants. The raging debate that ensued on alleged unethical outsourcing of US jobs to low-cost countries like India and China created brouhaha for quite sometime.  Friedman, however, debunks this theory in the first chapter of the book itself. He explains that India’s economy remained stifled for a good part of the post-independence era. In the post-liberalization era, services sector surged as the growth engine of Indian economy. Today most of the call-centers in India have US companies as major shareholders. Not to mention the pieces of software and hardware provided by American companies. Yes, Friedman’s argument is, some jobs have been lost to India but on a broad scale, exports from the US companies to India have doubled in a span of 15 years.
  6. Offshoring. Where outsourcing is about transferring standard functions such as call-center, research, etc. to low-cost countries, Offshoring, on the other hand, is when a company moves the whole manufacturing plant offshore to a foreign country to leverage the benefits of low-cost labor, lower taxes and other subsidies.
  7. Supply-Chaining.  I assume most of us would arrive on a consensus when it comes to guessing the company that has become synonymous with Supply-chaining. You guessed it right – Wal-Mart!. Wal-Mart certainly stands above most of its peers and companies from other sectors. Put it down to the vision that its legendary founder Sam Walton had. Sam was quick to foresee the efficiency he could derive out of connecting the important assets of his company and then have them integrated into a whole supply chain. No wonder, today, Wal-Mart’s phenomenal supply chain system has become an inextricable part of most B-schools’ Marketing and Operations curriculum. Friedman’s section on ‘supply-chains’ as a world-flattening force shines a bright spotlight on Wal-Mart – the epitome of supply-chaining.
  8. Insourcing. Friedman admits that Nandan Nilekani of Infosys tipped him off about the importance of Insourcing and its potential to be a major world-flattening force. Insourcing is when you bring your partners into your own premises. Friedman relies on UPS – the once dormant delivery company – to corroborate the inclusion of Insourcing in his list of ten world-flattening forces. Quoting Friedman, “ I like the term Insourcing because the UPS engineers come right inside your company; analyze its manufacturing, packaging and delivery processes; and then design and redesign, and manage your whole global supply chain. And if necessary, they will finance part of it.”
  9. In-Forming – Another flattening force that has the potential to be disruptive, according to Friedman. Explosion in online content has spawned In-forming and has certainly empowered the individual with power of self-expression. Web 2.0, a term made popular by O’Reilly Corporation, sets this generation of folksonomical, community-based, networking sites apart from the previous e-mailing and chatting based generation of Web. Web 2.0 is all about the democratization of information. Consider It’s a community-based popularity website which has become the equivalent of a newspaper on the web. News and websites are submitted by the users and then promoted to the front page through a user-based ranking system. According to, in terms of page views, Digg has surpassed the New York Times website and is now ranked among the top 100 websites. Mandate is clear – Sites such as Digg would lay to rest the vertical command system of traditional newspapers.
  10. The Steroids. Friedman is of the opinion that there are some technologies (he calls them steroids for obvious reasons) that are providing impetus to the rest of flattening forces.  I, however, believe ‘the steroids’ are actually propelling only two forces – Uploading and In-forming. Nevertheless, first on the list of Friedman’s steroids is fast expanding online storage space and availability of more and more miniaturized versions of external storage devices. Websites such as offer 25 GB force for free on mere registration. Let me decipher that for you – 25 GB would allow you to keep at least twenty full-length movies online. That entails freeing up a huge pie of space on your hard-disc. Also, data storage companies like Seagate have devices you can carry in your pocket and that can store 500 GB data at a humble price of $150 only. Second steroid, according to Friedman, is breakthroughs in instant messaging and file sharing. This one is a real MacGyver. Napster, BitTorrent, Kazaa are some of the file-sharing sites that changed the landscape of entertainment industry, forever. These sites enabled their users to download movies and songs from one another’s computers. Peer-to-peer networking, however, far from being a positive steroid has actually broken the back of entertainment industry. Friedman shares the data for the year 2005 when more than 5 billion songs were downloaded by people for free from these P2P sites. Did someone say DRM? Third steroid is VoIP – Voice over Internet protocol – a technology that allows you to make phone calls over the internet. Imagine the potential of this technology when coupled with the concept of outsourcing. Fourth energy booster is Videoconferencing.  HP and Spielberg’s DreamWorks joined forces to work on a high-definition videoconferencing system called ‘Halo Virtual Collaboration System’. Videoconferencing at this level coupled with outsourcing will certainly redefine the rules of engagement in many sectors. The fifth steroid involves advances in computer graphics. Companies such as NVIDIA with a core competence in graphics and computing are certainly the bedrock of this revolution. Last amplifier in Friedman’s list is actually a group of technologies and devices. Friedman cites the examples of RFID tags improving the efficiency of Wal-Mart’s supply chain, Artificial Intelligence detecting anomalies in cars, Internet-enabled mobiles as having the potential of worldwide distribution and enabling people to book tickets for movies and rock concerts while walking down the lane.

 Friedman, in the very next chapter, purports the concept of ‘triple convergence’ which is a direct function of the convergence of all ten world-flattening forces. To me, that’s the end of the part one of this book. Part two elaborates upon the current position of America in relation to the whole world.  For reasons best known to Friedman himself, he has overstretched the second part by at least 150 pages.

Friedman lays strong emphasis on improving American education. He exposes many holes in American Education System and earnestly urges his compatriots to sense the urgency that looms over them should they fail to pay heed.

At the same time, he brings up some of the critical factors that have been underpinned America’s success over the years. Highly flexible markets have given the US companies the freedom to hire and fire.

Easily available venture capital has always helped breed the next generation of entrepreneurs and simultaneously, propel the US a step ahead of the competition. Friedman also discusses the highly efficient US capital markets. Undoubtedly, US markets have proved effective at continually funneling money to tomorrow’s best use.

 Technically, Friedman accomplishes two objectives. First, he underlines the manner in which the lives of people, globally, have merged blurring the centuries-old demarcations and the events that led up to it. Secondly, he consciously alerts his fellow American citizens to the impending inevitabilities of the flattened world.

His message is loud and clear – the world is no longer the same; the command and control systems of yesteryears have given way to compete and collaborate system of today and the only way to survive in this era is to outstudy and outsmart your Asian and European counterparts. Burying the head in the sand is certainly not an encouraging tactic in this connected world. It’s simple – Innovate or Evaporate!

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