Dear ATCA Colleagues; dear IntentBloggers

[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]

We are grateful to:

. Ashutosh Sheshabalaya, based in Brussels and Bassilly, Belgium, for "The Third Round of Globalisation is here!;"

in response to Prof Jean-Pierre Lehmann's submission to ATCA, "Beyond Davos: Demise of the Hub-and-Spokes World Economy: The 21st Century Great Global Economy Paradigm Shift."

Ashutosh Sheshabalaya is the author of 'Rising Elephant', which is a heavily-researched bestseller about India's rise and long-term opportunity and challenge to the West, published in the US, India and Europe. Described as a "tour de force" by the Director of UBS bank's Wolfsberg think-tank and as "highly provocative" by former Indian Deputy Prime Minister LK Advani, 'Rising Elephant' has been reviewed worldwide. He has worked in Brussels as an accredited foreign correspondent, in public affairs (for the European Federation of Pharmaceutical Industries), and as a strategic consultant -- both for private corporations as well as the European Commission, Invest in Sweden Agency and others. In total, he has led research projects for over 65 studies covering a wide range of industries. Now heading Belgium-based India-Advisory, he is a frequent speaker at conferences and seminars in Europe, India and the US, a columnist for the Indian online news portal Sify and an occasional contributor to Yale University's Center for Globalisation and Washington's Globalist. A winner of the all-India National Science Talent Scholarship and the Wien International Scholarship, he studied at a leading Indian engineering institution, the Birla Institute of Technology and Science, and at Brandeis University in the US. Mr Sheshabalaya is married to a Belgian and is part of New and Old India. His parents were both university Vice Chancellors, and his family includes an Industry Minister in the Nehru government, a Commissioner in British India and representative of the Tata industrial group, one of India's first women legislators, senior military officers, diplomats and seven members of the elite Indian Administrative Service (IAS). He writes:

Dear DK and Colleagues

Re: The Third Round of Globalisation is here!

Prof Lehman is absolutely right in speaking of a "paradigm shift" in the global economy. But the process goes beyond the world economy, to politics and geopolitics, societies and cultures, and more. What we are witnessing now is the emergence of a new Hegelian Idea, but few still know either its contours or its implications. In other words, there are great possibilities of disruption and flux, in terms of both comprehension and decision-making by the world's opinion makers and its centers of power, old and (fast) emerging.

One of the key factors, of course, is that China and India are rising together, and they count for one-third of humanity. In the not too distant future, they will together constitute half the world's working age population. These are not Singapores and South Koreas or even Japans, whose relative rise had little disruptive implications in both the relative and absolute senses for the world at large.

But what is even more significant is that India's emergence is thoroughly unexpected -- for both experts and the public at large. Even a serious publication like The Economist headlined an analysis on India, as recently as April 2005, as a country 'not losing hope'.

China is a textbook case of a large economy rising up the value chain with foreign direct investment and relocation in the classic sense. There are maquiladora precedents in the rise of China -- although their implications are evidently more far reaching, simply due to its huge size.

On the other hand, India is attaining Chinese rates of economic growth without any serious Foreign Direct Investment (FDI) -- at least so far, and there are good and very portentous reasons for this. It is disrupting the underlying logic of wages as being either 'cheap' or 'expensive'. From its low-cost base, India is attacking Western know-how and value creation at its highest ends, while gaps in the competencies of India's globalizing corporations (which, uniquely, synergise both core competency and comparative advantage) are being plugged through high-valuepoint acquisitions in the heart of the West, in a process fuelled by increasingly borderless finance.

For me, the US -- a 'Darwinian and Gatsbyesque' America, ready to reinvent itself at any cost -- is much more engaged than Europe (or Japan) with the new Idea, and will be integral to its evolution.

Europe, on the other hand, remains bewildered. For a one-time student of philosophy, two brilliant German words describe the European response to this challenge: zukunftsangst and weltschmerz. Thus, no Brussels-based think-tank of any consequence has so far managed to see the point in a ChIndia task force.

The key tenets of the new Idea are as follows:

1. India and China are returning to where they were before the onset of the European Age. This is the Third Round of Globalization. The First was the exchange of ideas, many of which originated in India and China. The Second -- Europe's Round, refined by the US -- involved trade in goods and the formation and reinforcement over 500 years of a global financial order, dating back to the Medicis.

2. Alongside India and China, the key actors in the future will be the US and the EU (and to a lesser extent, Japan and Russia); every other country will have to initiate its own points of engagement in this overarching Quad of Powers. At this point, it is clear that the four wheels of the Quad are made of different materials, and have different textures. It is less clear whether they will (eventually) pull in at least roughly the same direction(s).

3. The West will rediscover what it had borrowed from India and China before the logic of their own histories and their readiness for the Industrial Age was interrupted by the Second Round and Europe's predominance. As much as an adapted Bollywood's forays into the Western cinema mainstream, I expect French schoolchildren will soon again learn that one of the two volumes of the famed Fables of Jean de la Fontaine originated almost wholly in India.

4. Clever actors in the Western system will leverage the innate but massive differences between India and China, and their respective processes of engagement with the Idea. From some cases I am studying for the EU Commission, I suspect Africa's new leadership has already begun to do this.

In terms of economics and the predictability, transparency and sophistication of the Indian and Chinese markets, these differences are known, and India's continuing lead in high technology over China is already being leveraged to the hilt by US/British private equity and VC funds. Meanwhile, in terms of connectivity to the global/US high-tech machine, India's persisting lead over others was the subject of a recent study by Duke University, which found that 'Indian immigrants founded more tech start-ups (in the US) from 1995 to 2005 than people from the four next biggest sources - United Kingdom, China, Taiwan and Japan - combined."

However, on the military/political front, such awareness is remarkably absent. In otherwise-intense debates about China's military "threat", one rarely comes across serious analysis about what to me is a seemingly clear Chinese preference for a 1950s Massive Retaliation style doctrine -- in both the conventional and nuclear warfare scenarios. Its recent anti-satellite test was one good example. Its air force is quantitatively five times the size of India's but much of it consists of what British expert Jon Lake described as woefully antiquated museum pieces (rather unlike the Indian warplanes which bested the Americans and their top-of-the-line F-15 Eagle 9-1 during exercises in early 2004).

More startlingly, in terms of classical force projection and capabilities for pressure-ratcheting, China's lack of an aircraft carrier and the decade or so required to learn how to operate a carrier battle group, leaves one wondering: are the Chinese really serious about peace (and will remain so), or will they treat any conflict in their spheres of interest in southeast Asia with immediate, overwhelming force ? Not too long ago, under cover of anti-piracy exercises, India's Navy operated unhindered for weeks in the South China Sea. Its recent dispatch of a 6,700 ton destroyer and two guided missile frigates (accompanied by a refuelling tanker) for evacuating Indians (and Sri Lankans) from Beirut was another good example of the Indian blue-water naval lead. All this will no doubt be dramatically reinforced by the launch of India's second carrier (an ex-Russian 40,000 tonne class ship) in 2008 and the commissioning of its own homebuilt carrier early in the next decade.

5. In my opinion, one serious structural threat over the next decade is the near-naiveté with which India's new leadership believes that their country's sudden rise -- and its disruptive implications for the world in general (and Europe in particular) -- is little more than business-as-usual -- which will indeed again be the most obvious fallout from Davos. It is beyond the scope of my comments to ATCA to discuss my views in more detail, but in Belgium for example, where the Indian diamond community accounts for 5% of the country's GDP, where an Indian (Lakshmi Mittal) is the country's largest private sector employer, and India itself was its third largest foreign direct investor in 2006 (excluding Dutch/British-based Mittal), the Indian Embassy has yet to employ a Press Officer who speaks either of the country's two official languages.

Kind regards


Ashutosh Sheshabalaya

[ENDS]

-----Original Message-----
From: Intelligence Unit
Sent: 24 January 2007 08:47
To: 'atca.members@mi2g.com'
Subject: ATCA: Beyond Davos: "Demise of the Hub-and-Spokes World Economy: The 21st Century Great Global Economy Paradigm Shift" -- Prof Jean-Pierre Lehmann, IMD International, Lausanne

Dear ATCA Colleagues

[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]

Re: Beyond Davos: Demise of the Hub-and-Spokes World Economy: The 21st Century Great Global Economy Paradigm Shift

The annual mela in Davos, Switzerland, begins today and is being held under the theme "The Shifting Power Equation." However, as Prof Jean-Pierre Lehmann from IMD Lausanne points out, this in fact is the "Demise of the Hub-and-Spokes World Economy" via "The 21st Century Great Global Economy Paradigm Shift." With multiple sessions on climate chaos -- which some in the gathered crowd are cynically branding as climate collapse -- this may be one of the "greenest" gatherings of the throng ever. "Better late than never!" as one social entrepreneur put it. Prof Lehmann writes:

Dear DK and Colleagues

Emirates Airlines runs daily non-stop flights from Shanghai and Beijing to Dubai. Soon it will be inaugurating a non-stop flight between Dubai and Sao Paulo. It will then be possible for Brazilian and Chinese business executives (and others including government officials, students, tourists and honeymooners) to fly between their two countries without the hitherto obligatory stop-over in either Frankfurt (Europe) or Los Angeles (US). Regular direct flights from Dhaka, Karachi, Mumbai and Colombo to Dubai also secure the dynamic and ever stronger link between the economies of the Gulf and the economies of the Indian Sub-Continent. Arab businessmen will be flying to all these destinations as an ever increasing flow of goods, capital and ideas link the four regions: Greater China, South Asia, South America and the Middle East.

The economic ties and business networks across Asia are being developed and discussed in the recently inaugurated Indian-Arab and Chinese-Arab CEO annual summits convened by the UAE based forum Moutamarat. This reflects, among other things, the fact that China, India and the states of the Gulf Cooperation Council are the three fastest growing world economies. The recent increasingly growing business ties between and across the three Asian regions (West, South and East) have been described as the New Silk Road.

While the trans-Asian connection - which increasingly also encompasses Central Asia within its expanding orbit - is the most important economic story of the first decade of the 21st century, it is by no means the only one. In October 2006, as ATCA observed, Beijing hosted the first China-Africa Summit, a very grand affair that brought to the Chinese capital over 50 African heads of state. China is by far Africa's fastest growing trade and investment partner; with India also increasingly active, this trend has been described in a publication by Harry Broadman of the World Bank as "Africa's Silk Road: China and India's New Economic Frontier." At a policy level, the new relationship between the three continents of the "developing world", Africa, Asia and Latin America, was reflected in the establishment of the G-20 during the Cancún WTO ministerial meeting in September 2003; led by Brazil, India, China and South Africa, the G-20 is the first developing world trade alliance to counter the hitherto overbearing authority of the "Quad" (US, EU, Japan and Canada).

All these trends are indicative of the terminal demise of the 20th century global hub-and-spokes business paradigm, whereby the OECD (Organisation for Economic Cooperation and Development) countries represented the hub and the different parts of the developing world the spokes. The new paradigm, though not yet entirely clear, is one of growing axes of trade, investment, networks and knowledge across the erstwhile spokes. Economic ties are also spawning more political and cultural connections.
By no means should one infer that the old industrialised nations are "finished". The US, EU, Japan, Australia, Switzerland and Norway remain extremely rich in both material and cultural wealth. But, in the words of Bob Dylan, "The times they are a-changin'", and both the demise of the hub-and-spoke and the rise of the new global axes of business development are inexorable.

The influential and highly respected economics editor of the Financial Times Martin Wolf, also an ATCA member, wrote in a 2005 article: "The economic rise of Asia's giants is the most important story of our age. It heralds the end, in the not too distant future, of as much as five centuries of domination by the Europeans and their colonial offshoots." [Asia's Giants on the Move, 23 February 2005] The rise of the European seaborne empires in the late 15th century spelt the end of the old Silk Road, as its merchants and rulers stayed confined in their resolute ways and mindsets, thereby failing to respond to the new competition and technologies, and to adapt to the changing times. The shoe is now on the Western foot.

This will have immense implications across virtually every dimension one can think of. Western policy makers and business leaders will need to adjust. The "typical" Western multinational enterprise that runs its business empire from a Western central hub with the developing world compartmentalised into regional spokes - Africa, Middle East, Latin America, South Asia, Asia Pacific, etc - is unlikely to capture the ethos of the new age and therefore ultimately will lose out on the business being created. The Western multinational corporation of the 21st century in order to survive, let alone thrive, will need to reflect these new realities, in terms of organisation, management, culture and manpower.

Western policy makers must also fully absorb the implications of the changing paradigm. The 21st century marks the end of the Western imperial age - what the Indian historian BN Pandey called "The Vasco da Gama era of history", stretching from the rise of the Iberian seaborne empires in the late 15th century to the resurgence of the great Asian nations in the late 20th/early 21st centuries. This new multipolar world will require, more than ever, the strengthening of multilateral institutions, and especially in such a way that they truly reflect the changes. Western political and business leaders must abandon their badgering colonial attitudes in favour of a truly global collaborative mindset.

It cannot be over-emphasised that carrying out these changes, especially the change in mindsets, is going to be extremely difficult. But there is no real choice, apart from decline and extinction.

Western business leaders and policy makers might be inspired by what Bob Dylan had to say:

Admit that the waters
Around you have grown
And accept it that soon
You'll be drenched to the bone
Then you better start swimmin'
Or you'll sink like a stone
For the times they are a-changin'

Very warm regards


Jean-Pierre Lehmann

Jean-Pierre Lehmann is Professor of International Political Economy at IMD International -- Institute for Management Development -- in Lausanne, Switzerland, since January 1997. His main areas of expertise are the socio-economic and business dynamics of East Asia, the impact of globalisation on developing countries and the government -- business interface, especially in respect to the global trade and investment policy process. In 1994 he launched the Evian Group, which consists of high ranking officials, business executives, independent experts and opinion leaders from Europe, Asia and the Americas. The Evian Group's focus is on the international economic order in the global era, specifically the reciprocal impact and influence of international business and the WTO agenda. Jean-Pierre Lehmann acts in various leading capacities in several public policy institutes and organisations. He obtained his undergraduate degree from Georgetown University, Washington DC, and his doctorate from St Antony's College, Oxford University. He is the author of several books and numerous articles and papers primarily dealing with modern East Asian history and East Asia and the international political economy.

Prior to joining IMD, Jean-Pierre Lehmann has had both an academic and a business career which over the years has encompassed activities in virtually all East Asian and Western European countries, as well as North America. He was (from 1992) the founding director of the European Institute of Japanese Studies (EIJS) at the Stockholm School of Economics and Professor of East Asian Political Economy and Business. From 1986 to 1992 he established and directed the East Asian operations of InterMatrix, a London based business strategy research and consulting organisation. During that time he was operating primarily from Tokyo, with offices in Seoul, Taipei, Bangkok and Jakarta and was concurrently Affiliated Professor of International Business at the London Business School. Other previous positions include: Associate Professor of International Business at INSEAD (European Institute of Business Administration) in Fontainebleau, France; Visiting Professor at the Bologna Center (Italy) of the Johns Hopkins University School of Advanced International Studies; twice in the 70s Visiting Professor and Japan Foundation Fellow at the University of Tohoku, Sendai (Japan); and Founding Director of the Center for Japanese Studies at the University of Stirling (Scotland), where he also taught East Asian history in the University's History Department. From 1981 to 1986 he directed the EC-ASEAN 'Transfer of Technology and Socio-Economic Development Programmes' held in Singapore, Bangkok, Jakarta, Kuala-Lumpur and Manila.

[ENDS]

We look forward to your further thoughts, observations and views. Thank you.

Best wishes



For and on behalf of DK Matai
Chairman, Asymmetric Threats Contingency Alliance (ATCA)
____________________________________________________________________________

ATCA: The Asymmetric Threats Contingency Alliance is a philanthropic expert initiative founded in 2001 to resolve complex global challenges through collective Socratic dialogue and joint executive action to build a wisdom based global economy. Adhering to the doctrine of non-violence, ATCA addresses opportunities and threats arising from climate chaos; radical poverty; geo-politics, organised crime & extremism; advanced technologies -- bio, info, nano, robo & AI; demographic skews; pandemics; and financial systems. Present membership of ATCA is by invitation only and has over 5,000 distinguished members from over 100 countries: including several from the House of Lords, House of Commons, EU Parliament, US Congress & Senate, G10's Senior Government officials and over 1,500 CEOs from financial institutions, scientific corporates and voluntary organisations as well as over 750 Professors from academic centres of excellence worldwide.

The views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. Please do not forward or use the material circulated without permission and full attribution.
____________________________________________________________________________
Intelligence Unit | mi2g ATCA The Philanthropia Φ

Thanks for signing in, . Now you can comment. (sign out)