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May 21, 2008

Is the world really flat?

Several years ago, the term "a flat world" was popularized as a description of a globalized economy. What does it mean to say the world is flat, and is the analogy accurate? Listen


"Well, you hear this term now all the time, and what it means is that modern communication and technology now allow anyplace in the world virtually to compete with any other place. So for example, now factories in the U.S. and North Carolina are competing with factories in Europe and South America and Asia. So the term "flat world" means there is no advantage to location. Work is going to go wherever the costs are lowest. But not everyone agrees. Some economists say there is still an advantage of being in a particular location. And they say there are two advantages. One is the advantage of being close to your customers. For example, let's take furniture. We all know a lot of furniture building has gone to China, but there is a market in the U.S. for customized furniture, for people who want a particular kind of furniture. And there is also a market for servicing that furniture after the sale. So, therefore, for that market actually there is an advantage to have the company here in the U.S. The second advantage of location might have to do with being close to creative people. People are different around the world. One of our benefits here in the U.S. is that we have a lot of creative people. So folks are saying that yes, for some things the world is flat, but for other things the world is spiky because of creative people and because of the advantage of being close to your market."

Posted by Dave at May 21, 2008 08:00 AM