A globalised world?

Schumpeter has an interesting column based on Pankaj Ghemawat's latest book on globalisation. Ghemawat contends that the statistics don't bear out contentions about the world becoming flat- or flatter:

Mr Ghemawat points out that many indicators of global integration are surprisingly low. Only 2% of students are at universities outside their home countries; and only 3% of people live outside their country of birth. Only 7% of rice is traded across borders. Only 7% of directors of S&P 500 companies are foreigners—and, according to a study a few years ago, less than 1% of all American companies have any foreign operations. Exports are equivalent to only 20% of global GDP. Some of the most vital arteries of globalisation are badly clogged: air travel is restricted by bilateral treaties and ocean shipping is dominated by cartels.

...Foreign direct investment (FDI) accounts for only 9% of all fixed investment. Less than 20% of venture capital is deployed outside the fund’s home country. Only 20% of shares traded on stockmarkets are owned by foreign investors. Less than 20% of internet traffic crosses national borders.....today’s levels of emigration pale beside those of a century ago, when 14% of Irish-born people and 10% of native Norwegians had emigrated. Back then you did not need visas.

Companies that operated on the 'flat earth' premise have actually burnt their fingers badly; the ones that were quick to adapt to local realities have done well.... The key question is whether globalisation will accelerate in one key respect: emigration. Demographics requires it should- Europe, Japan and the US all require foreign hands in a big way. But security considerations and xenophobia militate against it. Outsourcing is one way of dealing with the challenge of lower costs: instead of bringing in low cost labour, simply shift production to where costs are low.