Davos: Demise of Hub-and-Spokes World Economy
London, UK - 24 January 2007, 08:47 GMT - 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:
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, 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.
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
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
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
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 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
We look forward to your further thoughts, observations and views.
For and on behalf of DK Matai, Chairman, Asymmetric Threats Contingency
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, 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.
Intelligence Unit | mi2g | tel +44 (0) 20 7712 1782 fax +44 (0) 20
7712 1501 | internet www.mi2g.net
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