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 / First Quarter 2002 / Issue 26(originally published by Booz & Company)


From New Economy to Siege Economy: Globalization, Foreign Policy, and the CEO Agenda

Washington needs to be prepared to make considerable new investments in multilateral institutions, a departure from the more aloof stance the administration evinced during much of its first year. American businesses ought to be not just highly supportive of but involved in this effort; for example, providing ideas about how they and the World Bank can work more closely together to get effective investment into developing countries.

Both business and government should rethink their political approach to globalization, aiming to add a more humane element to it, with more emphasis on environmental cooperation, education and training of non-U.S. work forces, and the creation of social safety nets in less-developed countries. These policies — descendants of the Marshall Plan programs we supported in Europe after the close of World War II — will not by themselves eliminate terrorism. But the harsher capitalism that has been spreading around the world is not compatible with the need for political support for globalization. At the heart of everything is the need to build a system of commerce that makes as many people as possible feel they have a chance for a better life within the system that is evolving.

Let me try this another way: Some three weeks after the September 11 attacks, the Financial Times editorialized that “the ills of the world’s poor resulted from too little globalization, not too much.” This is not completely right. Globalization is not an end in itself; sustainable globalization is. CEOs and developed-world officials alike would be remiss were they not to acknowledge that certain effects of globalization have clobbered emerging markets time and again in the last several years. Even before mid-September, increasing attention around the world was paid to the downside of an integrated world economy. There is no question that globalization has widened the gap between rich nations and poor nations, and between rich and poor within countries. The troubles of today — and tomorrow — will be concentrated in those segments of the world that are falling further and further behind. It was tragic enough from a social and moral perspective to live in a world of these widening disparities. But now it holds a tangible security dimension, as well.

So more attention must be given to the impoverished, and a better way of helping them move up the economic ladder, than has been to date. Antiglobalization demonstrators highlighted the problem; because many of them were avowed anarchists or freelance troublemakers, it was easy to dismiss their concerns. But the fact is, many Third World governments were becoming increasingly troubled, too, even before September 11. Their concerns cannot be addressed by either government officials or corporate leaders acting in isolation. (By the way, it wouldn’t hurt for CEOs and government leaders to have even the semblance of a strategy to deal with those protest groups, who are getting more and more attention. Surely now is the time to develop one.)

American CEOs further have a role to play in pressing Washington not to neglect policies that were strengthening globalization before September 11, and that are still crucial for the future. A major case in point is our relations with Mexico, much of which were turning on more cooperative ties regarding people flows. It is hard to envision political support in Washington for more liberal immigration policies today. But sooner, rather than later, we will need to have them, even in the context of stepped-up vigilance. We may need to take some detours, to be sure, but we have to get back on the right road.

We must continue the effort to shore up the global banking system, well beyond the new push against money laundering. Similarly, we can’t forget the need to rethink intellectual property laws in the context of changes wrought by information technology (Napster-type issues), new global diseases (pharmaceutical issues), and the human genome (who owns the secrets of life?). In other words, the fight against terrorism, as important as it is, cannot subsume the multitude of thorny questions that must be resolved if a global economy is to operate efficiently and humanely.

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  1. Joel Kurtzman, “An Interview with Rosabeth Moss Kanter,” s+b, Third Quarter 1999; Click here.
  2. John Micklethwait and Adrian Wooldridge, “Globalization Is No Fait Accompli,” s+b, Third Quarter 2000; Click here.
  3. Randall Rothenberg, “Jeffrey E. Garten: The Thought Leader Interview,” s+b, First Quarter 2001; Click here.
  4. Jeffrey E. Garten, The Mind of the CEO (Perseus Books/Basic Books, 2001)
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