The Hindu Business Line : Global gambit gaffe

JOSEPH Stiglitz won the Nobel Prize for Economics, 2001. He wrote Globalization and its Discontents when he was the Chief Economist at the World Bank. It was there that he saw "first hand the devastating effect that globalisation can have on developing countries, especially on the poor within those countries." Excerpts:

If, in too many instances, the benefits of globalisation have been less than its advocates claim, the price paid has been greater, as the environment has been destroyed, as political processes have been corrupted, and as the rapid pace of change has not allowed countries time for cultural adaptation.

When unemployment in the US fell to below 4 per cent and still inflation did not increase, the IMF economists came up with a misguided policy prescription: raise interest rates. Fortunately, the Fed paid no attention to the IMF recommendation. Other countries could not ignore it so easily.

When foreign businesses come in they often destroy local competitors, quashing the ambition of the small businessmen who had hoped to develop home-grown industry. There are many examples of this. Soft drinks manufacturers around the world have been overwhelmed by the entrance of Coco-Cola and Pepsi into their home markets. Local ice cream manufacturers find they are unable to compete with Unilever's ice-cream products.

With regard to the East Asia crisis, the IMF failed to understand how financial markets work and their impact on the rest of the economy. Its crude macro-models never embraced a broad picture of financial markets at the aggregate level, but were even more deficient at the micro-level, that is, at the level of the firm.

China's success over the past decade stands in marked contrast to Russia's failure. While China grew at an average rate of over 10 per cent in the 1990s, Russia declined at an average annual rate of 5.6 per cent. And China's transition has entailed the largest reduction in poverty in history in such a short time span, from 358 million in 1990 to 208 million in 1997, using China's admittedly lower poverty standard of $1 a day.

A must-read for economists.

Where's Laden

WHEN the BBC's Panorama reporter Jane Corbin goes on al-Qaeda's trail and explores its tradecraft, what you get is The Base, a book on the terror network that shook the world. A few picks:

Bin Laden first established a company called Wadi al-Aqiq, `the mother of other companies', which effectively became the holding company for the terror corporation. There followed a trading company called Laden International and a vehicle for currency trading, Taba Investments.

To this day, Ramsi Yousef remains an enigma. Incarcerated in `Supermax', the Colorado prison which is the highest security institution in America, he is serving a 240-year sentence while politicians, investigators and journalists still argue about which of the forty aliases he has used is his real identity.

On October 10, 2000, when the USS Cole cruised into Aden for a brief visit, a so-called `gas-and-go' stop, a skiff packed with 500 pounds of C4 plastic explosive slipped its mooring and sped across the harbour. Sailors waved at the two men, suicide bombers, standing in the boat. As they reached the port side of the hull they pressed the detonator, blowing a gaping hole in the warship. Seventeen American sailors died. The only disappointment for al-Qaeda was that the man told to video the attack for the propaganda unit fell asleep at his observation post on Steamer Point.

After the September 2001 attacks the intelligence community in the US would admit to a `failure of imagination' in not preparing for a massive domestic terror attack using aeroplanes. Two years earlier, however, in 1999, a report prepared for the National Intelligence Council, a think-tank affiliated to the CIA, warned that terrorists associated with Bin Laden might hijack an aircraft and crash it into an American government building.

The last man to leave his base was Mohamed Atta. As the cell commander he had the responsibility to obey the good housekeeping rules of al-Qaeda, the return of unspent funds to be used in future operations.

An engaging read.

Take charge

TOTAL Access, by Regis McKenna, is about giving customers what they want in an `any time, anywhere world'. Because marketing, as we know it, is disappearing, warns the blurb. And marketers have to operate with one foot in marketing and one foot in information systems. Read on:

IT is absorbing marketing functions that can be codified and put into software. Even the process of sustaining customer relationships — what some would call the very heart of marketing — is disappearing into the network and is no longer under marketing's purview.

Otis Elevator recently connected 100,000 individual elevators via the Internet for remote maintenance. Once connected, Otis plans to put flat-panel colour screens above the elevator doors for building owners to display information such as news, sports and so on.

Adaptation is the key to survival. Dotcom consultants promoted such shortcuts to success as "first mover advantage", "cyberbrand leader", "gorilla", or "e-category killer," when the long-term success of any business cannot be summed up in a simple sound byte.

Trust is at the heart of marketing. Without it, a business, product, or service cannot expect loyalty. Trust is not a matter of selling; rather, it is a matter of delivering. To build and sustain customer trust, the marketing architecture must both perform and respond consistently.

A study by the Silicon Valley Chapter of the American Marketing Association found that while 90 per cent of the CEOs of technology companies considered marketing crucial to the success of their companies, over 74 per cent of them rated the effectiveness of their marketing programmes as poor, fair, or average.

A book to fire up your marketing man, if you are not firing him.

(Books courtesy of Fountainhead, Chennai. E-mail: fhbooks@satyam.net.in)

Tailpiece

"The shop was locked when I went."

"You could've tried the backdoor."

"I did that but it led to a different shop."

hindubusinessline@hotmail.com

D. Murali

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Global gambit gaffe