Developing Countries and the Flat World
Summary of Chapter Ten: The Virgin of Guadalupe
Friedman looks at the situation in Mexico, which was poised for economic growth a decade ago but is declining economically today. The number one and number two exporters of goods to the United States used to be Canada and Mexico; in 2003 it became Canada and China. Friedman found that the traditional statues of the Virgin of Guadalupe, the patron saint of Mexico, were being imported into Mexico from China. Similarly, Egypt imports cheap Ramadan lanterns from China. Friedman thinks developing countries have to take honest inventories of their policies in order to compete in the market now. Developing countries need to get three things right: the infrastructure to connect to the global platform; the right education; and the right governance. During Globalization 2.0 after the fall of the Berlin Wall, countries like China, Russia, Mexico, Brazil, and India adjusted with market-friendly policy, but Friedman calls this “reform wholesale” (p. 398). That is not enough. Globalization 3.0 is going to call for “reform retail” that transforms and upgrades the whole structure of governance and infrastructure in a country. Friedman summarizes a checklist from the IFC (International Finance Corporation, part of the World Bank) for aspiring countries: 1) deregulate wherever possible; 2) enhance property rights; 3) expand Internet usage; 4) reduce court litigation in business; 5) make reform a continuous process.
Commentary on Chapter Ten: The Virgin of Guadalupe
This chapter is aimed at advising countries in the way Friedman predicted success for individuals in previous chapters. He looked at what countries have done to get themselves out of poverty. Countries like Mexico, Russia, and China adjusted to an open market economy to generate more wealth through trade but have been slower in making deep reforms. China can beat others in cheap manufacture but still has to become a world player through internal change. Friedman gives Ireland as a country that has turned itself around. It was once the poorest European country and now is the richest. Its reform included free secondary and technical education to its children, and university is almost free. The country united under a policy of fiscal austerity to attract foreign investment. They did this with an educated workforce, top infrastructure, and low corporate taxes.
Friedman then addresses the sensitive issue of a nation's culture. A country with an outgoing, open, hard-working culture will be more successful today. This cuts across the east-west divide, as India, China, and Japan prove with their aggressive workers and industries. Muslim countries, on the other hand, are struggling because they still embrace a tribal culture that rejects outsiders and modernization. Muslim countries are not tolerant of other religions or even other branches of their own religion. Cooperation is not one of their cultural virtues. Other cultural desirables today are the ability of a country to pull together, and to support education and equal opportunity for all, including women. Mexico, Friedman concludes, did not take off as it was supposed to because it still has a top-down patronage mentality. Governance there needs to create the right environment for success.