Tuesday, September 5, 2006

Culture Matters: Globalization

May I resume what I said around one week ago? Where did I leave off? Ah, I said growth is the matter of politics rather than economics. Politics itself is based on national culture. And culture, in its turn, is the product of national psychology. National characters, instead of those snails’ job, hold sway over growth and decline of a nation, even progress and decay of a civilization.

To add more weight to what I am arguing, I’d like to excerpt a piece from the US best-seller “The World is Flat”, written by Thomas Friedman:

Culture Matters: Globalization

Why does one country get over this reform retail hump, with leaders able to mobilize the bureaucracy and the public behind these more painful, more exacting micro-reforms, and another country gets tripped up?

Our answer is culture. To reduce a country’s economic performance to culture alone is ridiculous, but to analyze a country’s economic performance without reference to culture is equally ridiculous, although that is what many economists and political scientists want to do. This subject is highly controversial and is viewed as politically incorrect to introduce. So it is often the elephant in the room that no one wants to speak about. But I am going to speak about it here, for a very simple reason: As the world goes flat, and more and more of the tools of collboration get distributed and com-moditized, the gap between cultures that have the will, the way, and the focus to quickly adopt these new tools and apply them and those that do not will matter more. The difference between the two will become amplified.

One of the most important books on this subject is The Wealth and Poverty of Nations by the economist David Landes. He argues that although climate, natural resources, and geography all play roles in explaining why some countries are able to make the leap to industrialization and others are not, the key factor is actually a country’s cultural endowments, particularly the degree to which it has internalized the values of hard work, thrift, honesty, patience, and tenacity, as well as the degree to which it is open to change, new technology, and equality for women.

One can agree or disagree with the balance Landes strikes between these cultural mores and other factors shaping economic performance. But I find refreshing his insistence on elevating the culture question, and his refusal to buy into arguments that the continued stagnation of some countries is simply about Western colonialism, geography, or historical legacy.

In my own travels, two aspects of culture have struck me as particularly relevant in the flat world. One is how outward your culture is: To what degree is it open to foreign influences and ideas? How well does it "glocalize"? The other, more intangible, is how inward your culture is. By that I mean, to what degree is there a sense of national solidarity and a focus on development, to what degree is there trust within the society for strangers to collaborate together, and to what degree are the elites in the country concerned with the masses and ready to invest at home, or are they indifferent to their own poor and more interested in investing abroad?

(to be continued)