Thomas Friedman published some years ago his book The world is flat a great essay on how the emergence of China and other countries is changing the world economy.
The world is flat means that in a globalized planet in the XXI century there are no longer barriers, geographical, historical, cultural, or even time divisions among the vast majority of nations. A resource available in one place of the planet is immediately available for the whole planet. No matter if that resource is a commodity, labor, scientific, specialized etc. The Internet, transportation makes everything available everywhere anytime. Millions of educated engineers, doctors or any other advanced degrees are coming out from universities in Shanghai, Beijing, Delhi or anywhere else in China, India, Brasil etc. Those students and workers are as (if not more) educated, capable and professional as anyone in USA or Europe but there is one big difference: they are hungry of prosperity; they are willing to work extremely hard at a much lower price than their counterparts in developed economies. So the world is flat, because all those resources are available for western universities and companies as well obviously to their local ones. Competition is global, no longer local, all competitors have equal opportunity. So we better wake up. Friedman thinks in his own country, the USA. In order to cope with these new challenges he suggests better education and more incentives for scientific/technical studies such as engineering and mathematics (I would add that americans should seriously learn foreign languages if they truly want to be global).
Since the book was published, in 2005, I think it’s clear that things are evolving the way Mr Friedman described, the world economy is growing fast mostly due to the unbelievable pace achieved by the developing countries, lead by China, India and Brazil. There are laggards in this successful situation: the USA and Europe (and within Europe clearly those who have not embraced the new economy in the right way: Portugal, Spain and Greece).
But is the world really so flat? Great authors such as Mr Ghemawat, Stiglitz etc. have critiqued this vision, I am not going to use their strong, academic and empiric arguments, but just a few comments based on my own experience.
There are still a number of industries where cultural, linguistic and regulatory aspects make a huge difference. The ability to adapt to those factors are the real competitive advantages for companies who want to win in those markets. In this case, technical and professional skills are a commodity and it´s the local factor that makes the difference.
Healthcare IT is a good example. We are talking about a super high tech industry in one of the most difficult and complex areas: hospitals, primary care centers etc, everything around healthcare is complex, high tech and heavily regulated, thus local and specific.
Why there are no global winners and global products in healthcare IT? Why those successful in the USA are not in Europe and vice versa? Why even within Europe there are more national players than pan European ones? Because somehow the world is not so flat.