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And last but certainly not least; advises the IFC study; 〃Make reform a continuous 
process 。 。 。 Countries that consistently perform well across the Doing Business 
indicators do so because of continuous reform。〃 
In addition to the IFC's criteria; reform retail obviously has to include expanding 
the opportunities for your population to get an education at all levels and investing 
in the logistical infrastructure…roads; ports; telecommunications; and 
airports…without which no reform retail can take off and collaboration with others 
is impossible。 Many countries today still have telecommunications systems dominated 
by state 
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monopolies that make it either too expensive or too slow to get highspeed Internet 
access and wireless access; and to make cheap longdistance and overseas phone calls。 
Without reform retail in your telecom sector; reform retail in the other five areas; 
while necessary; will not be sufficient。 What is striking about the IFC's criteria 
is that a lot of people think they are relevant only for Peru and Argentina; but in 
fact some of the countries that score worst are places like Germany and Italy。 (Indeed; 
the German government protested some of the findings。) 
〃When you and I were born;〃 said Luis de la Calle; 〃our competition 'was' our next…door 
neighbors。 Today our competition is a Japanese or a Frenchman or a Chinese。 You know 


where you rank very quickly in a flat world 。 。 。 You are now competing with everyone 
else。〃 The best talent in a flat world will earn more; he added; 〃and if you don't 
measure up; someone will replace you…and it will not be the guy across the street。〃 
If you don't agree; just ask some of the major players。 Craig Barrett; the chairman 
of Intel; said to me; 〃With very few exceptions; when you would think about where 
to site a manufacturing plant; you would think about the cost of labor; transportation; 
and availability of utilities…that sort of stuff。 The discussion has been expanded 
today; and so it is no longer where you put your plant but now where do you put your 
engineering resources; your research and development…where are the most efficient 
intellectual and other resources relative to cost? You now have the freedom to make 
that choice 。。。 Today we can be anywhere。 Anywhere could be part of my supply chain 
now…Brazil; Vietnam; the Czech Republic; Ukraine。 Many of us are limiting our scope 
today to a couple of countries for a very simple reason: Some can combine the 
availability of talent and a market…that is; India; Russia; and China。〃 But for every 
country Intel considers going into; added Barrett; he asks himself the same question: 
〃What inherent strength does 'the' country bring to the party? India; Russia…crummy 
infrastructure; good educational level; you have a bunch of smart folks。 China has 
a little bit of everything。 China has good infrastructure; better than Russia or India。 
So if you go to Egypt; what unique capability 'does that country have to offer'? 
Exceedingly low labor rates; but what is 'the' infrastructure and education base? 
The Philippines or Malaysia have good literacy rates…you get 

to employ college grads in your manufacturing line。 They did not have infrastructure; 
but they had a pool of educated people。 You have got to have something to build on。 
When we go to India and are asked about opening plants; we say; 'You don't have 
infrastructure。 Your electricity goes off four times a day。'〃 
Added John Chambers; the CEO of Cisco Systems; which uses a global supply chain to 
build the routers that run the Internet and is constantly being wooed to invest in 
one country or another; 〃The jobs are going to go where the best…educated workforce 
is with the most competitive infrastructure and environment for creativity and 
supportive government。 It is inevitable。 And by definition those people will have 
the best standard ofliving。 This may or may not be the countries who led the Industrial 
Revolution。〃 
But while the stakes in reform retail today are higher than ever; and countries know 
it; one need only look around the world to notice that not every country can pull 
it off。 Unlike reform wholesale; which could be done by a handful of people using 
administrative orders or just authoritarian dictates; reform retail requires a much 
wider base of public and parliamentary buy…in if it is going to overcome vested 
economic and political interests。 
In Mexico; 〃we did the first stages of structural reform from the top down;〃 said 
Guillermo Ortiz。 〃The next stage is much more difficult。 You have to work from the 
bottom up。 You have to create the wider consensus to push the reforms in a democratic 
context。〃 And once that happens; noted Moises Nairn; a former Economy Minister of 
Venezuela and now editor of Foreign Policy magazine; you have a much larger number 


of actors participating; making the internal logic and technical consistency of the 
reform policies much more vulnerable to the impact of political compromises; 
contradictions; and institutional failures。 〃Bypassing or ignoring the entrenched 
and defensive public bureaucracy…a luxury frequently enjoyed by the government teams 
that launch initial reform measures…is more difficult in this stage;〃 Nairn said。 
So 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 get tripped up? 
324 
Culture Matters: Glocalization 
One 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 collaboration 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 differences 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 
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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? 
The more you have a culture that naturally glocalizes…that is; the more your culture 
easily absorbs foreign ideas and best practices and melds those with its own 
traditions…the greater advantage you will h

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