Thomas Friedman's 'triple convergence' and its impact on South Carolina
By Dr. Daniel Ostergaard
This is the second in a series of three articles on international trade and the impact of globalization on South Carolina. The first article traced the historical antecedents to where we are today, which is where we will pick up.
International trade today can only be understood in the context of the last 30 years. During the 1990s, revolutionary advances in new technologies, the emerging post-Cold War world and external events such as Y2K resulted in a massive investment in infrastructure and a radical departure from the way things had been.
Thomas Friedman termed this series of events the "triple convergence" in his book "The World Is Flat." And it's these three great forces which continue to reshape South Carolina's international trade today.
The first of these forces was actually a collection of 10 "flatteners" as Friedman called them: the fall of the Berlin Wall, the introduction of Netscape to navigate the world wide web, uploading, outsourcing, offshoring, supply chaining, insourcing, informing and the newly emerging devices like mobile phones and portable media players.
The combination of this collection of flatteners enabled South Carolina's business community to really look at what tools were available for business. And these business leaders were quick to adopt many of these new tools.
The implications and ramifications of these tools sometimes had unforeseen—or at least, reluctant—changes to the landscape of business and manufacturing across the Palmetto State, changes that continue to make an impact even in the present day.
Outsourcing and offshoring dramatically altered many small towns as mills closed and work moved overseas. At the same time, South Carolinians saw the price of consumer products reduce thanks to increased foreign competition.
Overall, the first force of the triple convergence had its own profound impact found in millions of daily transactions and decisions. New skills and habits began to emerge as firms invested in new infrastructure, either through a desire to capitalize on these new tools or in some cases prompted by the looming "threat" of Y2K. Either way, business in South Carolina has continued to evolve even today.
Desktop PCs have given way to enterprise risk management and integrated data solutions. The term dashboard is no longer reserved for vehicles, and the use of your watch as a combined phone, camera, television, movie theater, etc., has taken us from science fiction to the boardroom.
But whereas the first force might be the tools available, the second force became the overall manner with which these tools began to impact how South Carolina does business. Friedman termed this the horizontalization of business.
Whereas generations of business people had matured in hierarchical, vertical business internal structures, the new tools were allowing a distinct change in both business culture and practice. Emails and cell phones gave way to more information being available at all levels of organizations. The CEO did not necessarily have to go through multiple levels of managers when her phone allows her to see what is happening throughout her firm instantaneously.
Again, this continues to evolve throughout our state whether in the form of multiple countries speaking on the same teleconference or business teams consisting of multiple people in multiple countries who may never meet face-to-face but who work together on a daily basis. We have seen great strides in efficiency and the easing of managing larger organizations—not only across your own business campus, but across the globe as well.
This latter aspect brings us to our third part of the triple convergence, what Friedman refers to as market liberalization.
Through the 1990s, we have seen a liberalization of developing countries' government trade policies (e.g., China, India, Russia) and the mobilization of billions of new workers and consumers in countries that were previously kept out of international trade. This has more than doubled the number of potential consumers in the world, and it has provided South Carolina firms with new avenues for growth. Likewise, it has created new supply chain opportunities, new potential employees and new markets.
On the other hand, it significantly increased the potential for competition in the form of products sold, services offered and a host of new voices trying to reach the ear of consumers.
How much has this impacted South Carolina? One only has to inquire with your local school system how many languages are spoken at the homes of students. One local high school principal told me recently that there are more than 60 languages represented within their student body. These new voices give rise to new ideas and new ways of doing things.
So what does all this mean for today? We have seen South Carolina's manufacturing base evolve in the last 30 years. Unfortunately, anytime there is an evolution taking place similar to South Carolina's transition from textile mills to high-tech, there are inevitably workers who are harmed along the way—jobs are lost, factories close, families face hard choices. And yet, what has remained strong from South Carolina's small towns and factory floors has been that uniquely South Carolina pride and determination.
Business has increased. Production has increased. The Palmetto State's manufacturers are seen as great places to work. It is not a stretch to think that South Carolina is emerging from Thomas Friedman's triple convergence as a stronger macro-economy with great potential and a strong international trade presence.
Job opportunities, quality of life, the weather and a host of other factors ensure South Carolina is seen as a desirable place to live. With a population having doubled since 1970 to over 5 million South Carolinians—most of that population gain resulting from people moving here from other states—we face a host of challenges in the future. The next installment of this three-part series will consider the future ramifications for South Carolina.
Population, industry, transportation, education and globalization will all continue to have profound effects. How we respond to this mix of challenges and opportunities will define the Palmetto State for the next generation. Are we up for that task?