A new book by Alan Rugman always demands investigation. Rugman is impressive for his inimitable and successful way of standing in front of runaway trains and shouting “Stop!” We recall how, when the talk was all about FDI and about Dunning’s Eclectic Theory, Rugman was promoting internalization. More recently, once Porter brought out his diamond model of competition, there was a muted silence for a while, then Rugman from his Canadian base brought out the “double diamond” model, which certainly made more sense in terms of the Canadian economy but, once it was aired at conferences, it was found that this model also had a natural fit with the New Zealand economy and other economies that had a trade dependency. There has been a lull for a while and now this new title has appeared. What to make of it? The title is certainly reminiscent of Francis Fukuyama’s End of History and is equally provocative. Can this really be the end of globalisation, now that the publishers have been able to persuade practically every author with “international” in his or her book title to change in favour of the currently preferred term, “global”? Certainly this whets the appetite and drives you on to read further.
This book is refreshing and it is one that just had to be written. The central focus of this book is the 1983 article by Theodore Levitt in the Harvard Business Review, “The globalization of markets”, which Rugman refutes entirely. Rugman builds upon the concept of the Triad first mooted by Ohmae of world trade being dominated by the key players of the USA, Japan and the EU. Rugman develops this concept of the Triad further to emphasize its importance in world trade and to demonstrate that within this Triad most trade is internal. Rugman then goes on to produce statistical and case study evidence from global industries, such as automotive, telecommunication and pharmaceutical, to demonstrate that multinational companies do not pursue global strategies but regional strategies within the Triad. Indeed, Rugman asserts that there is no evidence of a system of free trade with fully integrated world markets. We are seeing, in other words, what we have been told to see. Rugman does not shrink from the challenge of what we might call the “Emperor’s clothes” syndrome. He is never afraid to stand apart from the crowd and use the kind of direct terms, which most academics would immediately seek to qualify in case they might actually be saying anything meaningful.
The style is essentially one of historical narrative to the present day, which takes us through the various developments, which have taken place in recent years in relation to world trade. On the way, Rugman not only describes the present day institutions, which influence the conduct of international trade, but also gives us the background to their establishment in the same forthright manner, indicating clearly what he perceives to form the road‐blocks to progress in free trade. Rugman concludes that what business needs is a successful regional Triad strategy. Free trade is discussed alongside the WTO, with Rugman offering us his assessment of the ability of the WTO, as presently constituted and staffed, to conduct the role for which we commonly believe it was established. Rugman provides us here with much food for thought with present day influences on trade interactions but goes beyond simple description and has a writing style, which also combines questioning and the result, providing good insights. Take Rugman on the Internet:
We are doubly deceived by the Internet. It is not a medium for exchange, nor a product in itself. It is a tool for communication. It does the same job as the telephone and satellite. It provides a global service for local users.
It is refreshing to find this forthright style throughout – it cuts a swath through traditional writing and thinking. This book will lend itself to a wide audience of academics, students, practitioners and advisers alike.
