Populated Peoples Front of Australia

I so enjoyed my amateur economic geography yesterday that I’ve made an another tribute map.

If you click on the “Population” tab on the aforementioned map from The Economist you can see the US states transformed into the equivalent nation by population (I’m feeling more exotic now as my 2011 US journeying will take me to Cameroon and Senegal).

So here is the Australia commonwealth rebadged (population for our states is from the ABS again, and country comparisons from this Wikipedia aggregation of sources):

This is a quite different batch of pairings, and my thoughts on each:

• It’s a joy to be living in Copenhagen again, although I’m stunned by the traffic (especially the paucity of bicycles) and lack of decent smørrebrød
• The NSW Labor Party would love the electoral might of Emomali Rhamon
• WA is no doubt relieved it has held off on adopting the Euro
• Tasmania has under-utilised its first-mover advantage with legal casinos
• Both our non-states (i.e. the Northern and Australian Capital Territories) have tax-haven status
• …and I know a lot less about Queensland and South Australia than I thought

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A slightly different Australian Federation

Inspired by The Economist magazine’s latest map of the USA with state names replaced by the equivalent nation based on GDP, I felt inspired to do the same for Australia.

The Australian Bureau of Statistics calculates Gross State Products. I converted each to $US using the average exchange rate of (A$1=US0.88) for the period 2009-10.  I then compared them to the latest country GDP calculations from the International Monetary Fund. It throws up some fun replacements:

I draw a number of conclusions from this:

• Victorians should be much more excited by the rarity of our current floods
• The beer in Queensland should be much, much better
• The current economic dramas of New South Wales should be viewed as a likely long-term issue
• Our Olympic sprint coaches should be scouring the Northern Territory
• All future Western Australian tourist campaigns will incorporate Paddington Bear
• We may see South Australia split into two states very soon
• Tasmania is NOT an island, but rather is mountainous (I assume all of Hobart has moved to the top of Mt Wellington) and landlocked…and bordering WA
• Julia Gillard will be delighted that her power has increased, ruling in a Kingdom as she does!

As an aside, I was a little disappointed that, during my stay in the US this year, I’ll be splitting much of my time between Australia and Indonesia!

Update: I have also done this for population now.

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Who’s #2? Who’s #2?

It would be remiss of a blog about International Business to not comment upon a major milestone that occurred (or at least was acknowledged) this week.

China has usurped Japan as the world’s 2nd largest economy behind the US.  This is rightfully being hailed as yet another step on China’s rise to the #1 spot (typically forecast as happening by 2030).

A few issues worth noting:

– This is simply in nominal terms (i.e. converted at prevailing exchange rates).  Allowing for cost of living (what we typically refer to as Purchasing Power Parity) China’s GDP was almost twice as large as Japan already (and about 60% the size of US, rather than the nominal 40% or so)

– There is good reason to believe that these Chinese economy is even larger, with one study estimating the grey economy may add another 30% on top of the official GDP numbers

– A long-term historical perspective would acknowledge this as a “return” to #1 (a rank China has probably occupied more than any other nation-state over human history)

– Putting this all in per capita terms tempers the story considerably, as China struggles to crack the top 100 nations on an income per head basis even when converted to PPP.

This last point is in many ways the most important aspect.  China, and in particular its entrepreneurs, planners, and citizens, isn’t about to slow down in the pursuit of a prosperity.  In the medium-to-long term only India has any real chance of matching the nation for market and labour-force size.  China is already the world’s top exporter, steel-maker and auto market.  The world’s largest multinationals are all scrambling to part of  China’s engagement with each and every aspect of their value chains.

Might multinational managers be the problem?

My recent US trip was principally motivated the big annual conference of international business scholars – the AIB. I spent five sunny days in San Diego presented, discussing and pondering the nature of multinational activities, strategies and impact with 900 or so other academics. There were a range of fascinating sessions and papers.

An opening session featured some IB luminaries – Pankaj Ghemawat and Udo Zander – discussing the nature of the global business environment (notionally the rather non-controversial Flat versus Spikey debate). Both made strong arguments that none of the purported globalisation we’ve seen in recent decades is particularly unprecedented when we look at a time frame of a century or more, nor is international trade and production as integrated or connected as most people assume. They presented some conflicting implications of this however.

Ghemawat argued that firms run the risk of assuming the world is flat and thus adopting big, bland reductionist strategies that will satisfy no consumer’s needs and will stumble in the face of genuine country and regional differences.

Zander argued a more complex and controversial position. In his tale, only a small number of multinationals manage to build temporary innovation and knowledge advantages that they can leverage via global cloning (i.e. advantages that are sufficiently transferable and applicable across multiple markets). Other multinationals will struggle to adapt to to local needs and thus fail (or at least underperform).

So far, there’s not much new in this perspective. Even his explanation for the barriers to firm adaptation/learning aren’t surprising – the multinationals are burdened by the organisational history/institutional memory and current wisdom is sticky.

Where it gets intriguing is the examples he gave of subsidiary managers in markets steadfastly refusing to change their strategy in the face of years of failure and repeated suggestions to adapt and learn.

This begs the question, as does Ghemawat’s characterisation of strategies being too simple, are multinational managers the handbrake on multinational success?

Perhaps we have placed too much weight on the size of the challenges in international business, and too little on the failure of managers to tackle these challenges. Firms may be failing more because of the weaknesses of their managers rather than any insurmountable liabilities of foreignness or risks of doing international business.

As scholars we spend too little time looking at failures and too much time looking at the winners. Perhaps the winners are just those who stuffed it up the least. Might we learn more from the mistakes?

Are multinationals better bosses?

Quite a neat report was brought to my attention in recent days.  The folks at the OECD have taken a stab at a pretty fundamental (and controversial) international business question: do multinationals pay their workers better?

This is a big issue, because multinationals are often slammed as being exploitative of labour and as having a deleterious effect on host markets.  So what did they find?

“The evidence suggests that MNEs tend to provide better pay and working conditions than their domestic counterparts, especially when they operate in developing and emerging economies.”

They also found that takeovers by a foreign firm tend to also push up wages in the acquired firm.  Is this another nail in the coffin of anti-globalisation?

For more on the report there is a short podcast here.