Global Restructuring: Lessons, Myths, and Challenges

Roll back the clock about ten years and allow yourself a sneak preview of three powerful forces that would forever change the global landscape — the demise of communism, the blossoming of the Information Age, and the virtual end of inflation. You would have probably concluded that the global village was about to enter a period of sustained peace, stability, and solid economic growth. Guess again. The global economy has been turned inside out. What happened along the way? Nowhere do the contradictions seem more apparent than in Asia. Once thought to be the new leader of the global economy, Asia has quickly become the laggard. The vaunted growth model of Eastern Asia has failed the test of a harsh marketplace. Crony capitalism has gone the way of communism. And, now, adding insult to injury, the region’s once proud aspirations for global hegemony have been jeopardized by heightened political tensions in the subcontinent of Southern Asia that could heightened the risk of nuclear confrontation. Yet on the other side of the world, there seems to be nothing but unbridled optimism. That’s certainly the case in Europe. With European Monetary Union now at hand, there is widespread hope that a single currency will be the key that unlocks the inherent efficiencies of the European economy. Europeans seem convinced that EMU will spark major structural change and thereby form the basis of a new competitive renaissance. At the same time, the United States is brimming with a newfound confidence. The Goldilocks economy has performed spectacularly in the 1990s, and there is general belief that the American model has emerged triumphant. The U.S. experience is the now the benchmark to which most other nations aspire. Through this diversity of experience in the world’s three major blocs, there is a common thread that brings the story together — the imperatives of restructuring. Market forces work in strange and mysterious ways, but in the end, there is no getting around the most powerful force of all — competition. Communism, crony capitalism, and state capitalism were all alternatives to the pure strain of market capitalism that is built on the very foundation of the invisible hand of Adam Smith. As the world comes to grips with these competitive realities, the transition to market capitalism has become the overarching force driving the global economy. Restructuring is the essence of that transition. It ties together the diversity of the experiences now evident in America, Europe, and Asia. And it sets the stage for the challenges, the risks, and the rewards of what lies ahead. [author]