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ECONOMICS - August 1999
By Sylvia L. Lovely

Going Global
Is Kentucky prepared to take its place in a global economy?

In a recent New York Times article, author Thomas Friedman discusses the global economy and how we must prepare people and communities for it. His overriding message is that just as the Cold War defined our world view following WWII, the global economy, still in its infancy, defines our world today.

Characterized by speed, the global economy depends less on nation states and more on deal making and individualism. To deny its emergence will be futile and counter-productive to our future well being. The U.S. economy is booming precisely because we caught on early to the global economy and became engaged long before anyone else.

The dangers? That local communities will not catch up in time and protectionism and separatist policies will result, stifling the U.S. role in promoting the global economy and that communities will not be offered appropriate assistance when the inevitable momentary hardships occur -- like losing industries to Third World countries. Friedman points out the importance of keeping communities, including their governments, strong and healthy, as they will serve as an essential building block for the global economy. If we are not careful, adds Friedman, America stands a real danger of developing an extreme system of haves and have nots that will undermine our strength both at home and on the global front.

How do these ideas play in Kentucky and in particular with real life mayors, county judge executives and other civic leaders who must deal on a daily basis with citizens displaced through the closure of the manufacturing establishments so prized not very long ago?

Local elected officials must answer as the level of government closest to the people. Mayors must respond to the loss of jobs in our communities, but are not being helped to understand the economic realities of the world economy and what has befallen their communities. Instead, they are being told that the old strategy will continue to work and they are not finding the resources to address the new realities of economic development.

While not promoting a welfare state, Friedman suggests that we have not tailored assistance programs to those truly caught in the inevitable economic squeeze - a situation that will get worse before it gets better. With an economic system as new as the global economy, the fallout will be more difficult for some than for others. Effective and integrated training and educational systems for lifelong learning, development of appropriate safety nets and assistance in wiring communities for jobs of tomorrow will be essential elements. Too often, we have let community leaders believe they could have and keep jobs without the necessary investment in people that will lead to improvement of their lives. The world of work has changed and we have done nothing to equip people in understanding what is happening to them.

The answer to sustaining the global economy is, paradoxically, not global but local. As Michael Porter of Harvard Business School states, "competitive advantage will increasingly lie in local things -- knowledge, relationships and motivation -- that distant rivals cannot replicate." Friedman points out that the American boom throughout the world depends on the stability provided by appropriately imposed government regulatory systems as well as the political stability provided by quiet but strong government.

Much work must be done to bring along our local communities so that there is an understanding of what we must do to continue our prosperity. That lives will be changed -- some for the worse in the short run -- is probably inevitable but can be cushioned from the worst blows and actually improved in the long run. The next presidential administration, says Friedman, will be faced with the difficult task of bringing all the "globalizers" together -- including software writers, hi-techies, Iowa farmers and environmental activists -- into a coalition to both understand and partake of global economic benefits.

Similarly, as Kentucky turns the corner into a new century it is with some real successes economically. We also must be ready to embrace what is new and bring together our own diverse groups and entities into common understanding. In coming regional economies, local leaders will play a pivotal role. Let’s not leave them in the dark. Instead, let’s share the rules of the new game in town.

 

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