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certain applications； new applications pop up that demand more powerful and more
complex chips； which are Intel's specialty。
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Once Google starts offering video searches； for instance； there will be demand for
new machines and the chips that power them； of which no one was even dreaming five
years ago。 This process takes time to unfold。 But it will； argued Bhagwati； because
what is happening in services today is the same thing that happened in manufacturing
as trade barriers were lowered。 In manufacturing； said Bhagwati； as the global market
expanded and more and more players came onto the field； you saw greater and greater
〃intraindustry trade； with more and more specialization；〃 and as we move into the
knowledge economy； you are now seeing more and more intraservice trade； with more
and more specialization。
Don't be surprised if your son or daughter graduates from college and calls you one
day and says he or she is going to be a 〃search engine optimizer。〃
A what？
A slew of firms has started up around Google； Yahoo！； and Microsoft to help retailers
strategize on how to improve their rankings； and increase the number of click…throughs
to their Web sites； on these major search engines。 It can mean millions of dollars
in extra profits if； when someone searches for 〃video camera；〃 your company's product
comes up first； because the people who click through to your Web site are those most
likely to buy from you。 What these search engine optimizers （SEOs as they are called
in the trade） do is constantly study the algorithms being used by the major search
engines andthen design marketing and Web strategies that will push you up the rankings。
The business involves a combination of math and marketing…a whole new specialty
created entirely by the flattening of the world。
And always remember： The Indians and Chinese are not racing us to the bottom。 They
are racing us to the top…and that is agoodthing！ They wanthigher standards ofliving；
not sweatshops； they want brand names； not junk； they want to trade their motor
scooters for cars and their pens and pencils for computers。 And the more they do that；
the higher they climb； the more room is created at the top…because the more they have；
the more they spend； the more diverse product markets become； and the more niches
for specialization are created as well。
Look at what is happening already： As American companies send knowledge work to India；
Indian companies are turning around and using their earnings and insights to start
inventing new products that poorer Indians can use to lift themselves out of poverty
into the middle class； where they will surely become consumers of American products。
BusinessWeek cited the Tata Motors factory； near Pune； south of Mumbai； 〃where a group
of young designers； technicians； and marketers pore over drawings and examine samples
of steel and composite plastics。 By early next year； they plan to design a prototype
for Tata Group's most ambitious project yet： a compact car that will sell for 2；200。
The company hopes the car will beat out Suzuki's 5；000 Maruti compact to become
India's cheapest car…and an export model for the rest of the developing world。 'This
is the need of the day in India…a people's car；' says Ratan Tata； chairman of the
12。5 billion Tata Group。 Indians are increasingly demanding better products and
services at an affordable cost。 Strong economic growth this year will only enlarge
that demand。 The phrase 'Made in India' may come to represent low…cost innovation
in the new global economy〃 （October 11； 2004）。
Raghuram Rajan； the director of research for the International Monetary Fund； sits
on the board of a company that puts Indian students to work tutoring students in
Singapore。 The students； from the Indian Institute of Technology in Madras； go online
to help students in Singapore； from grades six to twelve； on their math homework。
They also help teachers in Singapore develop lesson plans and prepare PowerPoint
presentations or other jazzy ways for them to teach math。 The company； called
Heymath。com； is paid for by the schools in Singapore。 Cambridge University in England
is also part of this equation； providing the overall quality controls and certifying
the lesson plans and teaching methods。
〃Everyone wins；〃 saysRajan。 〃The company is run by two Indians who worked for Citibank
and CSFB in London and came back to India to start this business。 。 。 Cambridge
University is making money from a company that has created a whole new niche。 The
Indian students are making pocket money。 And the Singapore students are learning
better。〃 Meanwhile； the underlying software is probably being provided by Microsoft
and the chips by Intel； and the enriched Indian students are
probably buying cheap personal computers from Apple； Dell； or HP。 But you can't really
see any of this。 〃The pie grew； but no one saw it；〃 said Rajan。
An essay in the McKinsey Quarterly； 〃Beyond Cheap Labor： Lessons for Developing
Economies〃 （January 2005）； offers a nice example of this： 〃In northern Italy's textile
and apparel industry 。 。 。 the majority of garment production has moved to lower…cost
locations； but employment remains stable because companies have put more resources
into tasks such as designing clothes and coordinating global production networks。〃
It is so easy to demonize free markets…and the freedom to outsource and
offshore…because it is so much easier to see people being laid off than being hired。
But occasionally a newspaper tries to dig deep into the issue。 My hometown paper；
the Minneapolis Star Tribune； did just that。 It looked at exactly how the Minnesota
economy was being affected by the flattening of the world； actually daring to run
an article on September 5； 2004； headlined； 〃Offshore Jobs Bring Gains at Home。〃 The
article； date…lined Wuxi； China； began like this： 〃Outside the air is dank； dusty
and hot as tropical fever。 Inside； in an environment that's dry； spotless and cool；
hundreds of former farm laborers covered head to toe in suits looking like something
out of NASA are performing work for Bloomington…based Donaldson Co。 Inc。。。。 In
Donaldson's case； the company has twice as many workers in China…2；500…as the 1；100
it has in Bloomington。 The Chinese operation not only has allowed Donaldson to keep
making a product it no longer could make at a profit in the United States； it also
has helped boost the company's Minnesota employment； up by 400 people since 1990。
Donaldson's highly paid engineers； chemists and designers in Minnesota spend their
days designing updated filters that the Chinese plant will make for use in computers；
MP3 players and digital video recorders。 The falling disk…drive prices made possible
by Chinese production are feeding demand for the gadgets。 'If we didn't follow ＇the
trend＇； we'd be out of business；' said David Timm； general manager of Donaldson's
disk…drive and microelectronics unit。 In Minnesota； Global Insight estimates that
1；854 jobs were created as a result of foreign outsourcing in 2003。 By 2008； the firm
expects nearly 6；700 new jobs in Minnesota as a consequence of the trend。〃
Economists often compare China's and India's entry into the global economy to the
moment when the railroad lines crossing America finally connected New Mexico to
California； with its much larger population。 〃When the railroad comes to town；〃 noted
Vivek Paul； the Wipro president； 〃the first thing you see is extra capacity； and all
the people in New Mexico say those people…Californians…will wipe out all our factories
along the line。 That will happen in some areas； and some companies along the line
will go out of business。 But then capital will get reallocated。 In the end； everyone
along the line will benefit。 Sure； there is fear； and that fear is good because that
stimulates a willingness to change and explore and find more things to do better。〃
It happened when we connected New York； New Mexico； and California。 It happened when
we connected Western Europe； America； and Japan。 And it will happen when we connect
India and China with America； Europe； and Japan。 The way to succeed is not by stopping
the railroad line from connecting you； but by upgrading your skills and making the
investment in those practices that will enable you and your society to claim your
slice of the bigger but more complex pie。
：：：：： SIX
The Untouchables
So if the flattening of the world is largely （but not entirely） unstoppable； and holds
out the potential to be as beneficial to American society as a whole as past market
evolutions have been； how does an individual get the best out of it？ What do we tell
our kids？
There is only one message： You have to constantly upgrade your skills。 There will
be plenty of good jobs out there in the flat world for people with the knowledge and
ideas to seize them。
I am not suggesting this will be simple。 It will not be。 There will be a lot of other
people out there also trying to get smarter。 It was never good to be mediocre in your
job； but in a world of walls； mediocrity could still earn you a dec