What are the economic effects of the flat world?

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Ashley Kannan eNotes educator| Certified Educator

A distinct economic effect of the flattened world is that more economic players are involved.  The flattened world is not one where there is a "first world" or "third world" anymore.  It is a setting in which more nations are involved and greater economic advances are no longer restricted to one particular area.  Friedman points to how the flattening of the world is one where industrialized advances in globalization are all over the world. The traditional location of economic power is no longer the determining factor in growth and innovation:

[the] winners will be those who learn the habits, processes, and skills most quickly—and there is nothing that guarantees it will be Americans or Western Europeans permanently leading the way.

This changing dynamic of where economic growth is located is a distinct economic effect of the flattened world.

At the same time, Friedman suggests that traditional models of economic growth might not be the best indicators in a flattened world.  The lack of growth of companies that "make" something is an economic effect of the flattened world.  Friedman points out that companies like Wal- Mart and UPS end up having an impact on the economic setting precisely because they don't "make" something.  Traditional business models have to be modified in accordance to the demands and ever changing flexibility of a globalized and flattened world. The economic effects is that traditional predictors of economic success have to be augmented to take into account the speed of communication, the flexibility with which technology has transformed the marketplace, and the rapid convergence of technological innovation and commerce.  In this, there are new realities in the flattened marketplace that are fundamentally different than what had been previously understood.  this becomes another distinct economic effect of the flat world.