The Incredible Shrinking World
Granted, I was heavily influenced by having recently finished two books on globalization by New York Times columnist Thomas Friedman ("The World is Flat" and "The Lexus and the Olive Tree"). But I still could not help but think of the incredible shrinking world when I and my business partner met with the Governor of the US Virgin Islands earlier this week.
Island economies can be forgiven for thinking they are, well, an island to themselves. But globalization is only going in one direction (more and more of it), and the recent global recession verifies the interconnectedness of all of our economies (the US sneezes, and the world catches a cold).
There's nothing wrong with an island economy being tourism-dominant: it's what you're good at, so make the most of it. But even within that, islands must figure out ways to stay sharp in the pursuit of travelers, aggressively marketing and offering unique amenities and being mindful of how broader demographic trends alter the ways people recreate.
And islands must also realize just how vulnerable tourism is to forces far outside of their control. You could have wonderful attractions, top-notch service, and brilliant marketing, but if a 9/11 happens or the world experiences an economic slowdown, you're going to take a hit.
The fact is that globalization means no economies can erect walls, take care of what's inside, and think everything'll be OK. Globalization exposes structural weaknesses in that it forces healthy competition; and if you are falling short compared with others, you'll lose out. But globalization also offers wonderful opportunities and on-ramps for everyone to play at the highest levels. Businesses can increasingly locate anywhere, and islands can minimize or even eliminate the disadvantages of their geographic isolation.
The moral of the story is that the incredible shrinking world is both a profound threat and a remarkable opportunity. It is not unlike the tantalizing hoops prospect from some off-the-grid location finding his or her way to the most storied camp: any weaknesses that were covered up by their previous dominance of local competition are now exposed by the world's best young players, but any strengths can now be seen on the most public of stages.
This was the core of our conversation with the Governor, and what I believe to be at the core of his challenge as he considers the way forward for the US Virgin Islands. Time will tell which hoops prospects fall into oblivion and which move on to success at the highest levels; and time will tell the same for economies around the globe, even those that are literally islands.