Or think of investment. Take all the real investment that went on in the world in 2010. What percentage of that was accounted for by foreign direct investment? Not quite ten percent.
4:14
And then finally, the one statistic that I suspect many of the people in this room have seen: the export-to-GDP ratio. If you look at the official statistics, they typically indicate a little bit above 30 percent. However, there's a big problem with the official statistics, in that if, for instance, a Japanese component supplier ships something to China to be put into an iPod, and then the iPod gets shipped to the U.S., that component ends up getting counted multiple times. So nobody knows how bad this bias with the official statistics actually is, so I thought I would ask the person who's spearheading the effort to generate data on this, Pascal Lamy, the Director of the World Trade Organization, what his best guess would be of exports as a percentage of GDP, without the double- and triple-counting, and it's actually probably a bit under 20 percent, rather than the 30 percent-plus numbers that we're talking about.
5:20
So it's very clear that if you look at these numbers or all the other numbers that I talk about in my book, "World 3.0," that we're very, very far from the no-border effect benchmark, which would imply internationalization levels of the order of 85, 90, 95 percent. So clearly, apocalyptically-minded authors have overstated the case. But it's not just the apocalyptics, as I think of them, who are prone to this kind of overstatement. I've also spent some time surveying audiences in different parts of the world on what they actually guess these numbers to be. Let me share with you the results of a survey that Harvard Business Review was kind enough to run of its readership as to what people's guesses along these dimensions actually were.
6:21
So a couple of observations stand out for me from this slide. First of all, there is a suggestion of some error. Okay. (Laughter) Second, these are pretty large errors. For four quantities whose average value is less than 10 percent, you have people guessing three, four times that level. Even though I'm an economist, I find that a pretty large error. And third, this is not just confined to the readers of the Harvard Business Review. I've run several dozen such surveys in different parts of the world, and in all cases except one, where a group actually underestimated the trade-to-GDP ratio, people have this tendency towards overestimation, and so I thought it important to give a name to this, and that's what I refer to as globaloney, the difference between the dark blue bars and the light gray bars.
7:26
Especially because, I suspect, some of you may still be a little bit skeptical of the claims, I think it's important to just spend a little bit of time thinking about why we might be prone to globaloney. A couple of different reasons come to mind. First of all, there's a real dearth of data in the debate. Let me give you an example. When I first published some of these data a few years ago in a magazine called Foreign Policy, one of the people who wrote in, not entirely in agreement, was Tom Friedman.