The Limits of Convergence.

ANDRES HERNANDEZ ALENDE

THIS BOOK CHALLENGES A POPULAR CONcept: that globalization stimulates convergence toward a single economic model and, as a result, nourishes the formation of a universal culture, to the detriment of national identities. Mauro F. Guillen, assistant professor of business administration and sociology at the University of Pennsylvania's Wharton School, thinks just the opposite is true: that globalization foments diversity, as much in economic models as in cultural development.

To support his thesis, Guillen studied three countries that have set off on the path to modernization from three different starting points: Argentina, South Korea and Spain. Having systematically reviewed and compared the changes that have occurred in those three countries since 1950, the author notes that competition in the international arena has forced each country to develop and take advantage of its economic idiosyncracies, it resources and its own organizational forms.

Argentina, which made great strides throughout the first third of the 20th century, suffered huge economic losses due to its dependence on exports, in this case raw materials, which were subject to fluctuations in foreign markets. Due to a global economic crisis, demand for raw materials fell and the Argentine economy went down the drain. Administrations that followed tried out a statist model that culminated in the rise of peronismo.

As we already know, the populist formula cou1dn't save the economy and instead helped create the runaway inflation that precipitated the changeover to the "shock therapy" free market economics of Carlos Menem's presidency. But if Menem managed to hold down inflation and allow the country to give a respectable macroeconomic performance, Argentina is still far from stable, suffering instead from high unemployment and economic doldrums.

South Korea's history is markedly different. In this case, what was a rural and backward economy in 1950 industrialized gradually, thanks to a forwardthinking government, which opened the doors to foreign investors. At the same time, the government also managed to favor the chaebol, groups of diversified companies owned by a handful of families. The government's formula for regulating and protecting private enterprise has helped this Asian nation grow and prosper. By 1990, South Korea had consolidated its power as an exporter of automobiles and technology.

And then there's Spain, which, until a quarter-century ago, was a country fairly isolated from the rest of Europe. The birth of a political democracy also precipitated an economic opening with the arrival of foreign capital and a domestic renaissance of economic development, transformation and diversification. Spain has changed gradually from a statist model to that of free market but with heavy govemmental regulation in a variety of sectors.

In Argentina, globalization opened the doors to the invasion of the multinationals, at a high price for local small and medium-sized businesses. In South Korea, the national diversified conglomerates, traditionally protected by the state, have been the big winners. In Spain, membership in the European Union has brought a boom of foreign investment as well as spurred Spanish companies to invest abroad--at the same time, the small and medium-sized business sector has gotten stronger, becoming a supplier to both foreign and domestic companies. The trajectory chosen by each country in this book has led to diverse forms of economic organization and the rise of different business groups.

Even though Guillen does show that there isn't one single path to development, he doesn't spend much time on one of the great debates of our time: the theme of cultural convergence. The controversy over the presumed Americanization of the planet, for example, often glosses over the fact that the United States, which is a big exporter of culture, is at the same time a great importer and assimilator of foreign cultures.

In any case, Guillen's position against globalization as a convergence mechanism and his challenge of market fundamentalism is original. He's no statist, but he does point out that in all three countries studied, the two that have reached more solid economic development--Spain and South Korea--applied neo-liberal policies with much greater restraint than Argentina. Indeed, in 1990, Argentina put into motion one of the most radical economic liberalization programs in the world. Opting for an intermediary formula between deregulated capitalism and statism, Guillen seems to think, as the ancient Romans did, that reason lies in the middle.