Donald Sull of the London Business School has a column in tomorrow’s Financial Express on the viability of firms from developing or newly industrialized countries that pursue international expansion to compete with developed nation companies:

Recent Chinese bids reveal a much broader phenomenon: the rise of fiercely competitive companies from the crucible of emerging markets, including India, Brazil and Mexico as well as China. These emerging market champions pose a much greater threat than most western managers recognise…

The harsh environment overwhelms the majority of emerging market companies. The few that survive the brutal process of Darwinian selection, however, emerge as fierce competitors that excel at efficiency, innovation and risk management. Having conquered local markets, they have strong incentives to expand abroad. Global expansion allows them to tap new markets, spread risk geographically, build economies of scale and compete in many places with multinationals…

The most critical element of these emerging market champions is their diversity. Here the facile analogy with Japan is at its most misleading. Japan’s push towards globalisation was co-ordinated by the government’s trade ministry, targeted at a handful of industries, and pursued by similar companies coming out of the same cosy home market. Emerging market champions, in contrast, vary in headquarter country and industry as well as their strategies to go global…

Executives who lull themselves to sleep with reassuring bedtime stories about Japan may sleep well for now. But they risk waking up to a very unpleasant reality.

Read the full piece for examples of innovative firms and more myth-busting.

Jagdish Bhagwati dismisses Thomas Friedman’s “flat world” metaphor in a Wall Street Journal op-ed that ranges from Indian call centres to Boston radiology clinics, and from fair trade standards to trade adjustment assistance. It’s an excellent piece; read the whole thing.

[Hat tip: Drezner]

This is entirely unsurprising to anyone that’s followed the sweatshop debate for a while, but here’s more evidence that sweatshops are good:

We examined the apparel industry in 10 Asian and Latin American countries often accused of having sweatshops and then we looked at 43 specific accusations of unfair wages in 11 countries in the same regions. Our findings may seem surprising. Not only were sweatshops superior to the dire alternatives economists usually mentioned, but they often provided a better-than-average standard of living for their workers. [CSM]

Christian Science Monitor article here; academic paper here (pdf). Hat tip to Arnold Kling.

As you’ve no doubt already read, China has announced that the yuan will no longer be fixed at 8.277 to the dollar, revaluating it to 8.11. They also announced that the fixed peg will now be more flexible, allowing flotation within a band of about 0.3 percent. Whether that band is fixed or will crawl isn’t clear. The move seems popular:

China’s long-awaited decision to allow its currency to strengthen was greeted with widespread praise from its main trading partners in Southeast Asia and the Pacific, signaling a diplomatic triumph for Beijing despite the mixed economic consequences the move will bring to the region. [IHT]

Malaysia followed suit:

Malaysia’s announcement, made less than an hour after China said it would abandon its dollar peg, suggested that the Malaysian authorities had been waiting for the Chinese government to act before allowing the ringgit to float and reacted immediately in order to avoid a buildup of speculative pressure. [IHT]

Daniel Drezner has a link-rich post with details.