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Executive Interviews: Interview with Ravi Ramamurti on Bottom of the Pyramid
November 2008
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By Dr. Nagendra V Chowdary
Dr. Ravi Ramamurti CBA Distinguished Professor of International Business & Strategy, and Director of the Center for Emerging Markets at Northeastern University. 
Historians will probably regard
America's greatest gift to the world as
the example set by its own
democracy, however imperfect it be,
and its commitment to free-market
capitalism. America's insistence that
its post-World War II allies promote
democracy and capitalism resulted in
the economic miracles of Japan,
Germany, South Korea, and Taiwan
that later many formerly Communist
countries to embrace similar policies.
Despite its many flaws, there is little
doubt that market-based competition
has done a great deal to lift millions
out of poverty wherever it was
practiced. At the same time,
democracy has provided political
stability to the countries that
embraced it, not just in Europe,
where, for instance, another major
war between France,
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Germany, and
England is no longer conceivable, but
also in countries with no prior
experience with democracy, such as
Japan, South Korea, and Taiwan.
Hopefully, China will also embrace
its own version of democracy in the
not-too-distant future. Looking ahead, at the dawn of the 21st
century, one can already see signs that
America's role in the global economy
is declining while that of emerging
economies, particularly the nonidentical
twins of Asia, China and
India, is rising. I do believe that the
global economy's center of gravity is moving from the West to the East. I
agree with those who argue that the
20th century was America's and the
21st century will be Asia's. As the relative economic clout of
Europe and the US in the world
economy declines, the advantages
enjoyed by multinational firms
headquartered in those countries will
also decline. By no means does this
mean that they will become
unimportant firms. But if by
"corporate imperialism" you refer to
the power of Western firms to drive
technical and economic progress in
other parts of the world, then, yes,
that will be less the case going
forward. That said, it would be foolish to
assume that Western firms and
economies will no longer matter.
Quite the contrary, given their human
resources, the quality of their research
and educational institutions, and
their large numbers of high-income
consumers, many cutting-edge
innovations of the future will
continue to come from the West. -
A lot has changed in the last
hundred years of corporate history.
What according, to you, were the
defining moments of that history? In
other words, what were the strategic
inflection points / touch points
during the last hundred years of
corporate history?
I have already touched on some of the
defining moments of the last
century—the Great Depression, two
World Wars, the Cold War, and the
rise of America in the world economy
and world politics. On the
technological front, therewere several
key milestones, but the most
revolutionary developments were in
the fields of medicine, transportation,
communications, and computing.
These technological developments,
coupled with a much better
understanding of how public policy
can promote economic growth and
development, helped bring about the greatest improvement in the standard
of living in history. We think nothing these days of
countries growing at 5% or 10% per
year. Indeed, in China and India,
there would be consternation if the
economies do not grow at least at 7-
8% per year. Who remembers that in
the first half of the 20th century India's
GDP grew at about 1%, barely enough
to keep up with population growth?
We have today an unprecedented
capacity to transfer economic ideas,
policies, and lessons from one part of
the globe to another, and that is one
reason why late-industrializing
countries like China and India are
able to grow so much faster than the
developed countries ever grew when
they were industrializing. -
What lessons do the last hundred
years of business offer to the new
businesses?
There are many lessons. The first
lesson is that business people must
not ignore the lessons of history. One
of my favorite quotes is attributed to
Mark Twain, who said (I paraphrase),
"History does not repeat itself, but
sometimes it rhymes." As America
dealt with its financial crisis of
September 2008, one could see
excesses of the kind that we had seen
earlier in the US savings and loan
crisis of the 1980s, in post bubble
Japan, in the Asian crisis of 1997, and
in the dot com bubble of 2000. Yet,
firms and governments often repeat
the same, or similar, mistakes. A second lesson is to recognize that
the world economy can change quite
dramatically over long periods of
time. The rise and fall of great powers
in the last century is one example.
Similarly, the rise and fall of great
companies should come as no
surprise. For the dispassionate
analyst, the challenge is discerning
when the future will be an
extrapolation of the past and when it
will not be. For incumbent firms, the
lesson is to not let success breed complacency, and for new firms the
lesson is to recognize that
technological or structural change can
be its friend. Think of the enormous
market value created by upstarts like
Google, relative to incumbent giants
like Microsoft, or ArcelorMittal
relative to US Steel, and TCS relative
to Accenture or EDS. The list goes on
and on.
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