Will globalisation continue?
Globalisation is sometimes seen as a modern phenomenon. But of course it began when our ancestors left Africa and started spreading out over the globe and, as the explorer Thor Heyerdahl proved, our ancestors were able to sail the Atlantic in mere papyrus boats.
In the past, phases of global growth have often ended in geo-political crisis. Good examples would be the fall of the Roman and the British empires and even apparent stability can end in financial and social disorder.
To summarise, upswings have generally been driven by technological advance, the downswings by social and economic failure.
Was the last wave of globalisation, which covered the 1990s and early part of the 21st century – and helped to reduce poverty levels across much of the world, any different?
The World Bank report on ‘Economic Growth in the 1990s: Learning from a decade of Reform’ has a 100 or more tables and figures to explain the complexities behind economic growth over this period.
However, I will simplify it. The upswing was driven by two things (apart from greed and credulity which are common factors through the ages) – the creation of increasingly opaque and complex financial instruments and the global internet. This latter provided the capability for a worldwide market of instant and repetitive trades.
With the collapse of the global banking system and the resulting national rather than international bail-outs, the big question that bankers, politicians and economists are still asking themselves is, will the global financial system survive? Or will more protectionist national centered systems take over?
I believe what changed in this latest downturn was the interconnectedness of the world. We are now, because of technology, all more intimately connected than we have ever been. That connectedness will be very hard to break. Markets have opened in ways that would have been unimaginable not long ago, and information flows instantaneously and globally.
Even if financial protectionism is put in place it is hard to see how the march of globalisation can now be halted. The problems confronting the world are increasingly global, from climate change to terrorism, and they need a global response. For those of us whose life has been spent building ever more connected environments that spells challenge and opportunity.
But it also means that I believe globalisation will only continue. We have gone too far, despite the desire the desire for many to go back to the ‘old ways’. Or have we?