Globalization: The Wellspring of Global Economic Growth

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Globalization: The Wellspring of Global Economic Growth

We’ve just been through the most serious financial and economic crisis since the integrated global economy began to emerge in the early 1990s. In earlier eras — even though international trade has inevitably suffered anytime a major national economy weakened until recently — recessions have been primarily national or regional in nature.

But in 2008, we saw the world's financial markets fall with amazing speed, triggered by a panic that started in the United States. Many were surprised, because it was widely believed that high-growth emerging markets would cushion the global slowdown caused by the developed economies. However, as the Great Recession unfolded, the emerging economies suffered from declining trade, shrinking capital flows, and slumping commodity prices just as the Trends editors predicted. More recently, creditor nations like China have been hit hard by an EU-centered debt crisis. As a result, the widely-held theory of “economic decoupling” has ended up shot full of holes.

A generation ago, this was unheard of. During the Cold War, the economic and political world order was characterized by a static tension between two superpowers; the United States and the Soviet Union. This ended with the collapse of the Soviet Union in 1991, and opened the world to the dynamic and interacting forces of a free market. Widespread changes in policy encouraged free trade, while competition paved the way for a more efficient and robustly growing economy. This opened the door to the possibility that free-market capitalism could spread to any willing nation, bringing with it a higher standard of living, education, better health care, and all the benefits that have been enjoyed in the developed Western world.

The model for this type of economy — and the benefits that it confers on nations that embrace it — is the American way of life. America has provided the model for the rest of the world to follow, because American products have proven to be the ones that people across the globe want.

The key technologies enabling and accelerating globalization are computerization, miniaturization, digitization, satellite communications, fiber optics, and the Internet. Those are all tied together under the integrating influence of the World Wide Web, while competitiveness is defined by speed. Speed defines the winners in commerce, travel, communications, and innovation. The speed with which companies can innovate defines whether or not their products are disruptive enough to become sustainable winners on a global scale.

A perfect example of this is digital photography. When it first came onto the scene, digital cameras were not very good...

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