The Threat from De-Globalization

Comments Off on The Threat from De-Globalization
The Threat from De-Globalization

Although globalization began in the 1970s and grew slowly throughout the 1980s, it was the fall of the Berlin Wall in 1989 that sparked its tremendous expansion. 

In the process, the number of people participating in the global free-market has more than doubled, growing from 2.7 billion to 6 billion.  One side effect was the creation of 40 million new jobs in the United States alone. 

According to Gary Hufbauer of the Peterson Institute, "Globalized trade has made America $1 trillion richer every year."1  By the end of 2007, right before the recession began, the Dow Jones Industrial Average had soared from under 800 in 1982 to over 14,000.

Globalization created a worldwide surge in economic activity over the past three decades as it brought together capital and labor, producers and consumers, and emerging and mature economies.  Hundreds of millions of people around the world have moved out of poverty, with standards of living rising dramatically. 

At the same time, hundreds of billions of dollars in shareholder value has been created as globalization amplified economic growth and individual opportunity.  Because of globalization, the past few decades have seen a growth in trade that has outpaced economic growth — and, globalization has proven to be a wealth-creating machine.

As explained in previous issues of Trends, globalization is absolutely crucial to unleashing the economic potential of the Fifth Techno-Economic Revolution.  In fact, without the continuing advance of globalization, North America, South Korea, Japan, and the EU will be crushed by the demands of their aging populations.  Meanwhile, India, China, Latin America, and Africa will never realize their full potential and billions will languish in poverty.

Unfortunately, the Great Recession appears to have triggered trends toward what we call "de-globalization."  There are many symptoms, including some that mirror the ill-fated actions taken after the stock market crash in 1929.  History shows that the 1929 financial panic was transformed into the Great Depression of the 1930s by disastrous protectionist policies, exemplified by the notorious Smoot-Hawley Tariff Act.  Those decisions touched off a tariff war that paralyzed global trade and made recovery next to impossible. 

Learning from history, policy makers have so far avoided a repeat of those suicidal actions.  But, despite the relative scarcity of explicit anti-globalization policies, we've seen the slow de-globalization of economic activity. 

The International Monetary Fund (IMF) is projecting global real GDP growth to drop to 3...

To continue reading, become a paid subscriber for full access.
Already a Trends Magazine subscriber? Login for full access now.

Subscribe for as low as $195/year

  • Get 12 months of Trends that will impact your business and your life
  • Gain access to the entire Trends Research Library
  • Optional Trends monthly CDs in addition to your On-Line access
  • Receive our exclusive "Trends Investor Forecast 2015" as a free online gift
  • If you do not like what you see, you can cancel anytime and receive a 100% full refund