We recently attended TiEcon 2007, held May 18-19, 2007 in Santa Clara, CA. At the pre-conference Charter Members-only event, Dr. Laura Tyson, University of California—Berkeley, talked about globalization of the economy.
Globalization is a great moderator; the GDP per capita is growing globally. There is more equal growth across the world. This also has a great decoupling effect—the United States will not lose its leadership anytime soon, but its influence on the rest of the world will diminish in this century, despite what leaders in Washington believe. Global interdependence is healthy.
Globalization in the 19th and 20th centuries was driven by the railroad, steamship, and underwater cables, which led to massive trade on a global scale. Globalization can be related to creative destruction. Yet, 90% of Americans fear their jobs will be outsourced/offshored and only 30% feel globalization is good, and moves are afoot in Washington to limit imports and impose levies on them—all in the name of keeping jobs in-shore and reducing trade deficits.
Globalization creates losers and winners and there is a role reversal between the developed (G7) countries and emerging economies. Emerging markets comprise 80% of the world’s population, control 40% of the world’s exports, and 96% of all new workforce in 2005-2010 will be created in emerging markets! Threats to globalization are not the economy, but politics.
Footnote: Chindia or Indina
It is noteworthy that in 1800 China and India accounted for almost 40% of the world’s GDP. Today, despite their robust growth and exploding economies, their combined GDP is less than 7% of the global GDP. However, by the year 2050, the leading world economies are expected to be China, the U. S., and India—in that order.