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Globalization has peaked


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2018 Oct 7, 4:37am   804 views  0 comments

by MisterLefty   ➕follow (1)   💰tip   ignore  

"The last 30 years we've been living and breathing globalization as if it's an inevitable force," but now, it seems the six-decade-long bubble has finally popped.

The period of hyperglobalisation that began in the early 1990s may be drawing to a close. Should deglobalisation come to pass, it could have far-reaching consequences for countries, corporations, and investors.

Loosely defined as the free flow of trade, capital, people, technology and ideas across national borders and regions, globalisation has long been associated with economic development, increased opportunity, and progress. Now, however, it is increasingly viewed as a threat. Indeed, anti-globalisation sentiment was a significant contributor to the two major ballot box surprises of 2016: the UK’s vote to leave the European Union, and the election of Donald Trump as President of the US.

First wave of globalisation (1850s to 1914): The first ‘Golden Age’ of globalisation, characterised by industrialisation, urbanisation, relative peace, new transportation and communications technologies, and a stable monetary system based on the gold standard. Global trade reached 38% of global GDP by 1914.

Protectionism (1914 to 1945): World War I brought on a sharp decline in global trade, followed by the end of the gold standard as an international currency system and the introduction of protectionist and isolationist policies. Global trade fell to just 7% of GDP by the end of World War II.

Second wave of globalisation (1945 to 1990): Global trade grew rapidly with the post-war economic recovery, and again in the 1970s. The Bretton Woods accord stabilized the global monetary system, along with new institutions and agreements such as the International Monetary Fund, the World Bank, and the General Agreement on Tariffs and Trade. Improved transportation (commercial aviation, container shipping) reduced trading costs. Global trade rose to 30% of GDP by 1980.

Hyperglobalisation (1990 to present): The fall of the Soviet Union, privatisation, deregulation, and huge advances in information and communications technology (ICT) ushered in a new era of rapid growth in global trade and investment. New trade agreements included the World Trade Organisation, joined by China in 2001, the North American Free Trade Agreement and the European Union’s Maastricht Treaty.

Among the clear beneficiaries of hyperglobalisation are the emerging economies, which have become increasingly integrated into more and more complex global value chains. Their role in processing raw materials, and in value-added manufacturing and services has grown rapidly.

https://www.investmentbank.barclays.com/our-insights/the-end-of-globalisation-as-we-know-it.html

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