the central theme of the World Economic Forum annual meeting in Davos this year
in 2019 is globalization 4.0 so what is globalization 4.0 you know for me it's a
very interesting subject because I've been studying and writing about
globalization for about 30 years so you know if you look at the march of
globalization the globalization 1.0 was actually the globalization of you know
in search of markets which is in looking for new markets like the British East
India Company or looking for resources the second era we can say globalization
2.0 is what started around 1980 which is really outsourcing of manufacturing to
Asia to China so that's we can say globalization of manufacturing added on
as a second layer on the cake of globalization above globalization of
markets the third layer on that cake was the globalization of R&D that took place
starting from around 1990 which is really companies like Microsoft and
others IBM building R&D centers GE not just you know in their home countries at
the headquarters but in other places around the world
the fourth layer now that's globalization 4.0 the layer on the cake is really actually the era of digital technologies and how these digital
technologies are actually affecting permeating and transforming all of the
first three layers so that's the new era of globalization now how is this new era
of globalization affecting actually inter-linkages among countries the you
know many analysts including in fact The Economist
just the latest issue miss interpret what's happening on the in terms of
globalization and call it really the transformation of globalization as
economists puts it into 'slow-balization' I think that's absolute and total
baloney what has happened is that global connectedness is actually not only
strong it's becoming but global connectedness by trading
goods is the one that's slowing down but the increasing connectedness is by
investment by capital by movement of know-how by movement of data so it's
really connectedness by data rather than connectedness by goods by trade in goods
in fact McKinsey estimates that the economic value added to worldwide GDP by
global traded goods already up by M data is global flows of data already exceeds
the economic value added by trade and goods so actually the last thing we
should do is to bemoan the decline of trade and goods and we should say
globalization is dead but that's the old globalization long live globalization and
that is the new globalization examples of the new globalization look at Tesla
for example the building of big factories in China so now you have not
the export of Tesla's from the u.s. to China even if in fact China were to
eliminate all tariffs on the import of cars into China it would not make sense
for Tesla to be exporting cars from China that would be trade in goods
rather it would be to build a Giga Factory in China and to export data
export know-how export technology and then manufacture in China for China
because why would you want to incur a thousand dollars in shipping costs when
it's completely unnecessary and makes you uncompetitive. Another example of
the new era of globalization think about you know Netflix or Amazon video you
know and Game of Thrones so when somebody in India or China downloads
Game of Thrones that's digital globalization then of course if we look
at other developments other examples of globalization is for instance global
platforms whether it's in the form of Facebook or Android or whatsapp or
Instagram and of course the new era of digital globalization is
so the traditional you know trade in goods and trade in services that becomes
a whole lot more efficient because customs clearance or coordination now
can take place through you know paperless mechanisms through blockchain
it's globalization 4.0 good I think the answer for that depends very much on
what countries we are talking about because you know if we take the rich
economies in the rich economies you're talking about slow growth and then what
happens is that in the new era of globalization 4.0 the returns to
knowledge and the returns to people who create that knowledge become very high
so you have superstar firms with superstar employees who are paid like
crazy but the returns to labor go down and so that's of course in the rich
economies it leads to creating increasing inequality and we all know
why that is pretty nasty in many ways on the other hand if you look at emerging
markets developing economies they're the vast chunk of the population has
historically been actually unconnected to the financial sector to education to
health care and so on and has that you know bottom of the pyramid or even the
middle of the pyramid gets connected now to the rest of the world get connected
to the online education gets connected to telemedicine and health care apps
gets connected to FinTech apps then suddenly actually the world opens up for
those hundreds of millions of people in emerging markets and again the labor
costs they're up there low so therefore it will be quite some time before AI can
begin to substitute in a big way now for what labor can do so I think on the
whole the globalization 4.0 it's a net plus for the global economy because hey
80% of the world population lives in emerging markets and 40% of the world's
GDP emerging markets but at the same time
globalization 4.0 is not necessarily good for all countries and it's
particularly you know let's say important in in with pluses and minuses
but different segments of society to the rich economies that every one of us has
to watch out for and try to do something to counter the nasty effects
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