Post Globalization Issues and Power shift of the Century

By Farhan Ahmed
Visiting Faculty at Bahria University

Business Studies Department, BUKC 1

Globalization
 We can define globalization as the increasing
interdependence and integration of
economies, markets, nations, and cultures.
 OR
 Globalization envisages a borderless world or

seeks the world as a global village.

 OR
 Globalization is the flow across national

borders of trade, finance, people, and of

course ideas.
Post Globalization Issues
 The component parts of globalization—the
flow of ideas, people, and money— are
retreating, and the United States is now
erecting barriers to trade with Europe and
Asia.
 At a more sinister level, technology—which

was once regarded as an outright positive—is

breeding more-sinister threats in cyberspace
and in new forms of warfare, such as cluster
drones.
Post Globalization Issues
 We will go through a period of next 5 to 10
years until we get new frameworks, new
ideas.
 The world economy has to digest a number of

enormous imbalances.
 Indebtedness is the highest since the second

world war.
 The power of central banks is enormous.
 The governments have to rediscover the

recipe for organic growth.

Power shift of the Century
 Era of globalization is ending and giving way
to new power centers.
 Globalization world was where

interconnectedness and the people used to

do the same in terms of law and approaches
but now we are witnessing the clash of
civilizations.
 We are now going to a multipolar world where

at least three big regions do things

increasingly differently.
Four Challenges Ahead
 Political Discontent

 Economic Growth

 Debt and Central Banks

 Geo Politics
Political Discontent
 The first problem relates to political
discontent, expressed initially through Brexit
and then in the US presidential election of
2016. It is now cropping up in Europe in the
form.

 For example, of the rise of the right-wing

party Alternative für Deutschland (AfD) in
Germany
Economic Growth
 The second challenge is economic growth.
Since the turn of the twenty-first century,
economic growth worldwide has been
running out of steam; only stimulants in the
form of very high levels of debt and
aggressive central bank action have kept it
going.
Debt and Central Banks
 The two obstacles are debt and central banks.
It seems the world has learned little from the
2009 global financial crisis.

 More importantly, many of the institutions set

up in the twentieth century—the World Bank,
IMF, World Trade Organization (WTO), and
North Atlantic Treaty Organization (NATO)—
may become defunct.
Geopolitics
 Geopolitics will be dominated by three
significant players: Chinacentric Asia, the
Americas, and Europe.

 India may constitute a fourth pole, but its

time has not yet arrived.

 These will be the players in the Great Game of

the twenty-first century.
Geopolitics
 If the world comes to be dominated by three
great intercontinental powers, several things
may happen. Countries that fall between the
cracks of these great power blocs, such as the
United Kingdom, Japan, Russia, and Australia,
will be forced to redefine their place in the
world.
 Countries that lack the economic power to
match the military might of the big three, such
as Russia, may have to rethink their national
development models.
What is Changing?
 We are in the first phase of De-globalization.
 There is a paradigm shift that would see the

disintegration of the world order.

 The election of Donald Trump, Brexit, and

new governments in Mexico and Italy, to

name a few.
 These events simply represent the smashing

of the old order; they are the detonators, the

wrecking balls of the system that has grown
up since the fall of communism.
What is the Levelling?
 The Levelling is about how the center of
gravity in our world, societies, and economies
is changing.

 The confusion those changes create, and the

ideas that will help bring new structure to
what is a disordered world.

 The West appears to be in decline and the

rise of liberal democracy is slowing.
Is the world really out of control?
 In absolute terms, world GDP and wealth are
at all-time highs, unemployment is at a
decade low in many large countries,
technological advances are spellbinding, and
there has been a sharp fall in poverty at a
global level in the past twenty years.

 So it seems that things are really not so bad.

Is the world really out of control?
 However, if we scratch beneath the surface, it all
looks very different. The world economy has so
strained and contorted itself to arrive at a post-
crisis recovery that debt levels and intervention
by central banks are at record highs.
 Though growth through 2018 has been positive

despite trade tensions, forecasts from bodies like

the IMF and the US Federal Reserve show that
trend growth—long-run average rate of growth—
in the next five to ten years will be considerably
lower than the average of the past thirty years.
Old world is receding
 The way we communicate is also changing. In 1990
close to 270 million letters passed through the US
Postal Service on a daily basis, but this had dropped
to close to 150 million by 2014. At the same time,
the number of email accounts globally has risen
from close to 3 billion in 2011 to nearly 5 billion in
2017.
 On a similar trajectory, social media users have
grown from fewer than 1 billion in 2010 to 2.5
billion in 2017, and the average time spent on social
media has risen from 96 minutes daily to 118
minutes daily in 2016
Pessimism
 In 2007, less than 20 percent of people in
European countries were pessimistic about
the European Union, but this has now risen to
close to 35 percent, led by Germany and
France.

 Nearly half (49 percent) of Europeans felt that

their voice doesn’t count in European affairs.
What is the new normal?
 In order to answer this question we have to
go all the way back to world war II and look at
the growth environment.
 After the world war II the world’s productive

capacity was wiped out.

 The US was really the only major producer

that left standing.

 That created what we call a supply-constraint

growth environment.
What is the new normal?
 During the 1990s we had demand growth
constraint environment where rather than
fighting inflation we were fighting deflation
because there wasn’t enough demand.

 We saw successful growth strategies like

exported growth to reach these wealthy
market in the United States and Europe.
Post Covid Wolrd
 We have seen rapid increase in some dimensions
of globalization.

 For example the digital classes are the reflection

of the rapid acceleration of digital connectivity
and that’s a crucial dimension of globalization
increasing.

 There has also been increase in some other areas

of globalization such as scientific collaboration.
Post Covid Wolrd
 There is also increase in other dimensions like
over 100 countries are under dire economic
stress.

 Some dimensions have slowed down

dramatically such as trade, travel, and tourism.

 There was really a peak supply chain

fragmentation in 2019 that will now accelerate.
What is the future?
 Technological Globalization will be rise.

 Cultural Globalization will recede.

 Economic Globalization has already

stagnated.

 Political Globalization is declining.

Conclusion
 COVID-19 won’t end globalization instead
different dimensions of globalization will take
new forms.
Thanks

2
4