There’s been a lot of talk these days that globalization is dead, even reversing — and for good reason. It seems that many of the factors that had been driving globalization have run out of steam. The growth of trade, which has long outpaced the expansion of the world economy, has slowed in recent years. Negotiations to forge a new global-trade agreement, the Doha Round through the World Trade Organization, have been stalled for years. Evolving technology is altering the manufacturing industry and convincing some U.S. firms to shorten supply lines and even “reshore,” returning factory work back to America and making production more local and less global.
But ignore the naysayers: globalization is very much alive and well. The White House, for instance is engaged in a renewed push for free trade with proposed pacts with the European Union and a collection of Asian and Latin American nations under the Trans-Pacific Partnership. More importantly, though, globalization is changing in key ways. It is knitting together a society that, more than ever, is truly global.
In the past, globalization was to a great degree a one-way street — from the developed to the developing world. Money and technology flowed from the U.S. and Europe into China, India and other low-income countries, drawing them into the global trading system. The process was the same with ideas (democracy, capitalism, Marxism) and culture (popular music, social networking, fast food, Hollywood movies). Emerging nations had few connections between themselves, and limited influence over world politics and finance.
Now, though, the rise of China, India and other emerging economies is shifting that old, one-way globalization into a new, vibrant multilateral globalization, with major consequences for how our world works.
Look at what’s happening in the global economy these days. The giant populations of China, India and Indonesia were participating in the world economy mainly as workers; they had meager economic power in their own right. Not anymore.
More than half of humanity now lives in South and East Asia, and Chinese and Indian consumers have become the most sought after in the world. Global commerce is changing as a result. General Motors, for instance, sells more cars in China than in America; Yum! Brands cooks up more Kentucky Fried Chicken for Chinese diners than Americans. Hotels and travel agencies from Paris to Bali are striving to accommodate Chinese and Indian tourists. The storied design houses of Europe have opened lavish flagship stores in Asia, which is set to account for more than half of the world’s luxury-goods market within the next 10 years.
Emerging-market companies are becoming equally important global players. Apple’s chief rival is not a European or even Japanese company, but South Korea’s Samsung; China’s Huawei is the new force in telecom. Firms from emerging nations are becoming more important global investors and job creators too. Chinese pork processor Shuanghu is buying America’s Smithfield; Ford offloaded Volvo to China’s Geely and Jaguar to India’s Tata. Companies like China’s Lenovo and India’s Wipro are true multinationals that employ people throughout the globe.
Most importantly, emerging markets are linking up to each other in ways never witnessed before. In the past, global trade tended to flow between poor and rich countries, but that has changed dramatically.
According to the Asian Development Bank, almost 56% of Asia’s exports went to markets within the region in 2012, up from 41.6% in 1990. In 1995, total trade between India and China was less than $1.1 billion; in 2012, it surged to almost $69 billion. Over that same time frame, total trade between China and Russia increased from under $5.5 billion to over $88 billion. Free-trade agreements among emerging economies have proliferated in recent years, especially within Asia.
Global politics and finance are no longer dominated by just a few powerful nations either. The G-8 has been replaced by the G-20 as the main global discussion forum, giving greater voice to nations like Turkey, South Africa and Brazil. Tiny Persian Gulf state Qatar is using its financial clout to muscle in on Middle East geopolitics. According to a recent survey from the Bank for International Settlements, China’s yuan entered the list of top 10 most traded currencies for the first time.
Similarly, culture is becoming increasingly globalized as well. How else can you explain grammar-school kids in the Boston suburbs dancing to a song in Korean performed by a guy named Psy? Or young people in Seattle or Denver driving to anime conventions in their Hyundais and comparing notes over dim sum afterward? Hundreds of Confucius Institutes promoting Chinese language and culture have popped up around the world. Bollywood flicks and Korean soap operas are wildly popular around Asia.
All of these trends are set to continue. Companies you’ve probably never heard of before might one day offer you a job; what the central bank of India does will impact your stock portfolio; your kids will be downloading music and movies from every corner of the world if they don’t already. Globalization is deepening, becoming more inclusive and more balanced between different parts of the planet. And it is introducing us all to new ideas, products and arts. Globalization is not just still with us; it’s just getting started.