x Abu Dhabi, UAETuesday 25 July 2017

You say potato, I say reverse globalisation

There are some who say that globalisation is in reverse, that declining global trade and rising protectionism are rolling back what many saw as an inexorable trend. Randel Carlock disagrees.

There are some who say that globalisation is in reverse, that declining global trade and rising protectionism are rolling back what many saw as an inexorable trend. Randel Carlock disagrees. Prof Carlock is the Berghmans Lhoist Chaired Professor in Entrepreneurial Leadership at Insead and director of the Wendel International Centre for Family Enterprise. We spoke yesterday and he challenged the notion that the economic crisis has turned the tide of globalisation. "I don't think you'll see globalisation reverse," he said. "You'll see a reduction in excesses and things that weren't profitable businesses." But globalisation, he reminded me, is not a new phenomenon. It's been around for 100 years or more. And technology has made the world more interlinked in a way that economic recession won't undo." Teenagers in Tokyo, he said, often know about what's going in Manhattan before New Yorkers do. You don't have to go too far to get a countervailing opinion. Fellow Insead professor Helmut Schutte, who is Senior Affiliate Professor of International Management at the French business school's campus in Singapore, told me earlier this month that growing protectionism was evidence of a retreat in globalisation. Yes, globalisation was an old phenomenon, he said, but one that ebbs and flows. A century ago, he noted, the world's economy was even more globalised, as colonialism linked economies under the aegis of a handful of industrialised powers. Then came the First World War, the Great Depression and the Second World War, and globalisation was rolled back. Globalisation recovered thanks to international trade agreements and technology, but it is by no means inevitable, he said. Clearly, this is a semantic debate that will require a better definition of the term globalisation. Prof Carlock said countries will now have to focus on what their natural competitive advantages are, like mining coal as opposed to, say, smelting aluminium, and trade for the rest. Bad news for developing countries like this one hoping to diversify away from raw materials. Companies, too, will have to stick to their knitting, focusing on their niche and outsourcing the rest. Whatever its impact on globalisation as a trend, global trade is collapsing. China's 26 per cent drop in exports and Germany's 35 per cent contraction in industrial orders demonstrate the trend. While the dollar slides, Angela Merkel is determined not to undermine the value of the Euro by borrowing and spending to alleviate the pain, reportedly saying that a strong Euro is in the interest of Europe. Meanwhile, statistics suggest inflation in the EU is actually easing for the kind of transactions consumers notice most. waynearonold@thenational.ae