As a new world order takes shape, the debate over the merits of globalization are raging. Let’s hope sensible heads prevail.
The debate over globalization is not new. Yet up until recently, the battle lines were fairly clearly drawn. On the pro-globalization side stood the ‘establishment’ — governments, businesses and institutions that understood the macro benefits that globalization could unlock. On the antiglobalization side stood a mish-mash of anti-establishment groups — Occupy Wall Street protesters, authoritarian states, environmental activists and the like.
Today, everything has changed. Antiestablishment rhetoric has proven to be a winning political platform and globalization has become the sacrificial lamb. The election of Donald Trump, the vote for Britain to leave the EU, the rise of populist parties in Europe all point to a decidedly anti-establishment and anti-globalization fervor.
While that may be the subtle narrative in the West, it is not the view shared in the East. In the emerging markets, globalization continues to be seen as the key to development, growth and prosperity. New trade agreements are being penned, regional bodies are being formed and protectionist measures are being removed.
The blurred lines of support for globalization are not entirely surprising. That is because globalization has both good and bad implications. And depending on where you sit, it could be a massive opportunity or a terrible risk.
So, there is a yin and a yang to globalization. It allows for simultaneous access to technology which is wonderful for emerging markets but a massive risk for the mature markets as competition increases. It opens up global trade and investment, unlocking productivity in low-cost markets but eroding job markets in high-cost ones. It reduces consumer costs and improves standards — something the developing world dearly needs — but it also reduces profit margins and commoditizes products. Some see disruption where others see opportunity. Some see fiscal risk where others see stability.
There is also a yin and a yang to the current debate and shifting of lines on globalization. On the one hand, risk and uncertainly has skyrocketed as key markets retract and rethink their embrace of globalization. But it has also created some good: namely a healthy (and hopefully serious) public debate about what we want as nations and societies.
The concern is that, rather than create new ways of moving forward, the forces against globalization will instigate a retreat, swiftly and irrevocably removing all of the hard-fought gains that have already been won in the West and sapping hope for the gains anticipated in the East.
For KPMGs part, we hope that, sensible heads will prevail. We firmly believe that globalization and open markets are the key to providing the much needed infrastructure investment across the world and delivering it quickly and at the lowest cost possible. In the debate about the merits of globalization, this publication is decidedly pro.