This change, coupled with a strong pro-commerce environment, caused global trade to increase fold between and , propelling economic growth in China, South Korea, Taiwan, Hong Kong and Singapore in the process. Now, many countries in Southeast Asia and other parts of the world are trying to replicate that success, but doing so will become increasingly difficult. The era of globalization is coming to an end, though its effects will not disappear entirely.
Trump, Trade, and the End of Globalization
Certainly, globalization has had its moment and could already be in decline, steadily replaced by its successor: a new age driven by advanced robotics, artificial intelligence and additive manufacturing. These technologies stand to dramatically lower the costs of production as they become more prevalent throughout the manufacturing process. Just as international trade was a familiar concept when globalization emerged, robotics is a field that has been around for some years.
Recent and impending advances in robotics, however, will expand its uses far beyond the few industries it currently dominates. By automating the assembly process, which is largely manual for many industries, robots could someday cause assembly lines to move away from cheap labor pools, undoing one of the biggest shifts underpinning globalization and eliminating many of the benefits that came with longer supply chains. Read: Apple supplier Foxconn replaces 60, humans with robots in China.
Progress in additive manufacturing, more commonly known as 3-D printing, will only further degrade the effects of globalization. Traditional manufacturing methods require separate molds to be made incurring additional capital costs for each product. But 3-D printers, which produce multiple designs on the same machine, do not. Because of this, economies of scale do not carry the same advantages with 3-D printing as they do in a world of traditional manufacturing.
As 3-D printing improves and is used more widely, it could reverse some of the specialization and standardization of supply chains that has taken place over the past few decades, allowing more parts to be made in fewer locations.
The shortening of supply chains in both distance and number of nodes will, in turn, reduce the volume of global trade as fewer countries and factories are involved in the production process. Returning to the example of the hypothetical laptop, companies may need to buy parts from only two countries as opposed to six since more components can be made at the same time, in the same place.
Of course, it would be dishonest not to acknowledge the constraints still facing these emerging technologies.
Free Trade: The Beginning of the End for Globalization
For instance, 3-D printing will reach its full potential only when a single machine can make products comprising multiple materials, something that could take years if not decades to achieve. Moreover, printing metal parts is still too expensive, slow and inconsistent to be widely applicable.
Robots, meanwhile, need to have greater dexterity and more capable and quick programming to have the greatest impact on manufacturing. The energy costs of operating a factory largely made up of robots are also significantly higher, and because industrial equipment lasts a long time, its replacement with robotic alternatives will be slow. Together, these factors suggest that the coming transition will be gradual, not abrupt.
As the next industrial revolution unfolds, the model for economic growth that arose alongside globalization will offer a less certain path toward development. Though new technologies will not completely erase the benefit of cheap labor, they will reduce the number of opportunities countries have to industrialize, diversify and grow their economies.
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Meanwhile, trade will become more regionalized as production migrates back toward consumer countries. Nations with high education levels but comparatively cheap wages, such as Mexico, will replace their low-wage peers as the hubs of new industrial manufacturing. If technology improves enough to bring costs so low that it does not make sense to ship goods from distant places — admittedly a difficult benchmark to reach — trade blocs such as Nafta could become virtually self-sufficient.
Economic crisis and global disorder – An increasingly chaotic globalization
Read: Donald, Hillary and Bernie are lying to us about those lost manufacturing jobs. Not surprisingly, according to IMF data in October , global trade growth was projected to have slowed to 3. If populist forces come to power in most major economies, consolidate their positions, and refuse to compromise, potential impacts could include:. Greater consideration should also be given to the insurance coverage in place that helps transfer risks associated with more protectionist trade regulations and a more volatile geopolitical landscape for overseas operations.go to site
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Populist forces have recently defied expectations. Businesses should look beyond consensus forecasts and prepare for a broader range of potential outcomes and operational risk scenarios. We're sorry but your browser is not supported by Marsh.
Is This the End of Globalization? The movements of people in recent decades has pushed the political limits of globalization in the rich world. The evidence is everywhere. The neofascist Golden Dawn party has held Nuremberg-style rallies in Greece, amid ongoing economic strain and the more recent migration crisis.