From the old industrial belt of the United States to the deindustrialized interior of Europe, in recent years many of the debates on economic policy have focused on the victims of globalization in the rich world and the political populism they have fueled. And if that were a thing of the past?
In a new report, researchers at the McKinsey Global Institute argue that even before US President Donald Trump launched his trade wars, the era of moving abroad and the disruption that affected many industrial cities of the advanced world had ended. They also predict that the change in trends in technology and manufacturing means that advanced economies, including the US, may be better positioned to benefit from a new wave of globalization that is already underway.
“We have already started the next chapter of globalization and we think it is important that everyone – companies and authorities – become aware of which chapter we are in. Do not make the mistake of thinking that the world is like in the 1990s and early 2000s, “said Susan Lund, co-author of the report.
The work of the McKinsey team comes before the World Economic Forum in Davos, to be held next week, whose agenda is headed by the future of globalization and its different new versions. It is also part of a wider debate about how many changes Trump’s trade wars cause in the global economy.
The tariffs imposed by Trump in the last 12 months on imports from China and aluminum, steel, washing machines and foreign solar panels have led many US trade partners. to respond with its own import charges. As a result, many companies have begun to reexamine and even modify their international supply chains.
However, instead of causing a new change, tariffs simply accelerate one that began in the mid-2000s and has been hidden among the economic consequences of the 2008 financial crisis, the authors of the McKinsey report say.
For the study, McKinsey researchers analyzed the supply chains of 23 industries in 43 countries between 1995 and 2017.
During this period, they determined that the large emerging economies were playing an increasingly important role. The share of emerging markets in global consumption grew around 50 percent in the last 10 years, and 40 percent of exports from advanced economies now have emerging economies as destinations.
Labor costs, technology
The researchers also found that labor costs were becoming less important in decisions about where to locate production and that investment in intangible assets such as intellectual property and research had more than doubled since 2000, from 5.5 to 13, 1 percent of the income.
Those conclusions, said Lund, indicate why the next wave of globalization strengthens the US economy.
In the last few years, manufacturing employment in the US has grown. But the manufacturing that returns to the country uses much less manpower than before. “The work is going to be different,” Lund said. “I do not believe that millions of jobs will be created in manufacturing production lines.”