by Events of the previous year, such as Brexit or the election of Donald Trump, seem to have marked the end of globalization as we know it. The world development is set to change. Will we observe the rise of multiple regional powers? Credit Suisse Research Institute in their latest report takes a look at the shift towards a multipolar world. The End of Globalization? The Credit Suisse Research Institute's "Getting over Globalization" report suggests three possible scenarios resulting from the recent events: Globalization continues along its well-trodden path, The world becomes multipolar, or Globalization comes to an end. Michael O' Sullivan in his recent video points towards the second scenario – namely multipolarity: The rise of regions that are now distinct in terms of their economic size, political power, approaches to democracy and liberty, and their cultural norms. We can observe changing dynamics of world order – steadily moving away from European-US hegemony to a more regional power-play story.
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Events of the previous year, such as Brexit or the election of Donald Trump, seem to have marked the end of globalization as we know it. The world development is set to change. Will we observe the rise of multiple regional powers? Credit Suisse Research Institute in their latest report takes a look at the shift towards a multipolar world.
The End of Globalization?
The Credit Suisse Research Institute's "Getting over Globalization" report suggests three possible scenarios resulting from the recent events:
- Globalization continues along its well-trodden path,
- The world becomes multipolar, or
- Globalization comes to an end.
Michael O' Sullivan in his recent video points towards the second scenario – namely multipolarity: The rise of regions that are now distinct in terms of their economic size, political power, approaches to democracy and liberty, and their cultural norms.
We can observe changing dynamics of world order – steadily moving away from European-US hegemony to a more regional power-play story. Multipolarity is most visible in economic terms, with the steady shift eastward in the economic center of gravity of the world to an extent that some writers now describe a process of "easternization." The old political order in the developed world, on the other hand, is causing either apathy, rage or political entrepreneurship. In Europe, there has been a marked and apparently structural decline in trust in the European Union and growth in the EU pessimism.
The Structure of Multipolar World
Three significant and easily identifiable poles are emerging: the Americas, Europe and China-centric Asia. Though legacy power players such as the USA, the UK and Japan continue to dominate, scoring relatively higher on most indicators, we see Japan increasingly losing steam here, given that the country continues to be challenged by a massive and tough economic rebalancing effort. The performance of the small developed countries group is noteworthy, plausibly offering competition to larger powers. Larger growing emerging markets (Russia, India, Brazil, Chile and South Africa) are identified as poles that are significant but have yet to realize their full potential.
Mapping pole strength
* Representative euro area including Germany, France, Italy and Spain
** Luxembourg, Singapore, Switzerland, Hong Kong SAR, Belgium, Ireland, Denmark, Iceland
Source: Credit Suisse
A Global Shift
An interesting and intuitive way of seeing how the world has evolved from a unipolar one to a more multipolar one is to look at the location of the world's 100 tallest buildings. The construction of skyscrapers (200 meters plus in height) is a nice way of measuring hubris and economic machismo, in our opinion. Between 1930 and 1990s, the USA dominated the tallest tower league tables, but by the 2000s there was a radical change, with Middle Eastern and Asian skyscrapers rising up. Today about 50 percent of the world's tallest buildings are in Asia, with another 30 percent in the Middle East, and a meager 16 percent in the USA, together with a handful in Europe. In more detail, three-quarters of all skyscraper completions in 2015 were located in Asia (China and Indonesia principally), followed by the UAE and Russia. Panama had more skyscraper completions than the USA.
Migration has become one of the most contentious facets of globalization. In particular, forced migration has become a grave political and geopolitical question. Today, the global migrant stock (as a proportion of total world population) is at its highest in 25 years (3.3 percent in 2015 versus 2.9 percent in 1990, 2.8 percent in 2000 and 3.2 percent in 2010). Historically, a great deal of migrant flow has occurred from poorer to wealthy countries. More recently, however, the pattern of flows has changed – between 1990 and 2015, outward migration from Europe to Latin America has risen 4.0 times and to Asia by 3.4 times. Similarly, migration from North America to Africa during the same period has jumped by 4.2 times, to Asia and Latin America by 2.5 times. It is interesting to note that, during the same period, within-region migration has been fairly stable.
Another rising form of people flow is tourism. In many emerging economies, "foreign travel" is one of the most prized yet under-penetrated forms of consumption. In 2015, international tourist numbers hit a level of close to 1.2 billion people, twice the level reached in 1995, while tourism expenditures have trebled in the same time period. In dollar terms, Chinese tourists spend more than tourists from the USA, Germany, the UK and France put together.
What is more, Pew Research Center studies also show a substantial change in middle class. The "American Middle Class Is Losing Ground" report highlights the "squeezed middle" where the number of people considered to be "middle class" (roughly 120 million people) is now outnumbered by the combined lower and upper classes and, importantly, the share of total income of the middle class has fallen from 62 percent in 1970 to 43 percent in 2015. Independently, the 2015 Credit Suisse Research Institute Wealth Report found that America's wealthy middle class (close to 92 million people) is now surpassed by the estimated number of Chinese middle class.