On September 20, 2010, the World Affairs Council of Charlotte hosted a Speaker Series program and luncheon with Adrian Wooldridge, Management Editor and Wilson Columnist for the Economist Magazine (London). The main topic of discussion at this program was “The New Face of Globalization.”
Dr. Wooldridge began the discussion by stating that the world has recently been going through a time of widespread crisis, which has been not only economic, but political, international and ideological as well. According to Dr. Wooldridge, this crisis has been the biggest test globalization has been given since the 1930’s. Instead of returning to protectionist ways, however, globalization has passed this test and international trade has increased. This in his opinion is a good sign for the global economy.
Globalization has been changing over the last few decades. In the 1990’s, there was a period of “Americanization” in which the United States and Europe were exporting ideas to the rest of the world. Today, however, this is not the case. The economies of the United States and Europe are growing at a very slow rate and will continue to do so over the next few years. According to Dr. Wooldridge, Europe has cut spending by 25% because of this trend, and the same can be expected in the United States in the coming years. Dr. Wooldridge stated that over the next 5 to 10 years, these two economies can expect a “future of dull, heavy calm.”
In contrast to this, the economies of emerging markets such as India and China will experience dramatic growth. For example, Shanghai is currently one of the fastest growing and most prosperous economies in the world. At the current rate, Dr. Wooldridge stated that China’s economy will match that of the United States in 2014 and India will have the second largest economy in the world.
Finally, Dr. Wooldridge discussed the fact that the nature of globalization can be expected to change. In the past, the majority of high-level innovation came from industrialized western nations such as the United States. Recently, there has been a shift in where innovation is coming from. Emerging markets have become centers of consumer power and innovation, and there has been a shift in both low-level and breakthrough innovation to the emerging world. Also, there has been an increase in “frugal innovation” coming from these nations. Frugal innovation is the creation of products that provide the same service as more expensive products at much lower prices. Costs on these products have been reduced by up to 90%. These new innovations will begin to make their way into western markets in the future. Dr. Woodridge ended his presentation by stating that the United States will have to work very hard to keep its current position and can still change directions if it is willing to make some significant changes.
by Lindsey Wright, UNC Charlotte (MBA Program)