Globalisation in reverse

by Jörgen Eriksson on January 6, 2014

Globalisation in reverseWe are still living in the aftermath of the crises. Before the financial crisis the interconnections between countries were growing. Since 2008 both international trade and capital flows have been reduced.

One reason for the retreat is the financial crises. Another reason is increased costs of shipping. It currently costs about USD 5000 to ship a container from Shanghai to United Kingdom. This is more than double the amount charged when oil traded at only 20 USD a barrel. The price of oil alone has had a severe impact on shipping costs and in some cases caused companies to go into reverse globalisation and return to local production. A third reason is the high growth in the emerging economies like China is raising costs for both energy and labour, and making offshore production there less interesting.

Financial Times and McKinsey have studied global capital flows and compiled the data in the graph below, which shows the development over the past twelve years.

image

In the video below from Financial Times, Ralph Atkins, capital markets editor, explains to John Authers the results of the FT study, which shows that capital retreated behind national borders during the crisis.

Globalisation in reverse

About Jörgen Eriksson :

Jörgen Eriksson is the founder of Bearing and is the Chairman of the firm since it was created. He has successfully expanded Bearing into covering projects on four continents. He is also Adjunct Professor of Innovation Management at the International University of Monaco and at Universitat Politècnica de Catalunya in Barcelona and he is an active member of the Founders Alliance organisation.

Working with consulting engagements across Bearings practices, he has over the past fifteen years participated in and supervised a large number of client projects, from innovation system development and place development and branding, to merger and acquisition assignments and leading edge research and business development activities for key clients.

His new book, Branding for Hooligans, will be published in 2015. It is about how innovation and branding are key survival factors in our modern times of hyper competitive markets.

Prior to Bearing, he was Director of Europe, Middle East, and Africa for Trema Treasury Management, a technology and consulting services provider, supplying financial software solutions for the global financial industry, Clients included The European Central Bank, Citibank, SEB, South African reserve Bank, Deutsche Bank, Abu Dhabi Investment Authority (ADIA), as well as many other large financial institutions and Fortune 500 companies.

Early in his career Eriksson was educated at the Stockholm School of Economics, where he studied economics, financial economics and philosophy. He then worked in Scandinavian investment banks and also for the Swedish Institute of National Defense Research.

You can contact Jörgen on e-mail jorgen.eriksson@bearing-consulting.com, connect on LinkedIn on http://fr.linkedin.com/pub/jörgen-eriksson/0/38/8a0/ and follow him on twitter on joreri508.

{ 2 comments… read them below or add one }

Sanjeev Baitmangalkar January 13, 2014 at 17:10

Hi Jorgen,

Something to share … after the Oct 2008 crisis, when the industry was reeling, I wrote a communique’ to show a different perspective; in which I had indicated that the down cycle might hit us around now … in India that has happened in some businesses, while some have grown at 25-30% … although macro causes will effect a pull or push, specifics may differ region wise … in case it is of interest, here is the link .. http://www.ajeets.org/archives/LeanManufacturing/Think%20growth,%20not%20recession.pdf

Rgds, Sanjeev

Jörgen Eriksson Jörgen Eriksson January 14, 2014 at 23:59

Dear Sanjeev,

Thank you for the link, I will take a look. It is very interesting to hear about your experience in India. Technology and global social integration are strong forces that drives globalisation and hyper competition and I think it is discouraging that it is slowing down. However I guess many emerging economies, for example China, have now reached a level of development where domestic demand can compensate for lower exports.

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