Globalization is more fragile and less entrenched than you think!

April 29, 2011

I was shocked that the statistics I came across in a recent article in The Economist which presented Pankaj Ghemawat’s research on globalization.

We seem to take it as a given that we live in a globalized world, but on many indicators global integration is far from complete:

  • Only 2% of students are at universities outside of their home countries
  • Only 3% of people live outside their country of birth
  • Only 7% of rice is traded across borders
  • Only 7% of directors at S&P 500 companies are foreigners
  • A few years ago less than 1% of all American companies had any foreign operations
  • Exports only represent 20% of global GDP
  • Air travel is restricted by bilateral treaties and ocean shipping is dominated by cartels
  • Foreign direct investment (FDI) accounts for only 9% of all fixed investment
  • Less than 20% of venture capital is deployed outside a fund’s home country
  • Only 20% of shares traded on stock markets are owned by foreign companies
  • Less than 20% of Internet traffic crosses national borders

More worryingly globalization seems reversible. Emigration levels today pale with those 100 years ago when 14% of Irish-born people and 10% of native Norwegians had emigrated. Back then you did not need visas. Today the world spends $88 billion a year on processing travel documents and in a tenth of the world’s countries a passport costs more than a tenth of the average annual income. Nearly a quarter of North American companies shortened their supply chains in 2008. It takes three times as long to process a lorry-load of goods crossing the Canadian-American border as it did before September 11th 2001. Even the internet is succumbing to this pattern of regionalization, as governments impose a patchwork of local restrictions on content.

Read the full article at: http://www.economist.com/node/18584204?story_id=18584204

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