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Globalization at a Crossroads

Over the course of the past decade, the world has changed more than at any other time since the World War II era. And, as economic and geopolitical power seeps away from the West, the United States, rather than leading a new multilateral front, has embarked on a self-defeating project of atavistic unilateralism.

LONDON – Whether or not one realizes it, 2018 may have been a historic turning point. Poorly managed globalization has led to nationalist “take-back-control” movements and a rising wave of protectionism that is undermining the 70-year-old American-led international order. The stage is set for China to develop its own parallel international institutions, auguring a world divided between two competing global-governance systems.

Whatever happens in the next few years, it is already clear that the 2008-2018 decade marked an epochal shift in the balance of economic power. When I chaired the Group of Twenty (G20) London Summit at the height of the global financial crisis, North America and Europe comprised around 15% of the world’s population, but accounted for 57% of total economic activity, 61% of investment, around 50% of manufacturing, and 61% of global consumer spending.

But the world’s economic center of gravity has shifted since then. Whereas around 40% of production, manufacturing, trade, and investment was located outside the West in 2008, over 60% is today. Some analysts predict that Asia will account for 50% of global economic output by 2050. True, China’s per capita income might still be less than half that of the United States in 2050; but the sheer size of the Chinese economy will nonetheless raise new questions about global governance and geopolitics.

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