World Economic Forum (WEF) started its annual meeting yesterday, and it will continue till Thursday this week. This is the first global in-person leadership event since the start of the Covid-19 pandemic, and this time their theme is; «Working Together, and restoring Trust.»
But the annual meeting has never been confronted with so many unprecedented global issues as it is now in 2022. The WEF`s annual meeting is coming at a crucial time. The most crucial in its 50-year history.
The world is recovering from a global pandemic, struggling with a war in Ukraine, and facing huge challenges from climate change. On top of that, monkeypox is coming, and so are inflation and famine.
One of the topics is globalization, and as we all know, globalization is dead right now. But, I think it`s only set on «pause.»
Chinese President Xi Jinping visited WEF in 2017, and on his first trip he said; «Whether you like it or not, the global economy is a big ocean that you cannot escape from.»
This time, in 2022, Xi said; «Economic globalization is the trend of the times. Though countercurrents are sure to exist in a river, none could stop it from flowing to the sea.»
Xi is also the founder of the Belt and Road Initiative (BRI), which is the 21st Century Maritime Silk Road. The Silk Road has always been important to the trade in the world. It was an ancient trade route that linked the Western world with the Middle East and Asia.
It was a major conduit for trade between the Roman Empire and China and later between medieval European kingdoms and China.
Established when the Han Dynasty in China officially opened trade with the West in 130 B.C., the Sild Road routes remained in use until 1453 A.D., when the Ottoman Empire boycotted trade with China and closed them.
Although it`s been nearly 600 years since the Silk Road has been used for international trade, the routes had a lasting impact on commerce, culture, and history that resonates even today.
I find it very interesting to see that Venetian explorer Marco Polo famously used the Silk Road to travel from Italy to China, which was then under the control of the Mongolian Empire, where they arrived in 1275.
Notably, they did not travel by boat, but rather by camel following overland routes. They arrived at Xanadu, the lavish summer palace of the Mongolian emperor Kublai Khan. (You can see the film about that relationship on Netflix. I think you will like it a lot).
In all, the explorer spent 24 years in Asia, working in Kublai Khan`s court, perhaps as a tax collector.
Marco Polo returned to Venice, again via the Silk Road routes, in 1295, just as the Mongolian Empire was in decline. His journeys across the Silk Road became the basis for his book, «The Travels of Marco Polo,” which gave Europeans a better understanding of Asian commerce and culture.
Khan`s Empire is gone. So are the Roman and the Ottoman Empire. Some historians say the start of the British Empire started around the 1490s, while others say the early 1600`s, but it all ended in the years after World War 2, with most of Britain`s colonies ruling themselves independently by the late 1960s. But what about the American Empire?
A New World Order started after World War 2, and the U.S became the leading Empire in the World. Now, we are all facing a revolution. A New World Order. Again. Globalization is dead, but it will come back, because as Xi said: «Economic globalization is the trend of the times. Though countercurrents are sure to exist in a river, none could stop it from flowing to the sea.»
On Friday, the S&P 500 briefly fell into a bear market, and the inflation in the UK hit a 40-year high in April. We are into a vicious cycle, and the WEF`s Chief Economists Outlook has warned of lower economic activity, higher inflation, lower real wages, and greater food insecurity globally in 2022.
They warn that this could have devastating human consequences as the global economy fragments.
As Saadia Zahidi, Head of the Centre for New Economy and Society and a Managing Director at the World Economic Forum explained:
«We are at the cusp of a vicious cycle that could impact societies for years. The pandemic and war have fragmented the global economy and created far-reaching consequences that risk wiping out the gains of the last thirty years.
Leaders face difficult choices and trade-offs domestically when it comes to debt, inflation, and investment. Yet business and government leaders must also recognize the absolute necessity of global cooperation to prevent economic misery for millions around the world.
The WEF`s Annual Meeting this week will provide a starting point for such collaboration.»
Four Futures for economic Globalization: Scenarios and their implications:
Globalization has created significant opportunities and lifted millions out of poverty, while also driving inequality and economic disruption. With many countries turning inward in search of new strategies to increase security and resilience, the convergence of physical and virtual forms of economic globalization is no longer a given.
As the traditional drivers of globalization have reached a critical juncture, we are entering a new phase of increased economic volatility, polarization, and structural reset of the global system. Ever-accelerating digitalization, however, means that the rivalry between global centers is rapidly expanding from the physical to virtual space, where competition over the control of technology and information networks is growing. How different economic centers of gravity will choose between physical and virtual integration, fragmentation or isolation will shape the fate of economic globalization in the years to come.
This White Paper outlines how the nature of globalization may shift as economic powers choose between fragmentation or isolation in both physical and virtual integration. The report calls for “no-regret actions” by policymakers: global cooperation on the climate crisis; investment in human capital to prepare populations for a range of economic futures, and returning to developing resilience through greater economic integration, knowledge-sharing, and diversification.
Globalization is at crossroads. It`s changing, but it isn`t ending.