- Globalization is shifting – Ian Bremmer, Ngair Woods, Niall Ferguson and I debated this at Davos and continued the train of thought in the FT and in Chartbook #192.
- Hyun Song Shin of the BIS gave a new outing and an update to his fundamental paper on how to envision globalization – as an island model or a network of balance sheets and how to connect financial and real economic globalization.
- Globalization has regressed since 2008 – World goods exports in relation to GDP are now back to where they were in 2000.
- Real and financial globalization are not separate processes but tightly interlinked – Credit finances transactions between a series of sub-contractors.
- European banks were the main drivers of financial globalization from the 1990s onwards – This went into reverse in 2008.
- Finance is fungible – A contraction in European lending shrinks funding across the entire system.
- The world economy has always consisted of a patchwork – Sectors differ from each other in their logics and large parts of the world are not included.
- Data from S&P’s Capital IQ (CIQ) database provides a snapshot of inter-firm linkages – This allows us to form an impression of the extent of corporate interconnections by country and by sector.
- Different modes of globalization prevail in the textiles, automotive and information technology sectors – Textiles globalization takes the form of relatively simple China-Asia networks, the automobile industry is multi-polar, and IT involves a mesh of interconnections between Japanese, Chinese, Korean and US firms.
- Comparing the network of firms in February 2020 with that in December 2021 – The automotive industry network remained largely stable whereas that for Information Technology was subject to significant contraction.
- Tools of this kind, covering both real and financial interconnections, will enable us to trace future trends in globalization.
Published February 27, 2023
Visit Chartbook to read Adam Tooze’s original post Chartbook #198 Globalization: The shifting patchwork
