Globalisation 2.0 could see different players taking the lead

WITH key players like US and UK withdrawing partially from the globalisation juggernaut and calling for its closure, questions have been raised about its importance in the coming era. The withdrawals (rhetorical or otherwise) however, may give significant space to other groups of nations to embrace the idea to spur their own growth. In many ways, this could be globalisation 2.0, with an altered star cast and some rule changes. These countries are already savouring the sweet smell, even as debates continue.

The country which will most gain from this is China. While it participated in globalisation 1.0, it never really drove it. Now is its opportunity. The country is luring technology multipliers so that it can dominate a part of the world in emerging economic segments. It has announced that it will set up a $2.1 billion artificial intelligence industrial park with an eye on the $150 billion opportunity (by 2030).

What the Chinese say they would do, they always do. They even do things that they don't talk about! The country is also increasing visas for academics, Indian students and others who can catalyse the knowledge-based economy. In about five years, we should not be surprised if China takes pole position in technology-based industries. They will probably follow a dual policy of less AI/automation domestically (to save jobs) and seek more overseas opportunities. Even if the US does not lose in this game, China will gain.

India has been a passive participant in world trade so far. It accounts for only 1.6 per cent of world trade, despite being the fifth largest economy in the world. As it transforms its economy over the next five to ten years, it will need to write its own globalisation strategy - one that leverages its current mantras like digitalisation, e-payments, low-cost housing, lowcost financial services, de-carbonisation and other domestically honed advantages. Shift of manufacturing, when it happens, will add its share to this pursuit.

Its globalisation drive will be an additional growth wing, as it should not be bogged down by domestic promise. India has many opportunities to tap friends like Japan, Britain, France, Asean, the Middle East and even Israel. India is also seen as a more amenable partner to many of these countries, even as China muscles its way into resource-starved countries.

INNOVATION AND IRONY

Turkey is a hurt country. Its EU bid is going nowhere. Its role in Syria is seen as double-faced and its domestic politics resemble the Soviet era. Yet, it is a powerful economy that can supplant Britain's EU disengagement as well as feed Asia, as the country slowly realises the futility of engaging the US. Its eastern hemisphere strategy could be a game changer under a more visionary, non-self-serving leader, if such regime change were to happen.

Israel could be the new US in many areas, especially technology related industries. Tel Aviv is often talked of in the same breath as Silicon Valley. Israel's edge in innovation is illustrated by the country's number two ranking on the subject in the World Economic Forum's 2016-2017 competitiveness report. With newfound political assertion under an extremely friendly US regime, the small but smart nation will seek to open its shops in many markets, including Asia, parts of Europe, Britain and perhaps even Mexico and Canada, two countries US is bent on unfriending.

One possible irony is that Britain actually increases its participation in world trade, despite playing hide and seek with the EU. To minimise the economic impact of its EU break-up, it may overextend to other potential partners and cause unforeseen ripples. The country has a long track record of global trade and financial hegemony and could benefit from an inward-looking US. It will be a test case for Prime Minister Theresa May's economic vision.

Japan and South Korea are on the upswing. Even though they are strongly coupled with the US, they have slowly opened up other horizons - South Korea is seeking Chinese partnership and Japan has already walked into India's arms. They are masters in export-led trade and will be jaguars if they see opportunities. Fifty-seven per cent of Japanese exports are within Asia (worldstopexports.com) and that may surprise many. Their exports surged 16.2 per cent in 2017 (tradingeconomics.com), amid all the talk of de-globalisation.

There are other groups and countries who never dominate the headlines of world trade. Brazil, Asean and Africa have their traditional advantages and their next steps are keenly awaited.

Unless tariff regimes reverse dramatically from the WTO-induced changes, there will be fresh dynamism in world trade. The fast movers will gain fast but more importantly, no one would want to be left behind. That is a lot more cheerful picture compared to the epitaphs written after the Trans-Pacific Partnership's demise. Money has always gravitated towards attractive opportunities, whatever the mantra.