New threats to globalisation

The last two decades have seen an astonishing increase in the extent and range of engagement and interaction among Asian countries and between them and other parts of the world.

Twenty years ago, exports of goods and services accounted for about 17 per cent of world GDP - a figure not much higher than it was on the eve of World War I. Over the past 20 years, exports of goods and services have risen and now exceed 30 per cent of global GDP for the first time.

Nowhere in the world have these trends been more dramatic than in Asia. Twenty years ago, merchandise exports accounted for just 7½ per cent of Asian GDP, barely more than half the figure for the world as a whole.

Since then, Asian merchandise exports have increased by just over 13 per cent per annum, on average, compared with 8½ per cent per annum for the rest of the world. Last year, merchandise exports accounted for 25.2 per cent of Asia’s GDP, slightly above the corresponding figure for the world as a whole of 24.8 per cent. Add in commercial services, and exports represented 28.5 per cent of Asia’s GDP in 2005 (2006 data are not yet available).

Asia now accounts for 22½ per cent of the world’s merchandise exports, almost exactly double its share years ago, and for 22 per cent of the world’s exports of commercial services.

This increasing integration and engagement with the global economy has considerably assisted the growth of Asian economies and improved the standard of living in Asia.

Asia’s real per capita GDP5 has risen at an average annual rate of 4¼ per cent per annum over the past two decades - or by 5½ per cent per annum excluding Japan - compared with just 0.1 per cent per annum in the rest of the world. Per capita Asian GDP has risen from 42 per cent of the global average 20 years ago to 70 per cent last year; or, excluding Japan, from 29 per cent to 60 per cent of the global average.

Moreover, the gap between the per capita income of Asia’s richest economy, Japan, and its poorest, Laos has narrowed from 19 times to just under 14 times over this period. Vietnam, which was almost as poor as Laos 20 years ago, has since seen its per capita income rise from one-twentieth to one-tenth of Japan’s figure.

Unlike the “globalisation” of the 19th century, which in many instances was forced upon Asia by a combination of European colonialism, “gunboat diplomacy” and “unequal treaties”, during recent years Asia has “globalised” by choice.

And yet I believe it is not being unduly alarmist to say that “globalisation” as we understand it today is under greater threat now than at any other time during the last 30 years - and certainly more so than a few years ago when meetings and occasions such as these were routinely besieged by rowdy and usually violent demonstrations.

The onward march of technological progress, which is undoubtedly one of the factors enabling greater economic and social engagement and integration among nations, may well be unstoppable. But this engagement and integration also requires the consent of governments. And what governments give they (or subsequent governments) may also take away.

The last three decades of the 19th century witnessed technological innovation no less dramatic in its impact than that of the past 30 years. According to Professor Kevin O’Rourke of Trinity College, Dublin, “no other innovation, including … the telephone or … the Internet, has had comparable impact on the speed of information flows and capital market integration” as the laying of the first transatlantic cable in 1866.