Globalisation in 2011 may look like an orphaned cause, as governments put domestic concerns over global growth. But in coming decades it will become widely accepted again – because it offers complementary benefits to both east and west.
The transition of both India and China from rural economies to service and manufacturing powerhouses has moved the locus of global growth. This is often taken in the west as a signal for caution. Instead it should be recognised as a series of new opportunities. Take India’s demographic dividend. Hundreds of millions of young people will enter the working population in the next decade, creating a labour pool the world can use to grow. Demographically challenged rich countries can bring workers from India, or outsource work to it.
Today, labour productivity in India and China is growing at more than five times the global rate. In combination with a further rise in affordable labour this will see goods and services for developed market consumers remain cost-competitive – an especially important factor in a year like 2011, as growth in incomes worldwide begins to slow. Emerging Indian and Chinese trading markets will also soon aid the global movement of capital. This trend will only intensify as the ageing west demands higher returns on pensions and other investments – returns only emerging markets can provide.