Progressives all over the West – and most fiercely the two Democratic presidential candidates – tend to blame globalization for everything because it’s an easy escape from political accountability. Protectionist posturing and scrapping free trade agreements is suddenly all the rage. But research shows it’s not primarily globalization but the worldwide skills revolution that is driving change in the world’s most important economies.
- Capital is crossing borders worldwide but 90 percent of fixed investment worldwide is domestic and is always attracted by local markets.
- It’s wrong to blame globalisation for the decline in manufacturing jobs in developed countries, since the global US share of manufacturing output has indeed slightly increased since 1980, because productivity doubled.
- Developing countries experience the same change. China lost 25 million manufacturing jobs between 1994 and 2004, which is ten times the US loss.
- Information is travelling 15,000 miles in a moment, but what is decisive is whether the person on the receiving end has the capacity to understand it.
- Human capital has become the main source of wealth creation, as addressed in our 2003 report The People Economy.
As David Brooks wrote in The New York Times:
The central process driving this is not globalisation. It’s the skills revolution. We’re moving into a more demanding cognitive age. In order to thrive, people are compelled to become better at absorbing, processing and combining information. This is happening in localized and globalised sectors, and it would be happening even if you tore up every free trade deal ever inked.