The end of globalization or a more multipolar world?

Globalization, which defines the increasing interdependence and integration of economies, markets, nations and cultures, is the most powerful economic force the world has witnessed in the past twenty years. It is now so pervasive in its effects and has produced so many startling outcomes-the rise of global cities, the successes of small states, growing wealth in emerging economies, the emerging consumer and fast-changing consumer tastes, for example-that we risk taking it for granted.

The current wave of globalization is the second the world has seen, the first one occurring between the years 1870 to 1913, built on the fruits of the industrial revolution and the rise of the American economy. 'The current period effectively dates from the early 1990s, where events like the fall of communism, rounds of trade liberalism and the growing momentum of the Chinese economy accelerated globalization. This was then driven by US multi-nationals, the advent of the euro, the growth of financial markets and the development of many emerging economies.

However, in recent years the path that globalization is taking has become obstacle strewn and much less clear. The global financial crisis has slowed economic growth, left large amounts of indebtedness in its path and checked the rise of the financial services industry. The Eurozone appears to many to be in a state of perpetual crisis while the structural rise of China's economy has caused some to fear the role it will play geopolitically. Its cyclical slowdown is also promoting concern. Elsewhere the side-effects of globalization-such as inequality and climate change-are now widely debated.

"Our sense is that the world is currently in a benign transition from full globalization to a multipolar state, though this is not complete. Specifically, the world is most multipolar in terms of trade patterns and economic activity; but financially the world, although highly globalized, is much less multipolar with the USA still dominating markets. Companies continue to try to sell their goods across borders but are less willing to invest internationally", says Credit Suisse.