Is Globalisation Dead?
Welcome to The Transatlantic Post an editorial on innovation and international growth. With occasional British satire. By Kajal
Ahead of the UK election, the Labour Party voiced a desire to improve the trading relationship with Europe and “do trade deals around the world” as well as a determination to reset Britain’s global image. This week Labour will hold an EU leaders summit convening 45 leaders at Blenheim Palace, fittingly the birthplace of Winston Churchill, to set out hopes for improving EU-UK relations.
This may prove a trickier operation than it might once have been as Europe leans to the far right and signals its rejection of globality. Resetting images, enticing the world’s best companies to see the UK and indeed Europe as an attractive place to invest - this need more than summits and handshakes after prolonged periods of political uncertainty.
As we look ahead to the second half of 2024 and whether we can preserve our sense of being global, a quick mid year recap.
2024 Mid year recap….
For those of you that missed earlier editions of the Transatlantic Post this year, I have written about the markets to watch in the East across sectors as well as relevant policies that will impact growth in years to come.
At the turn of the year, we focused on "The Next Decade of Growth ," particularly the UAE and India, and how their increasing trade may impact East-West trade. The IMF growth projections by region offer a sobering and stark view of the economic challenges that lie ahead.
In February, we noted the increasing influence of the Middle East in MEINA at DAVOS. By 2026, Gulf trade with Emerging Asia is expected to exceed that with advanced economies, and by 2030 will be worth US$757bn, almost doubling the value in 2021.
This is a significant geoeconomic shift that our future elected leaders will need to grapple with. How do the West remain relevant and compete for critical trade and investment? Very few candidates appear to be addressing this in recent political debates.
In March, for International Women’s Day we looked at Two global growth paths - the one with women and the one without. Countries in the East and West with more inclusive policies to protect and accelerate women’s economic contribution could add trillions to their economies. Although there is progress, there is still a long way to go.
The green economy across the East and West holds more promise as does the opportunity for global collaboration to solve our pressing climate issues. In “The Clean Energy Goldrush” we focused on the energy transition and global clean energy investment. Recent bilateral R&D efforts, climate tech innovation and funding partnerships between the East and West are for now a bright spot.
In our May edition, we covered the intersection of artificial intelligence and life sciences in You and AI are going to Live Forever (a twist on an Oasis song for those that didn’t see it!). Whilst it has hard to escape any conversation on AI, some of the most positive and pivotal changes will be how AI could transform healthcare to become both more efficient and equitable.
A global view from London tech week…
Last month, I attended London Tech Week - a conference that pitches itself as the global tech ecosystem coming together. It certainly felt like the world was under one Kensington Roof. Some of this year’s key themes included empowering entrepreneurship, Green Innovation and AI.
As the notion of globalisation has never felt more under threat than in 2024 - at London Tech Week, I witnessed a strong desire for continued global collaboration despite the environment of increased protectionism, trade barriers and geopolitical tensions.
Interestingly, right in the centre of the pavilion were IBM flanked by Ukraine to the left and Dubai to the right. Within two hours, I spoke with the Qatar Research Development and Innovation Council, Dubai Department of Economy, Cyprus Ministry of Commerce, Hungarian Innovation Agency, Japan External Trade Organisation (JETRO) and Innovate UK.
A whirlwind tour from Europe to Asia and Middle East also revealed how fiercly competitive the world has become to attract top businesses to their regions. Some countries emphasised tax incentives, their strategic location, and favourable regulatory environments.
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More compelling, however, were those that presented specific value propositions for various industry sectors, such as a world-leading program in renewable energies. The focus on innovation clusters and the resulting knowledge diffusion are often key factors for companies comparing locations for international growth and investment.
Looking ahead in 2024….globalisation is not dead but it is adapting to a new reality...
In June, I took part in a Future of Trade Panel hosted by the British Chambers of Commerce . I spoke about the idea of leading with innovation clusters as key to attracting foreign direct investment to the UK. It equally applies to those looking to grow from the UK.
Over the last two years in the UK, I met pioneers in life sciences, cleantech, energy and fintech - clusters and sectors in which the UK have differentiated innovation in particular from our university spinouts. There is no sign of a slowdown in their global ambitions.
Governments being able to demonstrate commitment and ambitions (financially and otherwise) greatly influences growth decisions for locations. We need to look no further than the US Inflation Reduction Act for a recent successful example of growing investment in the green economy. One year in, 280 clean energy projects were announced across 44 US states representing $282 billion in investment and projected to create 175,000 jobs. 1
Can such success be mirrored in the UK? The new Government announced £7.3bn in funding for a National Wealth Fund to attract private investment into UK infrastructure. A welcome first step. The British Chambers of Commerce recently released the “Global Britain Challenge Report” 2 which also covers a number of ways to remain open and promote trade and investment from the UK.
This includes concluding Free Trade Agreements (FTAs) with India and the Gulf Cooperation Council as well as taking a targeted sector approach to accelerating investment. FTAs are from easy to implement and the Future of Trade panel highlighted divergent views on how effectively they can drive growth in the current geopolitical environment. A recent article in the FT "India warns UK not to impose deadline on trade talks" sheds light on some of the challenges ahead.
While Governments grapple with trade agreements, from the grassroots, globalisation is far from dead but it is quickly adapting to new geopolitical and economic realitiies. A recent article by McKinsey “Can your company remain global and if so, how? 3 highlights shifting strategies of larger companies to de-risk growth and taking a systematic approach to build “geopolitical resilience”. It is worth a read to understand how business leaders are preserving global roots despite the challenges.
With more than 60 countries and nearly 50 percent of the global population heading to the polls in 2024, our future leaders and their policies will play a crucial role in determining whether we can unlock economic growth through advancing global trade and investment, we will be watching the winners and losers closely for the remainder of the year.
“It has been said that arguing against globalisation is like arguing against the laws of gravity” Kofi Annan
Sincerely, yours, Kajal
References and Further reading
2 Global Britain Challenge Report, British Chambers of Commerce
3 Can your company remain global and if so, how? , McKinsey Quarterly
About the Transatlantic Post
An editorial on innovation and international growth. With occasional British satire. Written and edited by Kajal Sanghrajka, founder and director of Growth Hub Global Kajal has worked with more than 250 businesses to support their international growth efforts to the US, Europe and MEINA regions. The full version is available via email 2 weeks prior. Subscribe here for the full version each month.