The Great Convergence
By Phar Kim Beng
Founder/Chair
Strategic Pan Indo-Pacific Arena
Strategicpipa.com
Twitter: @indo_pan
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Globalization, according to Richard Baldwin, a professor in international relations at the Graduate Institute of International Politics in Geneva, began in 1820 and lasted until 1990.
There were other periods of globalization, of course. More than 200,000 years ago, the human population had moved out and away from Africa to different parts of the world. Some survived the migration, many did not.
What made the globalization of 1820–1990 unique was the dominance and commercial conquest of merely seven countries. The G7 i.e. US, Canada, Italy, Germany, England, Japan, and France went on to control 2/3 of the world’s trade, with China fast catching up: a process that caused serious disquiet among the G 7 especially the United States as the political system of China is totally different from that of how Washington DC operates.
Nevertheless, from 1990 onwards to the degree the industrial preponderance has slipped out of the hand of the G7, from 2/3 to 1/5, the loss has slipped purely into the hands of what Richard Baldwin also called the Industrializing 6 i.e. China, India, Korea, Poland, Indonesia, and Thailand, with China alone increasing its percentage of global GDP from 3 percent to more than 20 percent.
This book is a must-read in terms of how it defined old and new globalization too. In old globalization, the introduction of steamships and telegrams reduced the cost of commercial transactions. But labor was still in-bound and clustered in the respective G7 countries. Hence, between 1820–1990, the level of world income in these countries increased by 70 percent.
From 1990 onwards, the figure has returned to a mere 20 percent; back to where things were in the 19th century. This phase of the new globalization has been much more damaging, which under the pressure of pandemic could lead to future decoupling from China alone. It favors those industries that can move in and out of the industry grid quickly. It is in some senses a more pernicious form of globalization where no one knows what will hit them.
But what did Richard Baldwin mean by the great convergence? The great convergence signals the arrival of the internet, computer technology, and the whole process of clustering businesses together, not necessarily sharing them widely beyond a certain locale, but allowing economic divisions of labor to occur in only some countries. Granted the unique treatment of globalization, this book deserves a serious evaluation. But it is questionable if the policy makers understand the importance of raising the income of the workers, rather than the capital owners, or, perhaps plutocrats.
It is also questionable if China can eliminate the poverty of the remaining 600 million people, having already redeemed the economic fate of 800 million people in all over the last forty years since 1979.
An impressive feat but a miracle that needs to be engineered by “coupling” with the world, and not the other way around. Baldwin’s book did not address the problems of China head on but the pressures heaped by the West and the United States due to pandemic have certainly raised the issue of restoring their own industries back home.
