When the world economy nearly collapsed in late 2008, many proponents of globalization feared that a contagion of protectionism would break out, poisoning the prospects for new trade initiatives that could provide long-term benefits for both companies and consumers. In the United States, unemployment was rising to unacceptable levels due in part to continued business services outsourcing (especially to India) and the steady influx of imported goods (especially from China).
Many of the trends in international trade that have developed over the past few decades appeared likely to be altered, or even reversed, in response to the weaknesses exposed by the economic downturn. Would multinationals succumb to domestic pressures by bringing home jobs they had outsourced? Would frustration over China’s trade surplus force Beijing to raise the value of the renminbi? Would countries turn inward, protecting their economies during a time of crisis, rather than pushing forward with new trade agreements?
In this special report, we take a detailed look at global trade in the wake of the recession, analyzing the impact on five fronts. One article explores whether outsourcing has run its course. Another focuses on China, whose trade surplus is increasing again even as it weighs a shift from exporting to serving its growing middle class. In a third article, we assess the changing relationship between the United States and India, which is gradually becoming a key trading partner. In a fourth piece, we ask whether the recent trade pact between the United States and South Korea is a turning point for U.S. export policy. Finally, we discuss how the growing complexity of global supply chains is driving more multinationals to the Internet "cloud."
Has outsourcing run its course in the wake of the recession and complaints from U.S. politicians about stubbornly high jobless rates? Exports from emerging markets fell markedly in 2009, and more companies are thinking harder about the unknowns of going abroad. But the cost savings in Asia are still highly attractive to multinationals, and export levels went up again in 2010. What’s more, China’s workforce is gearing up to manufacture an ever-wider range of products.
China’s trade surplus is rising again and, with it, criticism of its handling of the renminbi. At the same time, China is facing the need to shift its focus from exports to serving its huge and growing middle class. Can it handle the transition, especially with inflation on the rise, real estate in a bubble and a demographic profile that increasingly resembles an inverted pyramid?
India is still the place to go for business process outsourcing — making it a lightning rod for complaints about lost U.S. jobs. But President Obama’s recent visit, highlighted by the announcement of nearly $15 billion in new trade deals, is putting India on the map in another way — as an increasingly important market for U.S. goods.
Washington’s surprise trade agreement with Seoul is good news for American exporters and promises to be a powerful economic stimulus, supporters say. Its success could revive other proposed free-trade pacts that have been on the back burner. But is Congressional approval a sure thing at a time when many Americans are suspicious of globalization, questioning whether trade pacts lead to job losses rather than the promised job gains?
When the global economy nearly collapsed in late 2008, some multinational companies reacted by quickly cutting their head counts and technology budgets. As cash flow dried up, providers of on-demand global trade and logistics technology were expected to face times in their efforts to retain old customers and win over new ones. It hasn’t turned out that way. A growing number of manufacturers and retailers have decided, instead, to streamline their worldwide supply chains for the long haul by signing up for pay-as-you-go logistics services available through the Internet "cloud."