External Forces and Trends
The New World Order – and its Implications for Global Trade
In-Person at the RAF Club, London & Live-streamed Meeting
2022 was the year in which many of the assumptions on which international business
had been based for the past 30 years were overturned with shocking impact and speed.
Geopolitical rivalries no longer took a back seat to globalisation. The financiers and CEOs
were no longer the masters of the universe. Now the politicians and generals were back in
charge – and the business people, who assumed for decades that the whole world was a
potential market, were no longer calling the tune. The Golden Arches theory that ‘No two
countries with a McDonald’s would fight each other’ had come to symbolise the integration
of former communist countries into the ‘western’ system. This theory was proved drastically wrong in February 2022, when McDonald’s itself pulled out of Russia permanently.
The democratisation of the former communist countries and the trade liberalisation of China created what economists had called a ‘positive supply shock’. It brought a massive increase in workers, resources, and markets to western capitalism. Firms could now do business in areas they had previously assumed were off limits. A system of global just-in-time supply chains was built, which rested on the assumption that it would always be possible to move things around the world at speed. The ‘Washington Consensus’ prevailed. Tariffs and business taxes fell, with the move towards trade and market deregulation. Political rhetoric and public policy were, for the most part, pro-business.
That period is now over. Political instability, both domestic and international, has gradually been on the rise since the middle of the past decade. However, the Russian invasion of Ukraine is, so far, its most devastating manifestation. The positive supply shock of the 1990s has been thrown into reverse. Russia has effectively left the capitalist economic system. China is making it clear that it no longer wishes to play by the rules of a system designed in the US. India is among many countries that are sitting on the fence. Global supply chains, access to markets, and supply of labour will all be affected.
That said, predictions of the end of globalisation may be overblown. While there has been a slowdown in cross-border trade, there hasn’t been a collapse. It may be that the interdependencies of global trade are too densely woven, and that the world’s sophisticated supply chains are too complicated to unpick. Globalisation may yet persist but in a more regulated and politicised form.
This event, on the eve of the first anniversary of Russia’s invasion of Ukraine, will help us to bring some essential perspective on the new world order against which business transactions at all levels will take place for the foreseeable future. We will be joined by Mike Martin, Research Fellow in the Department of War Studies at King’s College London and a former British Army Officer, and Alan Beattie, World Trade Editor of The Financial Times and formerly an economist at the Bank of England. Both speakers will provide critical insight into the challenges faced by business in navigating geopolitical risk.
Senior Trade Writer, The Financial Times
Alan Beattie is senior trade writer at The Financial Times, recently relocated to London from Brussels, and writes Trade Secrets, the FT’s newsletter and opinion column on trade and globalisation. Alan joined the FT in 1998 after working as an economist at the Bank of England. Before moving to Brussels in 2016 he was the FT’s international economy editor, covering global trade and economics from London and Washington, including the World Trade Organization, the International Monetary Fund, the G8 and the G20. He has also worked as a editorial writer. He is the author of False Economy, a popular economic history of the world published by Penguin, and Who’s In Charge Here?, a critique of policymakers’ responses to the 2008 global economic crisis.
Research Fellow, Department of War Studies, King’s College London and former British Army officer
Dr Mike Martin is an author and speaker on conflict and geopolitics. He is a former British Army Officer who served in Afghanistan, and now advises governments, militaries and other organisations how to navigate conflict zones. Mike is a Visiting War Studies Fellow at King’s College London and regularly appears in/on international media discussing conflict. His latest book How to Fight a War is out soon. Mike tweets as @ThreshedThought.