Global Trends Blog

The Yale Center for the Study of Globalization through its YaleGlobal online service has just launched an ebook A World Connected: Globalization in the 21st Century which is well worth the read for anyone interested in how globalization has – and will in future – impact our world, lives and work.  It’s a seminal collection of essays collated from over ten years of work by scholars, practitioners, politicians, and experts in the study of globalization. 

One of its most compelling points is its broad scope, covering the complex array of ways in which globalization is changing our world – often discussions of globalization narrow in to areas of economics and trade, or to the global capital markets which have had such an impact in recent years, or to the geopolitics of a new world order. With the notions of interconnectedness and interdependence as its lenses, the book not only explores these topics, but also the many ways in which globalization touches all of our lives and interweaves communities, countries and continents – including how cultures and societies develop, how we seek security, how ideas moving around the world are impacting creativity, how rising inequalities are changing societies, how China’s rise is impacting the world, and how we as people interact around the world.

The headlines have been full of numbers recently, particularly as we have just passed a milestone where the 7 billionth person has now joined the world’s population (give or take a few million and a few months either way).  So let’s start there in terms of looking at some important numbers that will impact the world in the next decades.

1.  7 billion: The world’s (estimated) population at the end of 2011

The eyes of the world remain on the violence in Libya and the ongoing unrest across North Africa and the Middle East, with oil prices reacting to the potential disruptions to a critical resource.  Further south, the countries that offer some of the world’s richest reserves of minerals are also undergoing fundamental changes, BRIC-style. As the world enters a period of potential resource scarcity, the scramble is on to secure future supplies of critical raw materials.  Africa has plenty to offer (as an FT graphic shows): Oil, timber, coal, copper, bauxite, gold, diamonds, uranium, gas and more. And despite significant economic and social development improvements in the last decade, many economies on the continent still suffer poverty, skills deficits and high levels of unemployment – making the context right for wealthier nations to come in and help boost African development, often in exchange for resources.  As China, India and increasingly Brazil compete to seize the opportunities, a phrase originally used by Warren Buffett in 2003 to describe the US trade deficit comes to mind, “colonized by purchase rather than conquest.” Is this a risk for African nations (and potentially other resource-rich countries)?  What are the implications?

A February report on Brazil’s investment in Africa by Reuters highlights the fact that in sheer financial terms and companies on the ground, China leads the pack by a long way in the scramble for Africa’s resources.  In 2010 China’s trade with Africa reached US$107 billion (source: IMF) versus US$32 billion between Africa and India, which has also been boosting its position in recent years.   This puts Brazil, with US$20 billion in trade in 2010, in third place, with Russia trailing a distant fourth among the BRIC with just US$3.5 billion of trade with Africa.  China too dominates in terms of overall investments in Africa. South African consultancy Frontier Advisory quoted in the Reuters report suggests that by 2007, cumulative Chinese foreign direct investment (FDI) in Africa had reached US$13.5 billion, or 14% of all Chinese FDI. In contrast Brazilian FDI in Africa between 2001 and 2008 is estimated at US$1.12 billion.  This is not surprising – China has a much weaker overall resource position than Brazil, plus much deeper coffers in terms of foreign exchange reserves to underpin its investments. Since 2000, China has established a series of resource-backed deals, with strong government support and financing, in which African nations handed over oil, bauxite, iron ore and copper and cobalt in exchange for dams, power plants and other infrastructure projects worth billions of dollars.  The aim: Secure future access to resources to power China’s continued rapid economic expansion.  On the back of these investments, some 2,000 Chinese firms are now operating in Africa, building infrastructure and helping to fuel the renewed economic growth of the continent.