AZnomicsGlobalization
The world becomes one economy — and a billion people escape poverty
From the 1980s onward, the world's economies fused together at a pace never seen before. Trade barriers fell. China and India opened to foreign investment. Supply chains stretched across continents. A billion people were lifted from poverty in three decades — arguably the greatest reduction in human suffering in history. The backlash is still reshaping politics today.
Three things converged: China's 1978 opening under Deng Xiaoping, the end of the Cold War in 1991 which ended ideological barriers to trade, and container shipping which made moving goods across oceans cheaper than trucking them across a country. The WTO was created in 1995 to set the rules. By 2000, a single product — your iPhone — would contain components from 40 countries.
China grew at 10% per year for three decades. 800 million Chinese people moved from poverty into the middle class. India's IT sector became a global giant. Consumers worldwide got cheaper goods — TVs, clothes, electronics that would have been luxury items became affordable. Global extreme poverty fell from 36% in 1990 to under 10% by 2015.
Manufacturing towns in the American Midwest, northern England, and France hollowed out. Jobs moved to wherever wages were lowest. The gains from globalisation went disproportionately to capital owners and skilled workers. The workers who lost factory jobs often had no equivalent replacement. The political rage this generated fuelled Brexit, Trump, and the rise of economic nationalism worldwide.
Globalisation is the most powerful anti-poverty force in human history AND the source of some of the deepest political instability in wealthy democracies. The tension between these two truths defines trade and economic policy debates today.