Globalisation is good?  A tale of two countries that were equally poor 50 years ago – Taiwan and Kenya. Today Taiwan is 20 times richer than Kenya. We meet the farmers and entrepreneurs that could develop Taiwan because it supposedly introduced a market economy and integrated into global trade. And then we meet the Kenyan farmers and slum dwellers that are still desperately poor, because Kenya shut its door to globalization. So the story goes … true?

Now the western economies are faltering and no one is sure where global growth is going. If the so-called third world keeps up its current growth rate, by 2027 it will produce two thirds of world output. Is it globalisation or another dynamic occurring in the overall economy?

Now it appears that those that are outside the western economic model are the places that are growing not necessarily the places that embraced globalization. Take a look at the USA (see thumbnail), the states that are least connected into the globalization story, are the states that are suffering the least from this economic crisis in terms of unemployment. Perhaps you say the better had further to fall and the worst did not have far to fall.

My take is that much of the Taiwan success story is a story of a free market economy and the rule of law – the globalization aspect was only the vehicle. However like many western economies Taiwan is or will begin to falter due to the world’s bubble imbalances. Kenya did not embrace a market economy and had too corrupt of a government for the people to thrive. Globalisation had little to do with either success or failure. You can kill a free market with a corrupt government that holds its people back and you can kill a free market if you allow imbalances and monopolies to occur. I suppose in time the current world imbalances will correct naturally – but it will be painful.  This is why I advocate slower (less globalisation), steady and stable growth rates, with less systemic globalisation interconnection risk.

Market view: