Globalization has run its course. The world has witnessed a fundamental shift in the power structure. Competition is tougher than ever? Geography is history. Outsource or in-source?

Globalization has run its course. The world has witnessed a fundamental shift in the power structure. Competition is tougher than ever? Geography is history. Outsource or in-source?

The headlines of many articles seem to imply that we are entering a totally new phase of the global economy. In some ways this is true, and in others not at all. I would like to share with you the perceptions which have been gathered through a series of workshops over the past two years, and over five continents, regarding these issues.

Firstly, the general outlook is radically different if one resides in the US as compared to the rest of the world. There is a clear global belief that the mode of globalization which was evident in the 1980s and 1990s is essentially over. The unfortunate radicalization of the world’s “-isms” is pushing against open door policies, resulting in an increase in protectionism and local/sub-regional business focus. The longer-term implications of this are a weakening of global institutions like the WTO and an increase in regional or bi-lateral trade agreements. This in turn will lead to a preference for local firms over global firms. However, if we look at the results of workshops held in the United States, the basic belief in a US led re-globalization remains evident. This fundamental disconnect could have serious long-term repercussions.

The second major issue which comes to the fore is the misdirected belief that China and India would remain low-cost production/service centres, allowing the US and Europe to maintain the hold on creativity and innovation. There is now an increasing amount of what I call “Innovation Blow-Back,” which refers to the fact that many new innovations no longer come from the Silicon or Ruhr Valleys (or other symbolic equivalent), but from innovation centres in Mumbai or Shanghai. Simply consider the numbers, the number of graduates, the trend of their studies, and the direction of direct foreign investment. China announced, on January 10, 2006, that creativity and innovation were to become the cornerstones of the next five-year plan. There is an explicit recognition that these are two of the most significant drivers of economic growth (the other two being access to energy and efficient transportation networks). This implies that US and European companies need to reconsider their global positioning.

The third major issue is access to energy. Research has shown that there is a direct relationship between economic growth/well-being and access to energy. The US has consumed most of its continental energy sources; that which is available in Alaska is effectively irrelevant in the big energy picture. Continued access to energy is recognized by all communities around the globe as vital to competitiveness. There is also a rising concern about the national imbalances of energy consumption per capita. This imbalance will lead to potentially uncomfortable geo-political and geo-environmental situations as nations and regions look for ways of increasing their own internal energy access. Opportunities for positive change are also abundant within this realm. It is recognized that the built environment is accountable for more than half of a western society’s energy consumption. Thus, if we can enhance the energy performance of the built environment, then there is a direct contribution to national competitiveness.

Chris Luebkeman is director for Global Foresight + Innovation with Arup and a senior fellow of the Design Futures Council.