Why will future globalisation be so different | Richard Baldwin | TEDxLausanne

Do me a favor close your eyes and imagine what globalization really is now close your eyes and bring to your mind a photograph of globalization how many of you are looking at a cargo ship with many containers? Can no one wake that man up? It always happens to me that one time I gave this talk about Japan and half the audience went to sleep. What about globalization? I just do not know. Have you come back today? I would like to change that image of globalization that you have in mind. I would like to change the way you think about globalization and more than that, I would like to increase your anxiety level a little, but also your enthusiasm level a little.

You see, I think

future

globalization

will

be very

different

from today's globalization. What we know today and the globalization we have known in the past,

future

globalization

will

be about things we do, not just things we do now, that sounds pretty abstract now, but for the next 12 minutes we will walk down a path of facts and logic and at the end of that journey I hope that sentence makes perfect sense and I hope that sentence helps you understand why you should be a little more nervous and a little more excited about globalization. Let's begin the journey by returning to some of your images of globalization.

These are some classic ones. What do they all have in common? Will they relate to property? things that we do things that you can touch feel and see and there is a very good reason for that it has to do with the fundamental nature of globalization you see, it is quite easy arbitrage drives globalization. Now let me explain what I mean by arbitrage in this context by talking about more than just globalization just for a moment when people go to Germany they try the beer because the German beers are pretty good and when they go to France they try the wine because the French wine is quite special.

The point is that countries are especially good at doing some things and less good at doing others and globalization is driven by companies that exploit these differences, make things in countries that are especially good at them and sell them elsewhere, an aspect critical of this selling elsewhere is that it takes place primarily on physical goods that we manufacture, there is a very good reason for this, it is easier to ship goods across borders, things that we manufacture, than to ship them that we do across borders what we economists call services and when I say services I mean your jobs, if you don't work in a factory or farm you are in the service sector and I am talking about your job, but ask yourself why it is easier to send goods than services to across borders and remember that the reason your work hasn't gone global yet is because it's hard to ship services across borders.

Harder than goods. The reason services are difficult to cross borders has to do with the fundamental reality of services. For many services, the service provider and the service buyer have to be in the same place at the same time and the technical difficulties of getting the service providers of one nation to match the service buyers of another nation is the reason why which globalization so far has been mainly in goods, not services, that is why globalization has been mainly focused on things we do, not things we do, but this is what digital technology is changing, that reality , digital technology is making it easier for people who sit in one nation to do things in another nation now.

Before looking at how digital technology makes this possible, I want to look at the economic facts that will make it profitable. Let's imagine we lived in a Star Trek world where workers could teleport from one country to another for free. The economic question is: would they have any incentive? do it and the answer is yes, given the huge salary differences between countries, an American accountant, for example, costs five times more than a Polish accountant and, in a Star Trek world, Polish accountants would teleport to the accounting offices of New York City in the morning and they would teleport. return home at night and by doing so, they would save those accounting offices in New York a lot of money.

Now that we don't live in a Star Trek world, workers can't teleport between countries, but digital technology is creating something I like to call migration. Tell a migration people sitting in one nation working in offices in another nation arbitration drives globalization and until now globalization has focused primarily on goods, not services, but that is not because there is no economic incentive to globalize the service jobs, but because there are technical barriers to doing so. So the next step is to observe how digital technology is breaking down the barriers to counting a migration. I will focus on four.

The first is domestic teleworking. Many of us have shifted somewhat to teleworking. How many people here have teleworking from work? from home, let's say one day a week or one day a week, well, many of you and our companies are organizing things to facilitate this teleworking. Until now, most of this teleworking has been domestic, but it is not necessary. a lot of imagination to realize that this teleworking will go global, having organized things at work to facilitate the incorporation of remote workers, our companies will find it profitable to hire foreign freelancers online, now remote foreign intelligence will not be as good as in-person with domestic talent, but foreign talent will be much cheaper, so what do you think is going to happen?

That was my effort to increase your anxiety a little. How am I? The second is online freelancing platforms. This is how you will find your company. Those freelancers are like eBay, but for the services that are not good, eBay made it easy for us to buy and sell products online. These make it easy to buy and sell services online. I work from more than a hundred countries and there are many other platforms the third factor is machine translation this is incredible just a couple of years ago it was like a party trick or a first draft now it is very good it is instant and free it is on your smartphone Right now on your tablets and laptops you can use it with Skype to talk to people who speak a

different

language.

The option is called Skype Translator. You can use it with YouTube to watch videos in foreign languages. They put subtitles in English. The option is called automatic subtitles. you can use it with emails Outlook Mail Outlook Mail has an option called Microsoft Translator that allows you to translate emails into French or German or whatever. Now imagine how revolutionary this is in terms of supply of foreign freelancers, hundreds of millions of talented ones. The high-cost foreign freelancers who were excluded from tell'em identification and who migrated until now due to poor language skills will soon speak English or French or whatever well enough and some of them will be able to do at least part of their work for less than a minute.

One is advanced telecommunications, they are creating ways to make it look like one nation's service providers are in the room with another nation's service buyers without actually being there. Here's one called telepresence. People who use these telepresence rooms have the feeling that they are actually all in the same meeting when in reality they are in different countries. Here's another one called telepresence robots, which is like a Skype screen, but in a very simple robot body, the person on the screen controls the robot so they can drive around the office. and look over your shoulder to see if you're playing solitaire or working on that project.

She leaves a robot in the field office and turns it on whenever she wants. People say that the physicality of the robot increases as a degree of communication, so that is the The second understanding in our journal we saw that the migration of tellers is profitable and we saw that the migration of tellers is possible. The ultimate question is how fast it is coming and the answer is that it is coming faster than most realize. This is a simple point, but I've spent a lot of time getting this point across to people, so today I'm going to try something different instead of talking about how digital technology is driven by Moore's Law about the wonders of exponential growth.

I'll give an example that shows how crazy it is. is that our ability to transmit, store, and process information doubles approximately every two years. This is an iPhone 6, it came out in 2015. It is a very powerful computer, more powerful than the computer that guided Apollo 11 to the moon and back in 1969. but how much more powerful, what would you say a hundred times, a thousand times a million times? The answer is: it's one hundred and twenty million times faster than the computer that guided Apollo 11 to the moon in 1969. That's amazing, but it gets more amazing. This is an iPhone 10, it came out in 2017 and is two and a half times more powerful than the iPhone 6s.

Now when you think about it, two and a half times means there was more progress in processing. speed between 2015 and 2017 than between 1969 and 2015 and guess what every two years we will see even greater increases in processing speed and that is why it is coming faster than most believe, that is why things that seem implausible in 2015 as free instant machine translation on your iPhone is universal in 2018, so let's go back to our phrase, future globalization will be about things we don't just do, things we do, digital technology is making a migration possible and it's coming faster than most think, which means people sitting elsewhere will. being able to do things in other countries.

I hope that this trip has changed the image you have of globalization in your mind and I hope that along the way it has managed to raise your anxiety level a little, but your excitement level should have also increased. Because of a very simple fact, globalization means more opportunities for the most competitive citizens of a nation, even though it means more competition for the less competitive citizens, and I look here and I see a room full of really competitive citizens, so I think you should know that that's really not a joke, it's true that all of you are winners here so you should be more excited than nervous, but let's not forget about the less competitive ones, that's why we should all have a little more nervousness and a little more enthusiasm about future globalization, thank you.