Globalization is on the best way and fragmentation is on the best way, says a number one economist Eco
After decades of globalization, the world is becoming more fragmented, which will have profound effects on markets and economies, said Dr. Dambisa Moyo, world economist and New York Times bestselling author.
Countries and companies will begin to operate regionally rather than globally, and industries will be restricted to economic “silos,” Moyo said during a presentation at the Investments & Wealth Institute-sponsored ACE Academy 2021 virtual conference on Tuesday. Moyo is a macroeconomics and global affairs analyst. that influences policy makers. She currently serves on the boards of Chevron Corporation and 3M Company. She worked for the World Bank for two years and Goldman Sachs for eight years before becoming a writer and international speaker.
Regionalization rather than greater globalization is one of the trends that will affect the world economy and investors in the future, she said. “We spent a lot of time building global networks, but these will be disrupted in the future. For example, supply chains will change. But the question is: where should the investment opportunities come from? ”
Despite the increased competition that will develop between the United States and China, Moyo predicted that China will offer investment opportunities even “if we end up with a more fragmented world.”
“Most pension funds and institutional investors currently only have one to two percent exposure to China. I don’t understand, ”she said.
The technology will continue to offer opportunities.
“We’ve seen technology generate tremendous returns, but we haven’t seen its full impact on healthcare and education.” The returns will be even greater when these areas are developed, she said.
A third area that is ripe for investors is the energy transition to a greener economy. “A real transformation will not come from public policy”, but from corporate initiatives. “The transition will come from innovations designed to create a greener world,” said Moyo. “It’s a difficult problem, but it’s an area where there is investment opportunity.” She added that energy companies like Chevron, where she sits on the board, are doing everything they can to make the transition happen.
However, another trend – a move towards more private companies and private equity and away from public companies – will make it more difficult to address environmental, social and corporate governance issues as much of the pressure on companies to address ESG issues , from shareholders, she said.
“We absolutely have to attract wealthy investors and clients to private equity. The number of listed companies is falling and the focus will be more on private equity in the future, ”she said. It will also increase the pressure to break up the huge oligopolies that now dominate some industries such as banking, pharmaceuticals, and technology.
Another question that needs to be answered going forward is whether investors who invest large sums of money in companies in the US and China are “a wrecking ball for other countries and emerging economies,” Moyo asked. “Ninety percent of the world’s population lives in emerging countries, but they only own 10% of the world’s wealth. That is not sustainable. “
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