A lot of social science focuses on the nodes. Part of this project is that we want to focus on the linkages, and let's take a look at what those links might be. Who trades with whom is really interesting. We've seen this change, particularly in the last 30 years. This top line here is trade from the rich countries to the other rich countries, and we see that for a large part of the first, let's say, 30 years up to 1960, this dominates. It's the rich trading with the rich. Basically Europe, Japan, and the United States, or the United States and Canada, trading with each other. What we find is that the share of this has gone down. That we increasingly have from non-rich to non-rich. That is, that the countries that were not rich previously are trading with each other, and this is another way of showing the Asia effect. And we see that non-rich to rich, and rich to non-rich, those have remained relatively constant. But a major, major shift in the straight linkages is that where before you have these— let's say, that the trade largely consisted of things flowing between Japan and the United States and things flowing between the United States and Europe. Now we've got a whole new set of players. And again, what do those new rules look like? What does that network look like, now that we have increased this? And again, most of it is China. This is share of world exports as a percentage of the total. Beginning in 1970, the US, Germany, and Japan are clearly dominant. Now this is not absolute change, this is relative. This is just a percentage of world trade. By 2014, this particular— I think this is from The Economist, it was forecast that China would be the leading. And it has, it has become. I don't know the exact number in the year 2020, but I'm sure you can look it up in a few seconds. This has been the major transformation of globalization. This, in a sense, takeover of global trade by China, as these previously dominant powers are no longer as dominant. It doesn't mean that they're poor, It doesn't mean that they're not trading more, it's that their relative role—and again, everything is about relationships— their relative role has declined. So, the linkages between these and the rest of the world, in a sense, have become less critical. The linkages between China and the rest of the world have become more important. And again, focusing on this lesson over and over again, and I'm sorry if I'm repeating myself, of intra-regional trade. This is showing you in 1990 versus 2011, in how much this is interregional and this is intraregional. You see where intraregional used to be relatively low. This is the little brown part, okay? The Middle East almost had no intraregional trade before. Notice, for example, what's happened in Asia. So, it used to be 58/42, 58% of the trade in Asia was interregional, and 42% was intraregional. Now they've switched. By 2011, and now it's even more so, it was more intraregional trade, 52% as opposed to 48%. So, again, this lesson that when we talk about globalization, let's not forget that we're talking about very different fates, okay, between countries, and also, that we have to really think of it as these central regions, with some satellite influence of the global South, Africa and Latin America, and to a certain extent, South Asia. But the action has become, really, this cross regionalization. And again, I want you to think about it as links. We haven't escaped geography—that we're still sort of bound by that geography, and that the linkages are partly reflective of that geography. When we're talking about transoceanic trade, we notice that the container ships have increased remarkably. The container-carrying capacity has increased by about 1200% since 1968. So, not only are we increasing this intraregional trade, but we also have increased, dramatically, the kind of transoceanic or interregional trade, because of this new infrastructure, because of the container ship growth. And whoever says globalization, in a sense, says container shipping. I hope that the next time you drive by a port, you will notice these container ships, because that's at the very, very heart of the trade globalization. And again, this relies on a shipping network. We've seen this, versions of this chart. It's a shipping network that goes, again, mostly across the ocean, across the Atlantic, between North America and the EU. Some between the Pacific Rim and North America, and some that goes across— and notice the Straits of Malacca, et cetera— this is particularly important for oil. So, the world is linked via these kind of networks. And again, I keep emphasizing, I keep showing you these maps, because I really want you to be thinking about— I want you to translate when you read something about globalization. or you read something about relationship between countries, I want you to think about them as networks, because that's what the world trade is. Again, making the point, this is —the size of the circle— is the importance for world trade, and what do you see? We see the United States, Canada, and Mexico, with a whole bunch, and I don't mean this in any derogatory sense, a series of satellites that trade with it, okay? Now this is changing as these countries in Latin America begin to trade more with East Asia, but still, it remains very much centered on trade to the United States. Then you have this intra-European trade with, if you will, this, perhaps this African set of satellite that largely trade with Europe, and then you've got this major new sector here of China, Korea, Japan, Thailand, Taiwan, et cetera, with India, by the way, coming along. And of course, the Middle East providing the oil for all of this. But I want you, if you can, to take away this image and imagine how the behavior of each one of these nodes is transformed, but also, the links between them. And now, I'm going to give you a little bit of a tighter look, not just at trade, but at a particular element of trade, which is supply chains and intermediate goods. And we'll talk about why those are so critical for globalization and why those represent, in a sense, a risk.
