The first phase of economic globalization in modern times lasted from the early 1950s to the first decade of the twenty-first century. It was shaped by national economies adapting to a global market and was dominated by the liberalization of trade and investments. The impulse for this came from the transformation of national economies that spread growth to other countries, drawing them into globalization. To make it work, rules-based international organizations were set up. Some nationstates went further and established a system of economic integration, such as the European Union (EU)—both an economic and a political enterprise—and the Association of Southeast Asian Nations (ASEAN).

The sinews of the global economy over the next fifteen years will be neither the national economies nor the conventional well-known forces such as trade and investment, but rather demographics, technology and energy, and how these will interact with each other. They will frame the conditions for the national economies to thrive; those that cannot do so will face a lacklustre economic situation. The impulse will be in the opposite direction to what it was in the first phase. This time it will be from internationalization to the national economies.

The political problem will be how to exploit the opportunities that this interaction will put on the table, and the question of where nationstates will be willing to take further steps to globalize their economies despite the short-term problems of restructuring.

Demographics

The size of the labour force (the share of the population aged 15–64 years of age) and the dependency ratio (the share of those aged over 65) are decisive parameters in attempts to forecast the future economic global competitiveness of a nation-state.

For many years the Chinese labour force knew only one direction—it was going up. When Deng Xiaoping initiated reforms in the late 1970s, he gambled on cheap labour costs combined with a reasonably skilled labour force, discipline and willingness, plus the ability to work hard. It turned out to be a colossal success. China became the centre for manufacturing, and it crowded out the industrialized countries as well as competitors among emerging markets and developing economies, coming close to monopolizing labour-intensive, low-cost manufacturing.