– says Stephen Roach, Chief Economist at Morgan Stanley,
“…there are increasingly disquieting signs. That’s because of a striking asymmetry in the benefits of globalization. While living standards have improved in many segments of the developing world, a new set of pressures is bearing down on the rich countries of the developed world. Most notably, an extraordinary squeeze on labor incomes has occurred in the industrial world — an outcome that challenges the fundamental premises of the “win-win” models of globalization.
It is a great theory — but it’s not working as advertised. The first win — that going to the developing world — is hard to dispute. China has led the way, with more than a quadrupling of its per capita GDP since the early 1990s. Other developing countries have lagged the Chinese experience but have still made considerable progress in boosting living standards.
The problem lies with the second win — the supposed benefits accruing to the rich countries of the developed world. And that’s where the going has gotten especially tough. In recent years, the benefits of the second win have accrued primarily to the owners of capital at the expense of the providers of labor…”