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Investment Bank

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Technology's mixed blessing
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Technology has always played a key role in globalisation, whether through large reductions in transportation costs or through the rapidly increasing power of information and communication technologies.

Analyst: Christian Keller - Head of Economics Research, Barclays

In earlier times, globalisation was driven by technologies that reduced transportation costs, such as railways in the late 1800s and commercial flights and standardised shipping containers after World War II. It became easier to transport more goods across more borders and over longer distances.

Since 1990, advances in information and communication technology have allowed corporations in advanced countries to shift production processes to low-wage emerging market economies.

As a consequence, emerging markets became deeply integrated in the global value chains operated by multinational enterprises. Trade is no longer centred on final goods produced in one country and consumed in another, but on intermediate goods shipped back and forth as part of multi-stage, multi-country production processes.

While these trends are unlikely to slow down in any deglobalisation scenario, technological progress is hard to stop. Indeed, technology itself, notably 3D printing and robotics, could significantly change or even reverse some of the factors that define hyperglobalisation.

3D printing could allow goods to be manufactured close to consumers, and even within households. Large-scale manufacturing that has been outsourced to EMs where labour is cheap could return to developed markets and be distributed among multiple small producers.

Robotics: Traditionally best suited for repetitive tasks in high-volume production, new-generation “collaborative robots” (co-bots), created with help from innovations in the gaming industry, are cheaper, can work safely alongside humans, and be easily reconfigured to perform different tasks.

 

Rise of the machines

Global robot use spreads as prices fall...

...and new collaborative robots will put more pressure on manual labour.

While these technologies are unlikely to affect the outsourcing of information-based tasks, they will have a significant effect on any manufacturing-based value chain. At the same time, technology-driven deglobalisation could disappoint those who hope to bring manufacturing jobs back to advanced economies, as increased automation makes those jobs redundant.
 

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About the analysts

Durukal Gun works as a strategist in Emerging Markets Research. Durukal joined from Barclays' equity research team where he was a banking analyst covering Turkey. Prior to Barclays, Durukal was an equity strategist at UniCredit within the EME Equity Strategy team, based in London. During his five years with UniCredit Group, Durukal also worked as a bank analyst/equity strategist in Istanbul. Durukal completed his BA in Economics at Bilkent University, Turkey, followed by a TEV-British Chevening scholarship for a Masters of Science in Finance and Economics at Manchester Business School.

Christian Keller is a Managing Director and Head of Economics Research at Barclays, leading the coverage of both developed and emerging markets. Mr. Keller is based in London and joined Barclays in 2007 from the International Monetary Fund (IMF) where he had been the Resident Representative in Turkey since 2005. Prior to that, he was based at the IMF headquarters in Washington D.C., working on IMF programs with emerging market economies in Europe, Latin America and Asia. Mr. Keller graduated with a PhD in Economics from University of Köln, Germany, and holds a joint-MA in Economics and Finance from University of Köln and HEC, Paris.

Sree Kochugovindan is a Vice President and Global Asset Allocation Strategist at Barclays, based in London. Global Asset Allocation Research is responsible for developing in-depth views on key macro issues and identifying tactical and strategic investing opportunities across all asset classes and regions. Ms. Kochugovindan is responsible for developing quantitative models for various asset classes. She is also a co-author of Barclays’ Equity Gilt Study. Prior to joining Barclays, Ms. Kochugovindan worked at State Street Bank and Trust in the Foreign Exchange Research department. Ms. Kochugovindan received her Ph.D. in Economics from the University of London. Whilst completing her thesis, she also worked as a lecturer teaching Economics.

Tomasz Wieladek is currently a Senior International Economist at Barclays, covering Poland, Hungary, Germany and wider European issues. Prior to joining Barclays, Tomasz spent seven years at the Bank of England working on financial stability and monetary policy issues. His financial stability work focused on the causes of the 2008-09 global financial crises and the design of macroprudential policy. As an adviser to the Monetary Policy Committee, he examined the economic effects of the unconventional monetary policies adopted by the Bank of England, including Quantitative Easing, Forward Guidance and the Funding for Lending Scheme. He also played a vital part in building the Bank of England’s new research hub. He holds a PhD in International Economics from the Graduate Institute, Geneva and an MPhil from the University of Cambridge, UK. His research has been published in outlets such as The Journal of the European Economic Association, The Journal of Finance, The Journal of Monetary Economics and The Journal of Money, Credit and Banking.

Disclosures

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