AN ENTERPRISING Englishman in the 1850s famously said that if he “could add an inch of material to every Chinaman’s shirt-tail, the mills of Lancashire could be kept busy for a generation.” Sadly, those mills have since turned to rust, but in the years to come selling to China and the world’s other emerging markets are expected to keep many Western firms busy for years to come. In 2012, an important new milestone will be reached when emerging-markets import more goods and services than the rich economies combined.
This has been a loooong time coming. One of the network effect of the Information Age is that large groups of people can be educated and do certain types of work muuuch more efficiently than in previous Ages. Also, as a remnant of the Industrial Age, raw supplies and *shipping* now often trump labor as a cost for most production cycles. We’ve combined our factories and our machines and linked the whole thing together with trade.
This has the ultimate effect of quickly leveling the playing field economically, so one could expect the political situation to follow suit. The manner in which it chooses to do so will be a big question for 2012 and beyond. The Dollar is likely to be one of the first casualties, as the dust settles after the Great Recession and we find the economic tables have completely turned.