Professor Beata Javorcik, chief economist at the European Bank for Reconstruction and Development, says that the pace of change in the global economy over just the past 17 years has been profound.
“When we look back at 2003, at the Sars epidemic, China accounted for 4% of global output,” she says. “Now China accounts for four times as much, 16%. So that means that whatever is happening in China affects the world to a much larger extent.”
Globalisation helps to explain while nearly every major car plant in the UK has shut down – they are dependent on sales and components from around the world. When both collapsed, they just stopped making cars.
China’s wealth and health therefore matter to us all far more than they used to, but this is not just a matter of scale – there is also a deeper problem with globalisation.
Ian Goldin, professor of globalisation and development at Oxford University, and author of “The Butterfly Defect, How Globalization Creates Systemic Risks, And What To Do About It”, says that “risks have been allowed to fester, they are the underbelly of globalisation”.
That, he says, can be seen not only in this crisis, but also in the credit crunch and banking crisis of 2008, and the vulnerability of the internet to cyber-attacks. The new global economic system brings huge benefits, but also huge risks.