Editor’s Letter: Welcome to globalization 2.0

Readers might find flipping through this months issue makes their heads spin. In the Middle East we find regional banks expanding rapidly, racking up eye-popping growth and profits. Africa, too, frequently forgotten, abused or just plain exploited by global investors, is suddenly emerging as a haven of robust growth.

Moving north to Europe we encounter a European Union commissioner fretting that the worst is yet to come for the worlds developed markets and the head of one of the worlds biggest financial institutions hankering for a global regulator that could identify and rein in the excesses of the worlds banking community. Across the pond its another tale of two markets: While US policymakers watched their currency crumble, their Latin American counterparts were battling to prevent their currencies overheating.

The coming months will be a test of the resilience of the emerging markets: Can they really stand on their own as some of the worlds largest economies and currencies go into a tailspin? Have they really decoupled? One senior banker we talked to in China was skeptical, gloomily pointing out that a huge proportion of China and its regional trading partners economic activity depended on demand from the United States. But in Turkeyusually one of the first emerging markets to stumble the moment investors get nervoussenior bankers told us theyre confident the country will sidestep the worst effects of the credit crunch.

The debate over decoupling will rage for some time. But decoupling is nothing more than a symptom of a much greater change taking placea sea change that will see the prevailing tide of globalization reverse as the biggest and most ambitious emerging markets take their rightful place on the world economic stage. In Globalization 2.0, massive foreign investments are as likely to come from China, India or Brazil as from Germany, the US or France. Policymakers in London and Washington are already assiduously courting their counterparts in Beijing and Delhi, anxious to curry favor with the new economic colonialists.

When the US emerges from the current crisisand it willthe financial world will be a very different place than it was just a year or so ago. Trade flows, financial power and cultural dominance are all in flux. The businesses that thrive in the new world of Globalization 2.0 will be those that recognized in time the wrenching changes already taking placethe shift in the balance of economic and political power, the blurring of the line between developed and developing markets, the growing self-reliance of those economies once thought to be entirely dependent on exports. The companies that can pick their way through the shifting sands of global demand, consumption and production will emerge as the new global corporate titans.