“Globalization is going to have more and more to do with moving services and ideas around the world than with moving goods in containers,” Marc Levinson tells David Marcus in this week’s edition of the Drinks With The Deal podcast.
Levinson, a historian, economist and author, explores the topic of globalization in his new book, “Outside the Box: How Globalization Changed From Moving Stuff to Spreading Ideas.”
The work is a sequel of a sort to Levinson’s 2006 study “The Box,” in which he wrote about the history of the shipping container and its effect on world trade. By making international trade much less expensive at the same time as companies could take advantage of cheaper communications and more powerful computers, the container helped allow companies to create global value chains. But by 2008, that era was coming to an end as the risks of extended supply chains were becoming clear and as both consumers and businesses were shifting spending from physical goods to services.
Over the past decade, Levinson said, “Manufactured good prices have been falling or rising much more slowly than the prices of services.” Consumers are spending a larger percentage of their income on services such as childcare, dining, healthcare and leisure activities, he said.
At the same time, there has been a “shift in the business sector. It used to be the case that a manufacturer’s business was selling a physical product that the manufacturer had assembled. That’s not the way it works any more. For capital goods, like jet engines or elevators or factory production equipment, the manufacturing process itself is almost secondary.” Instead, Levinson said, the producers of the goods “have bundled the service with the product so that they’re not really separable.” The growth of services, he said, “will shape the future of globalization.”