One of the longer-term themes we have been writing about for a number of years now is the third wave of globalization—the outsourcing of labor from the service sector. This follows the first wave, the globalization of goods, and the second, the globalization of know-how. This third wave is undoubtedly one of the biggest macroeconomic trends currently taking place and one that will continue for many more years to come. Yet, based on recent conversations with clients, this third wave seems to be garnering surprisingly limited attention, particularly in relation to fears about the sustained pickup in inflation.
In this Economics Weekly, we once again outline the discussion around this wave of globalization and highlight how this mega shift has only been accelerated by the recent COVID pandemic.
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Richard de Chazal, CFA is a London-based macroeconomist covering the U.S. economy and financial markets.