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As energy prices rise, the current globalization model will collapse. What is the value of free trade if transport is to expensive? The rising energy prices has rose import barriers to never seen high levels before. Not by governmental protectionistic import legislation, but by transport costs (due the high energy price). And why produce on the other end of the world if the main production cost swifts from labor to energy, which has a global price? Air travel (business and leisure) will become a very expensive habit. The price mechanism will reduce the demand for air travel severely. Airlines, airports, seaports, containerships and trucking are 'no go zones' for smart investors, shareholders and banks. The Energy Crisis is the end of the old globalization model. No government recognize this and they all expanding airport and seaport facilities, giving them in the future repayment and interest burdens without turnover driven payment power. Will globalization end? No it will find a new model. Energy will be the driven force behind this new model. The current USA politics is a (not very nice) example of this. Energy deficit nations will go in to bilateral relations with energy surplus nations. Water (as in: food) deficit nations will go in to bilateral relations with water surplus nations. Mineral deficit nations will go into bilateral relations with mineral surplus nations. Bilateral as in: good for both. What has the deficit nations the surplus nations to offer? Not simple markets, as markets require currencies, payment power, and de deficit nations will have less, less and less of it. The deficit nations has to offer: New knowledge/education, mature organization models (management), mature marketing models (brands, regardless the 'no logo' movement), mature political models (democracy, not by war, but by choice), credit (?) and equipment. Equipment is the main trade enabler of the future for deficit nations: difficult to produce (not easy to copy), small changes gives much better performance (technological headstart), easy (relatively cheap) to transport and capital intensive (as in: giving much purchase power for the deficits). The deficits are not markets, but trading partners. In PeakX, everybody is a market, but the more important question is who has the purchase/payment power, due economy like the whole world or due currency/credit (like the US, who can buy without real economy, just based on currency/credit)? The market polarity change regarding energy, mineral and concentrated water (food) is something that has no place yet in the minds/perception of the deficit countries, but will hit them severely, just for the reason the they don't see it and thereby don't anticipate to it. What is advanced globalization more than market polarity change, rise of commodities, transfer of wealth, rise of new powers, new winners, new losers, major decline of the supra national structures, major rise of bilaterals and bringing the jobs back home (the rise of national production as energy not labor becomes the main production cost facet)? It's about 1) Communication: Mainly about video communication. Video calling and video conferencing will rise parallel with the energy price rise. 2) Models: As global production based structures face energy price rise that undermines their profits and market shares, the global brands will turn to virtualization/fragmentation. The global brand/marketing will stand, although global brands are threatened by rapidly increasing consumer lifestyle fragmentation/segmentation: the one brand fits them all times are over). The global design/innovation within a brand/manufacturer will stand. The production/logistics will change. Fragmentation in production locations: much more, as close by the markets as possible. Multinationals must reinvent themselves in a new global/local production (and even brand) balance or they will die.

Author: Gijs Graafland

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