The winners of globalisation

In an economy there are three main economic participants.

Governments
Corporates
Households

One can see by viewing the publically available GDP numbers of an economy how each economic participants is doing. For example, by looking at the income view of GDP data we can see the tax receipts of the government, the wages received by households and the profits generated by corporates are evolving.

However, as we have stated in the past, we see many developments in economies, and hence GDP structure of economies, be significantly affected by the role of globalisation.

Globalisation is a word so commonly used that the majority of the value contained within it has been destroyed. We simply see it as the reduction in barriers to move capital outside your home country to wherever you decide to spend/invest that capital. There are many consequences to this becoming easier and easier.

However corporates are the economic participants that most enjoy the fruits of globalisation.

Governments by definition are local, hence cannot invest capital abroad.

Households are stubborn and don´t move easily to where the best paid jobs are for their particular skill set. Hence in Spain unemployments is over 20% whilst in China wages are increasing by 20% per annum.

Corporates can choose to invest in any region of the world determined only by how profitable the venture is expected to be. Hence they are the winners of globalisation. It is no surprise they are generating record profits with record margins whilst unemployment is at record highs in developed markets and wages are increasing significantly in many emerging markets.