“The core drivers of globalisation are alive and well,” the think-tank of American consultancy McKinsey wrote in a 2010 study, while the world was still recovering from the financial crisis.
“To be unconnected is to fall behind,” its researchers wrote in 2014. But a study McKinsey released yesterday stresses the economic gains of changes in the global economy have not been widely shared lately, especially in the developed world.
It’s called “Poorer Than Their Parents? Flat or Falling Incomes in Advanced Economies.”
Prospects for income growth have deteriorated significantly since the financial crisis, the report finds.
Britain’s vote to exit the EU exemplifies what happens when people feel like the system is letting them down, Richard Dobbs, the co-leader of the research, said on Wednesday, ahead of the report’s release.
He likened the build-up of resentment over globalisation to a dangerous natural gas leak in a row of houses.
“One of them will explode. I did not think that it would be the UK first,” said Mr Dobbs, a senior partner of McKinsey and a member of the McKinsey Global Institute Council.
The study found 65%-70% of households in 25 advanced economies were in income segments that had flat to falling incomes between 2005 and 2014, up from less than 2% between 1993 and 2005.
Mr Dobbs described the institute’s stance on globalisation as an “evolution,” not a reversal. “We’re not saying throw it all out. ... It’s about a sophistication in our thinking,” he said.
The McKinsey Global Institute still sees value in offshoring, immigration, trade, and so forth.
Mr Dobbs said: “Generally we’re pro those, but there’s a however, and we need to be more aware of the however.”