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While product and capital markets have become increasingly integrated, labour markets have not. Tens of millions of people currently work outside their home countries. Yet labour is less mobile than it was in the second half of the 19th century, when some 60 million people left Europe for the New World. Even within the European Union, which gives citizens of any member state the right to work and live in any other, only a small proportion of workers ventures across national borders. Language, cultural barriers, and incompatible educational and professional qualifications all combine to keep labour markets national.
This does not mean that globalisation is just a myth. In some new and different ways the world economy is becoming more internationally integrated than it was at the turn of the century.
For one thing, large parts of the world did not participate in the pre-1914 global economy. Today, more economies than ever before have opened their borders to trade and investment. Not only developed countries, but developing in Asia and Latin America have embraced market-friendly reforms.
A second difference is that whereas 19th-century globalisation was driven by falling transport costs, it is now being driven by plunging communication costs. This has created new ways to organise firms at a global level, with closer international integration than in the past.
Cheap and efficient communication networks allow firms to locate different parts of their production process in different countries while remaining in close contact. Modern information technology also reduces the need for physical contact between producers and consumers and therefore allows some previously untradable services to be traded. Any activity that can be conducted on a screen or over the telephone, from writing software to selling airline tickets, can be carried out anywhere in the world, linked to head office by satellite and computer. Even medical advice or education can now be sold at a distance over telecoms networks.
A third difference is that although net flows of global capital may be smaller than in the past, gross international financial flows are much bigger. Cross-border sales and purchases of bonds and equities by American investors have also risen.
As yet, the world economy is still far from being genuinely integrated. In future, however, new technology is likely to encourage further integration. The Internet and its companion technologies, for example, are expected to help to make markets more transparent, allowing buyers and sellers to compare prices in different countries. Telecommunication prices will fall even more sharply over the next decade.

So technology will continue to power the globalisation train. This poses a challenge for governments. By allowing more efficient use of world resources, globalisation should boost average incomes. However, the costs and the benefits will be unevenly distributed. Many people - notably unskilled manufacturing workers in rich economies - will find the demand for their labour falling as the jobs they used to do are performed more cheaply abroad. This raises the risk of a political backlash against free trade and capital flows.
Could the trend towards globalisation be reversed a second time ? Doing so might be more difficult than before. New technology and new types of financial instruments make it tricky for governments to impose effective capital controls. Likewise, the growth of multinational firms that can switch production from one country to another would make it harder to erect effective trade barriers.
New technology also creates distribution channels that protectionist governments will find it hard to block. A French government that wanted to shelter its film industry from American competition by restricting imports may find it impossible to stop foreign films being beamed by satellite or passed over the Internet. Foreign films will be able to squeeze through electronic windows that cannot be closed.

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