HASfter the fall of the Berlin Wall, then the collapse of the Soviet Union and the integration of China into world trade, Francis Fukuyama announced ” the end of the story “ and Thomas Friedman, columnist at New York Times, claimed that, from now on, “the Earth is flat”like a “new global playground” for businesses, without borders or obstacles.
This new era ultimately only lasted thirty years, during which States and companies received the “peace dividend”. During this period, Western economists were concerned with growth, innovation, rising inequality, the fight against poverty, but much less about sovereignty and economic warfare.
Relocations caused concern from time to time, but the benefits of globalization on prices ended up winning out in the debates. The United States has reassured itself with digital (GAFA) and monetary (the dollar) domination. Anxious to reconquer their past power, China and Russia have been more strategic, the first becoming the factory of the world, the second skillfully wielding the weapon of gas.
It took Covid-19, then the war in Ukraine for Europe to wake up and admit that the “peace dividends” are not eternal. A question then arises: if States have to increase their military spending and if companies lose the savings they have made thanks to the fluidity of world trade, who will pay this bill? What consequence is it likely to have on this inflation which is already making life significantly more complicated for households?
Shortages and price increases
The windfall of peace dividends is quickly calculated. The economist Kenneth Rogoff did it for public finances. Defense spending has fallen, according to the World Bank, from more than 4% of global GDP in 1985 to 2.2% today, representing a saving of 2,000 billion dollars (1,869 billion euros). For the United States, the defense effort fell from 6.9% of GDP in 1989 to 3.5% in 2021: this freed up 600 billion dollars. In France, this spending exceeded 3% of GDP at the end of the 1980s and fell to less than 2%, a differential of around 30 billion euros per year on state spending.
Large companies are also big winners thanks to “globalization of value », as Alain Quinet recalls in Economy of war (Economica, 288 pages, 37 euros). A teacher at the Saint-Cyr Coëtquidan Military Academy, this economist is also director of strategy at SNCF Réseau. ” In the 1990she recalls, Companies from the most advanced countries took advantage of cost differences between the country where their headquarters were located and the countries producing the different intermediate components. » They did not retain “on national soil [que] the most value-creating tasks – R&D, design, marketing, after-sales service – relocating manufacturing”, to improve their performance. Gold, “the higher the desired return, the more the risk on supplies tends to increase”, remember Mr. Quinet.
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