In China alone, more than 150 million new people connected to the Internet last year, giving that country a digital population almost as large as the world’s biggest social-networking site, Facebook. Estimates by Cisco Systems suggest that in 2009, global data flows expanded by nearly 50 percent. Even as capital flows temporarily shut down during the crisis’s darkest days in the winter of 2008–09, for example, the global information grid kept growing. In the absence of direction from a single center, they grow, evolve, interconnect, disrupt, and-quite important-heal themselves. Such complex adaptive systems create their own organizing dynamic. Who would have imagined that Iceland’s financial system might collapse when mortgages in Las Vegas went belly up? These interconnections are even more pronounced in capital markets. No wonder that over the past 40 years, trade in intermediate goods as a percentage of total trade has doubled.
These days, a typical manufacturing company relies on more than 35 different contract manufacturers around the world to provide the necessary parts for its goods, which for some companies, such as auto and airplane manufacturers, can range in the tens of thousands. Why? Trade declined everywhere because, increasingly, products are made everywhere. Organisation of Economic Co-operation and Development. By the end of 2008, the volume of trade had fallen by more than 10 percent in more than 90 percent of OECD 1 1. The striking thing about the recent economic downturn wasn’t just the rapidity of the decline but the fact that so many seemingly diverse markets plunged at once. On this grid, trillions of large and small transactions synchronize instantly. Case in point: only one in ten US dollars in circulation today is a physical note-the kind you can hold in your hand or put in your wallet.
Within this digital fabric, old boundaries begin to blur cross-border capital flows also become information flows and just-in-time supply chains also serve as just-in-time information chains.
These networks form a global communications and information grid that enables large-scale interactions in an instant. Information flows have increased exponentially. Cross-border capital flows have expanded at three times the rate of GDP growth. Since 1990, trade flows have grown 1.5 times faster than global GDP. Money, goods, data, and people now cross borders in huge volumes and at unprecedented speed. Over the past two decades, globalization and digital technology have combined to create vast, complex networks that weave themselves through every economic and social activity.
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