>Globalization’s critical imbalances (McKinsey)

Future financial crisis could accelerate the rebalancing of global economic activity from developed to emerging markets.

The problem
Labor can’t be freely traded on a single global market, but capital and commodities can. This dynamic is creating significant tensions in global currency, commodity, and debt markets.

Why it matters
The release of those tensions will have profound strategic implications. For example, the dollar and euro would need to be devalued by between 30 and 50 percent for the purchasing-power-parity exchange rate of emerging-market currencies to reflect financial foreign-exchange rates more closely. Such a shift would dramatically affect the attractiveness of running operations and serving customers in different countries.

What you should do about it
Don’t assume prevailing globalization norms will continue. Prepare for future financial shocks, partly through scenario planning around rapid currency or commodity price shifts. Also, prepare for a time when emerging markets are at least as important as drivers of consumption as they are platforms for low-cost operations.

To read the full report: CRITICAL IMBALANCES