De-globalization is a term we hear a lot lately, but what does it actually mean? In an increasingly interconnected world, is de-globalization becoming an unstoppable trend? Let’s find out together in this article.
What is de-globalization?
De-globalization is a process in which world economies become less dependent on each other. This may be due to a reduction in international trade, foreign investment or migration. De-globalization can also be defined as a trend toward the restoration of national boundaries.
The main effect of de-globalization is to strengthen national economies and protect local markets from external impacts, such as global competition. However, this may have negative effects on foreign direct investment, technological innovation and other benefits that come with globalization.
Why and how is de-globalization happening?
There are several factors that contribute to de-globalization. First, growing political and geopolitical uncertainty is making companies increasingly cautious about making long-term investments in areas of the world considered risky. Second, increasing protectionism by governments is hindering the free trade of goods and services. Finally, the spread of technological innovation is reducing the need to move production activities to countries with lower costs.
De-globalization manifests itself in different ways. First of all, it results in a decrease in international trade and foreign investment. Second, it leads to an increase in trade barriers and the restriction of people’s freedom of movement. Finally, it also leads to the contraction of international financial activities.
International relations are changing and the world seems to be becoming less connected. Global trade is declining, the number of air passengers is down, and the foreign direct investment decreases. These trends suggest de-globalization, but is this really the case?
According to theSwiss Institute of Economics KOF, from 1990 to 2007 globalization increased rapidly. But, for the first time in 40 years, globalization began to decline in 2015. According to the United Nations Conference on Trade and Development (UNCTAD), there was another decline in globalization in 2017, when global production levels rose sharply. Another measure of de-globalization is FDI or foreign direct investment.
The effects of de-globalization.
De-globalization does not necessarily mean that the world is less connected. People are increasingly connected to each other and have access to more information than at any previous historical stage. Technology has made this connection possible and will continue to do so.
However, de-globalization is manifesting itself in more tangible ways. States are taking protectionist measures to restrict world trade and exclude or limit the sale of foreign products. The number of international trade agreements has decreased and mobility difficulties are increasing. Ultimately, de-globalization is a complex phenomenon involving relationships between governments, businesses and people.
The war in Ukraine has shown how globalization is at risk.
The war in Ukraine has shown how globalization is at risk. Indeed, the war has highlighted the fragilities of the global economic system, particularly the West’s dependence on energy imports and the resulting vulnerabilities to geopolitical actions by states that hold these resources. This will have a significant impact on companies that rely on shipping parts from other countries to production facilities in their own country.
In addition, the Ukraine crisis has reignited the confrontation between East and West, questioning the West’s ability to positively influence democratization in the former Soviet republics.
The war in Ukraine has also strained regional financial stability, with Western countries facing a decline in investor confidence. This has led to serious liquidity problems in the markets, and a consequent rise in bond yields.
In summary, the war in Ukraine has highlighted how geopolitical tensions can have a significant impact on globalization. The Ukrainian crisis has challenged some of the economic benefits of globalization, creating new vulnerabilities and presenting challenges that need to be urgently addressed.
In summary, the war in Ukraine has highlighted how vulnerable the global economic system is to geopolitical pressures. The Ukraine crisis has shown that the West is not immune from similar risks and that nations must prepare for an unstable future.
Conclusion: a new production model.
De-globalization will have a significant impact on how global logistics chains function. It is clear that companies will have to take measures to ensure the continuity of their production chains and limit the risk of production paralysis by adapting to the new global economic reality. By incorporating these measures into business strategies, even the smallest companies will be able to prevent any problems related to changes in the global supply chain.
Companies will also need to develop a new knowledge of markets, technologies and resources available to help them meet the challenges posed by de-globalization. For example, companies will need to learn how to manage the complexity of a decentralized supply chain, identify ideal trading partners, and manage changes in consumer demand.
As the world slowly moves toward a model of de-globalization, the logistics chains will have to adapt to ensure efficiency and avoid disruptions. Logistics chains must be strengthened to cope with future economic realities and must be proactive in reacting to changing global market conditions.