Globalisation Is Fracturing. So What Comes Next?

This eight minute video from Bloomberg News is ideal support for teachers and students covering Globalisation and indeed de-globalisation as part of their Year 13 Macroeconomics. It introduces us to the idea of connector economies such as Vietnam, Poland, Morocco and Indonesia - economies that seem to be thriving as the fractures of the world economy seem to widen.

Graham's insights:

This Bloomberg clip, on the very day that the Berlin Wall came down 34 years ago - is a great look both at globalization and the recent collapse of globalization in the wake of COVID and successive wars in Ukraine and now Gaza.

So what next? It seems unlikely that we're going to go back to hyperglobalization and lengthy supply chains? So where are we headed? A collapse of globalization is forecast to wipe off 7% of global GDP, as much as the French and German companies combined.

De-globalisation refers to the gradual slowing or reversal of the trend towards increased global interconnectedness, particularly in terms of economic integration and the free flow of goods, services, capital, and people. Some of the reasons why de-globalisation is happening include:

• Rising nationalism and protectionism: There has been a surge in nationalist and protectionist policies, as seen with Brexit, the US-China trade war, and increasing border controls.
• Technological advancements: New technologies, such as 3D printing and the internet, have made it easier for companies to produce goods locally, reducing the need for global supply chains.
• Environmental concerns: There is a growing awareness of the environmental impact of globalisation, including carbon emissions from transportation and the use of fossil fuels.
• Political instability: Political uncertainty in some countries has made international trade and investment riskier, leading some companies to withdraw from certain markets.

The rise of Near-Shoring

Near-shoring is a business strategy that involves moving production or services to a country that is geographically close to the company's home market. This is typically done to take advantage of lower costs of production and lower transportation costs. Near-shoring differs from offshoring, which involves moving production or services to a country that is further away, typically in a low-cost region. Near-shoring can provide companies with several benefits, including:

• Shorter supply chains, which can reduce transportation costs and lead times.
• Improved communication and coordination between the company and its suppliers.
• Greater control over quality and supply chain management.
• Opportunities for market expansion and new business partnerships.