In this revision video we look at the issue of de-globalisation.
After decades of increasing globalisation, there now seems to be a slowing of globalisation, or even a turn to de-globalisation, meaning decelerating trade and investment and reduced global value chains.
Will the covid pandemic accelerate a process away from hyper-globalisation or will most aspects of our inter-connected world demonstrate more resilience in the face of severe shocks?
De-globalisation is the process of contracting interdependence and integration between businesses and countries . For example, growth of trade in goods and services and investment flows between countries declines.
Some drivers that might be causing de-globalisation
- Rise of populist politics and return to protectionism (including many non-tariff barriers) - a response to trade imbalances
- Shift towards bi-lateral and regional trade deals + decline in the influence of the World Trade Organization (WTO)
- Some return to capital controls and managed floating exchange rates especially after the global financial crisis
- Economic nationalism – such as disputes over vaccine exports, controlled mergers and acquisitions, technology rivalries
- Businesses shifting away from reliance on extended global supply chains (some reshoring of manufacturing)
- Movement away from free movement of labour across borders – greater use of migration controls
- Immediate impact of the 2020-21 covid pandemic - threats to supply chains and reductions in labour movement
Is de-globalisation inevitable?
- Our desire for overseas travel & study is strong – will rebound after the pandemic
- Global parcel and data flows have risen sharply over the past decade - expected to continue expanding post pandemic
- Fall in global trade during pandemic has not been as severe as many feared
- Technology has erased virtual borders – the physical movement of labour not as important as it once was
- Signs emerging global collaboration for example over corporation taxes and pharmaceutical research
- Trade liberalisation is not dead – there has been raft of new trade agreements signed between major regional blocs such as Mercosur, EU and the Pacific Alliance