By many standard measures, globalization is in retreat. The 2008 financial crisis and the ensuing recession brought an end to three decades of rapid growth in the trade of goods and services. Cross-border financial flows have fallen by two-thirds. In many countries that have traditionally championed globalization, including the United States and the United Kingdom, the political conversation about trade has shifted from a focus on economic benefits to concerns about job loss, dislocation, deindustrialization, and inequality. A once solid consensus that trade is a win-win proposition has given way to zero-sum thinking and calls for higher barriers. Since November 2008, according to the research group Global Trade Alert, the G-20 countries have implemented more than 6,600 protectionist measures.
But that’s only part of the story. Even as its detractors erect new impediments and walk away from free-trade agreements, globalization is in fact continuing its forward march—but along new paths. In its previous incarnation, it was trade-based and Western-led. Today, globalization is being driven by digital technology and is increasingly led by China and other emerging economies. While trade predicated on global supply chains that take advantage of cheap labor is slowing, new digital technologies mean that more actors can participate in cross-border transactions than ever before, from small businesses to multinational corporations. And economic leadership is shifting east and south, as the United States turns inward and the EU and the United Kingdom negotiate a divorce.
In other words, globalization has not given way to deglobalization; it has simply entered a different phase. This new era will bring economic and societal benefits, boosting innovation and productivity, offering people unprecedented (and often free) access to information, and linking consumers and suppliers across the world. But it will also be disruptive. After certain sectors fade away, certain jobs will disappear, and new winners will emerge. The benefits will be tangible and significant, but the challenges will be considerable. Companies and governments must prepare for the coming disruption.
THE NEW ERA
The threads that
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