As the world moves forward despite suffering from a pandemic and currently dealing with a major conflict, new challenges have arisen that many countries are now grappling with in different ways.
One issue that has increased in effect is deglobalization. The term defines the trend of countries starting to aim toward self-sufficiency while becoming less dependent on other nations. At the same time, global trade has increasingly become unstable with tariffs, tensions, and geopolitical issues destabilizing the global chain.
On August 18, 2022, Project Syndicate wrote that the new direction the world is taking with globalization waning in the past few years is currently unknown. Some speculate that globalization won’t go away fully and will only be on a smaller scale while others suggest that countries will focus more on productivism.
The trend of productivism can be seen among many nations' governments. Increasing plans for solutions to help stabilize their economies while increasing their means of production has grown more as a priority and in popularity.
Goldman Sachs wrote similarly on August 4, 2022, where it provides a summary of this emerging trend by saying, “supply disruptions are beginning to encourage companies to source materials locally when possible, and governments are looking for ways to support the production of more goods domestically to improve their country’s economic resilience.”
This factor contributes to the geopolitical shifts of nations focusing more inwardly than outwardly.
One earlier world example of this was when the pandemic hit and communities were enclosed into groups under quarantine. This had led to people focusing more on themselves and their local communities than worldwide issues.
In early December of 2022, Arab News reported, “Part of the impact of this and the lockdowns is that many who were laid off or were at home on furlough schemes set up entrepreneurial home businesses and, as such, people have reignited their love for homemade items, gifts, decor, clothes and food and are selling locally or nationally. So, commerce has, in some ways, become deglobalized.”
A different article published by Axios on March 24, 2022, points out several reasons other than the pandemic that has helped contribute to this pursuit of self-sufficiency.
It said, “The list of affronts to a vision of liberal internationalism keeps getting longer. Xi and Putin. Brexit and Trump. Bolsonaro and Erdoğan and Orbán. Pandemic-closed borders, and now war in Eastern Europe.”
The effects of these causes have already led to some countries pushing for less global trade and more local production. An article by CME Group wrote back on October 19, 2022, that stock prices of semiconductors have been a prime example of deglobalization affecting geopolitics.
“In this transition, countries are increasingly viewing key economic sectors in national security terms and looking to onshore or near-shore production. This policy change is no more evident in some areas of the economy than in semiconductors.”
Continuing, the article explains that the choice made by the U.S. for more processes and regulations on the imports of semiconductors from China reflects the geopolitical tensions between the two countries. At the same time, this will affect the prices of semiconductors which could mean more expensive devices and technologies.
As times change, countries will always face obstacles toward goals of prosperity and stability. With geopolitical factors playing into the trend of deglobalization and productivism increasing geopolitical tensions, only time will tell how the world will look like 10 years from now.
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