The World Economic Forum identifies the first wave of modern globalization as spanning from the late 1800s to the start of World War I in 1914. After this period, the global economy entered a phase of deglobalization amidst the turmoil and destruction that followed the First World War. To shield local economic structures and industries from external, more competitive markets, a series of protective measures were implemented.
While the post-WWII era initially reversed this deglobalization trend, the period of globalization lasted only until around 1980, influenced by the Bretton Woods system. Subsequently, political changes in the U.S. and Europe, led by Ronald Reagan and Margaret Thatcher, combined with the opening of the Chinese economy, sparked a new wave of globalization. This wave of globalization was only halted by the 2008 global financial crisis.
History allows us to apply context into current events, but what is exactly deglobalization? According to the British International Think Tank, Chatham House, “Deglobalization is a movement towards a less connected world, characterized by powerful nation states, local solutions, and border controls rather than global institutions, treaties, and free movement.”
Over the past decade, a combination of public and private sector actions has fueled a growing deglobalization trend across various economic sectors. Governments have implemented protectionist tariff policies, while businesses have pushed initiatives to bolster local economies of scale. Together, these measures have cultivated a stronger social preference for domestic products.
The recent tariff imposition only reinforces the trend that’s been happening for the past decade—even if we really weren’t paying attention to it. For our sector it can mean a lot of change, and it’s up to each party involved to determine whether that change is good or bad. And of course, what opportunities can come from that change. Let’s not forget that regulatory measures that are implemented on a broad-based scale, with little or no room for exceptions, will almost always create uncertainty in the market. And when uncertainty is the predominant feeling within the business community, it will generally lead to halt imposed by an abundance of precautions. The question is, can we afford to sit still and wait to see what happens?
