The idea, the background, the current condition, the different aspects, and the advantages of globalization have all been the subject of extensive study and discussion during the past 25 years.
The argument put forth by the World Economic Forum is that there have been four waves of globalization.
The following is a summary of them from a 2019 publication.
The first wave is regarded as beginning in the late 19th century and lasting until 1914.
It was fueled by the industrial revolution and the concomitant advancements in transportation and communication.
After World War II, the second wave began in 1945 and lasted until 1989.
The third started in 1989 with the fall of the Berlin Wall and the dissolution of the Soviet Union, and it ended in 2008 with the global financial crisis.
The fourth wave began in 2010, when the effects of the global financial crisis began to fade, the digital economy was growing, artificial intelligence was becoming more prevalent, and China’s influence as a global powerhouse was growing.
Recent discussions on the subject have centered on whether or not the world is currently in a retraction from the fourth wave and is prepared for the takeoff of the fifth wave.
Startling parallels exist between the first wave’s retraction phase and the current global dynamics a century later.
But do these parallels imply that there has been a retreat from globalization?
Is there enough proof of “slowbalization” or “de-globalization”?
Parallels
The geopolitical and economic effects of WWI and WWII characterized the protracted retreat from globalization throughout the 30-year period from 1914 to 1945.
The Spanish Flu Pandemic of 1918–1920, the 1929 Stock Market Crash and Great Depression that followed, as well as the development of Stalin’s Communist Bloc in the 1940s, were further contributing factors.
Protectionist views, higher tariffs and other trade barriers, as well as a general slowdown in global trade, were further characteristics of this time period.
The similarities are astounding when viewed in the context of the present world.
The COVID pandemic, which had catastrophic repercussions on the international economy, global supply networks, and people’s livelihoods and well-being, is still being battled by the world today.
On the other hand, the Russia-Ukraine conflict has led to significant worldwide unrest and food shortages.
Additionally, it has caused significant disruptions in global value chains, an increase in gas and fuel prices, and political polarization.
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The general price level has been under pressure due to the rise in the cost of electricity and other consumer products.
For the first time in forty years, global inflation is accelerating. The world’s monetary authorities are battling inflation.
The World Trade Organization and the UN, which performed successfully in the post-WWII era, now have less sway, and the Russian-Ukrainian war has divided the world into three political factions.
Supporters of the Russian invasion, neutral nations, and opponents make up this group, which is dominated by the US, EU, and UK.
This division is a factor in the complicated geopolitical issues that are gradually changing regionalism and trade alliances.
Early signs of the possible expansion of Chinese influence in Asia are obvious, and Europe is already looking for new sources of oil and gas.
World with fewer connections
De-globalization is considered
A trend toward a less interconnected world that is characterized by strong nation states, regional regulations, and local solutions rather than international organizations, agreements, and freedom of movement.
These days, slowbalization is a hot topic.
Trend-spotter and futurologist Adjiedji Bakas coined the phrase to refer to the phenomenon as the in 2015.
continuous global economic integration through trade, financial, and other flows, albeit at a far slower rate.
The information about economic globalization presents a compelling picture.
They demonstrate that, even before the COVID epidemic struck the globe in 2020, a slowdown in the pace of globalization was visible.
The following data show broad measures of globalization:
exports of goods and services worldwide. These peaked at a record-high 31 percent of global GDP in 2008, marking the end of the third phase of globalization.
Exports decreased as a share of the global GDP and didn’t reach that level until the beginning of the fourth wave in 2011. T
hen exports began to decline gradually, reaching 28 percent of the world GDP in 2019 and a low of 26 percent in 2020, the first year of the Covid-19 era.
the amount of foreign direct investment that is brought in.
These peaked at US$2 trillion in 2016 and then began to decline, declining to US$1.48 trillion in 2019.
Despite being a startling 20% below the level seen before the 2009 financial crisis, foreign direct investment inflows of US$963 billion in 2020 recovered to US$1.58 billion in 2021.
From a low of 1 percent in 1989 to a high of 5,3 percent in 2007, foreign direct investment as a proportion of GDP began to rise.
It retraced after the global financial crisis and peaked at roughly 3.5 percent in 2015 and 2016.
After that, it fell to 1,7% in 2019 and 1,4% in 2020.
Over time, multinational corporations have served as the primary engine of economic globalization.
The quantity of them reflects how eager businesses are to make investments outside of their own nations.
According to the UN Conference on Trade and Development, 82 000 people were affected in 2008. By 2017, it had dropped to 60 000.
Data on global private capital flows, such as remittances, portfolio equity movements, foreign direct investment, and private sector borrowing, are not easily accessible.
According to data from the Organization for Economic Co-operation and Development, private capital flows for the reporting nations, however, hit a record high of US$414 billion in 2014 before decreasing to US$229 billion in 2019 and US$8 billion in 2020.
The evidence of increased economic relationship fragmentation brought on by Brexit and the troubled US/China relations, particularly under the Trump administration, support these downward tendencies.
Next, what?
Whether the most recent information is:
a slowbalization in expectation of the global economy’s recovery from the effects of the Covid-19 outbreak and the war in Ukraine, or an indication of a pullback from globalization akin to that occurred after the first wave a century ago?
The first wave of globalization and current global events share many parallels, even though they are part of a very different world order.
The pace at which technology and knowledge are disseminated, the digital age, and other current world dynamics will undoubtedly have an impact on how intensely the already deeply ingrained dependence on globalization is retracted.
Nation states understand that choosing trade and investment partners carefully is necessary and that naively entering into contracts and agreements with businesses in other nations may be troublesome.
Events over the past three years have undoubtedly demonstrated the extent to which global economies are interconnected, and it will be impossible to fully reverse this trend despite instances of protectionism and threats of more inward-looking policies.
Supply networks may become more regionalized, leading to fragmentation.
Nobel Prize winning economist Joseph Stiglitz used the term “friend shoring,” which was created by US Treasury Secretary Janet Yellen, to describe the shift in manufacturing.
It is becoming clear that the globalization process has elements of both de-globalization and slowbalization.
It is also obvious that the effects of the global external shocks necessitate a complete rethink, repurposing, and reform of the globalization process.
Most likely, this will usher in the fifth phase of globalization.
Elsabe Loots, a professor of economics at the University of Pretoria and a former dean of the faculty of economic and management sciences
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