Deglobalization: A Critical Analysis

What is Deglobalization?

Globalization refers to the increasing interdependence among the world's economies, cultures,

and populations, resulting from the cross-border trade in goods and services, technologies, and

the flows of investment, people, and information. Over many centuries, countries have

developed economic partnerships that have facilitated such movements. The term gained in

popularity after the Cold War in the early 1990s, when these cooperative arrangements shaped

modern everyday life. The present study deals with international trade and investment flows,

focusing on the developed economies, with a prime focus on the United States. Whereas

globalization used to symbolize a frictionless and integrated world economy, the series of recent

events starting with the COVID-19 pandemic and followed by geopolitical tensions and

environmental challenges brought its weakness to light.

Summary and Analysis of the New York Times Article

Summary

The global economic structure, established after the Cold War, was characterized by its open

markets, free trade, and deregulated financial systems which was branded as a system that was

going to produce unprecedented prosperity. That grand narrative however did not come to

fruition as it started falling apart under the sheer weight of the systemic challenges mainly

caused by a series of economic and political crises.

In the 1990s, the collapse of the Soviet Union was hailed as the "end of history," and with it

liberal democracy and free-market capitalism seemed to offer the ultimate templates for global

governance. Trade liberalization gained momentum, buoyed by agencies like the World Trade

Organization, which was formed in 1995. In what was hailed as a transformative step, China

joined the WTO in 2001, with the expectations that economic integration would lead to political

democratization.

Indeed, globalization brought tremendous benefits in terms of lifting millions out of poverty in

China, South Korea, and Vietnam and propelling technology worldwide forward.

Yet, the cracks in this system became more and more visible. Policymakers were aware of the

fact that in globalization, there were going to be winners and losers but relied on market forces

to allocate resources and believed that redistribution would come in due course. This is how the

stark inequalities became aggravated. In the U.S. and other developed economies, industrial

jobs have been sent abroad to lower wages, resulting in a hollowed middle class and producing

resentment among workers.

These economic dislocations have given rise to populist leaders such as Donald Trump, Viktor

Orbán, and Marine Le Pen who have taken advantage of the anti-globalization sentiment.

The 2008 global financial crisis served as the most significant catalyst. Where the financial

system was almost paralyzed, it disclosed the weaknesses of being interconnected.

Analysis

The article provides a comprehensive examination of the cracks in the foundation of

globalization linking them to the real-world crises that most of us know. I especially agree with

the critique of globalization's overreliance on the efficiency of markets because they have
repeatedly been shown to prioritize profit over preparedness. The pandemic, for instance, has

exposed the vulnerabilities of outsourcing critical goods that could, instead, be manufactured in

the selfsame country rather than depending on imports.

That being said, this article points out that some of the assumptions that mattered for

globalization-always-open markets, unavoidability of economic integration-have been

immensely undermined, and that I agree with. The article should have raised more voices about

those softer forms of deglobalization, like tariffs in different countries or creeping tensions due to

trade pact conflicts. While some trends may have suggested a possible pulling back from

globalization, some sectors still have a sustained high volume of trade. Thus, although

deglobalization seems to be the new paradigm that the world is going toward, we have not yet

crossed the threshold.

Why Deglobalization is Suddenly in the News

The reason that deglobalization is suddenly on the news and is suddenly something that many

countries are considering as a possible direction that their country may need to take is because

of the recent crises amplifying the attention deglobalization is given. Some of the key factors

include:

1. COVID-19 Pandemic

○ The Pandemic forced many countries to have to rely on their countries natural

resources because the once efficient global supply chain screeched to a halt
 when the pandemic was in full effect with travelling and trade between countries

being shut down. This caused a severe shortage of basic goods and services

like hand sanitizer and food that was a basic staple in that country but is not

actually produced there. The semiconductor crisis was also that negatively

impacted the more impoverished and less technologically advanced countries

because they don't have the technology to produce semiconductors.

2. Geopolitical Tensions

○ The war between Ukraine and Russia and the escalating conflict between the US

and China has further soured the idea of globalization and having to rely on

another country for a specific product and has exposed the fragility of our

interconnected world. One of the main incidents that tipped the scale in the

favour of deglobalization was when Russia declared war on Ukraine and many

countries realized how much of the oil that they are importing is being exported

from Russia, pushing these nations to reconsider their global strategies.

3. Climate Change

○ Increasingly frequent climate-related disasters have highlighted the

environmental costs of globalization such as the carbon footprint associated with

global trade and without the planet slowly dying it is in the best interests of

everybody to slow down the process of global warming as quickly as possible.

Why It Feels Sudden

While the factors contributing to deglobalization have been building for decades, recent events

have brought them into sharper focus:

 ● Crises Create Urgency: The pandemic and geopolitical conflicts created an immediate

problem with many resource shortages and disruption of trade and other sectors and

forced nations to act quickly to secure resources and to stabilize there economies

● Visibility in Media: Coverage of the various trade wars, sanctions, and supply chain

challenges has made deglobalization a much more realistic and tangible problem that

we have to mold our futures around and it is not something that is just theoretical

anymore.

● Shift in Policy Narratives: Governments are openly discussing deglobalization as part

of their strategies, making it a more prominent topic in political and economic discourse.

Driving Forces Behind Deglobalization

Political Factors

Nationalist and protectionist policies have gained more traction globally, as governments around

the world focus on industries and economic security rather than collaboration with other

countries. There are leaders such as Viktor Orbán in Hungary or Donald Trump in the US who

promote agendas of "self-reliance" and "economic sovereignty" for instance,

● The US tariffs imposed on China and multilateral trade agreements such as the

Trans-Pacific Partnership were two examples of the US's turn towards globalization.

● Brexit was the political rebuke of globalization as the UK wanted to take back control

over its trade policies and their borders.

Economic Factors
The COVID-19 pandemic revealed the vulnerabilities in many global supply chains and sparked

widespread disruptions in the distribution of goods and services that had both short-term and

long term effects on the economical situation of some countries, examples of this are:

● Shortages of Basic Supplies: Medical equipment like masks and ventilators became

scarce as countries competed for limited [Link] was also a massive shortage

of toilet paper, sanitizers, napkins and some specific food items that varied in each

country for example Jamaica had a shortage of rice because rice is not produced in the

country and is only acquired through trade.

● Semiconductor Supply Crisis: There was also a Semiconductor Supply Crisis which

created global chip shortage and crippled industries such as automotive and phone

manufacturing which led to many countries to identify the risks of relying on concentrated

production hubs​. These disruptions led governments and companies to focus their

efforts on either building a more resilient supply chain or producing semiconductors

themselves which would contribute to deglobalization.

Environmental Factors

Globalization’s environmental toll has been significant, with large-scale production and

transportation systems contributing to deforestation, greenhouse gas emissions, and resource

depletion. Examples include:

● Deforestation in Brazil: Driven by global demand for soy, beef, and timber, Brazil's

Amazon rainforest has faced extensive clearing, exacerbating climate change. Brazil is

an agricultural country known for its production of soy, beef and timber products because

of the Amazon rainforest. This has in recent years turned into a negative however as

greedy companies and countries have continuously exploited the rainforest by cutting

down trees and killing wildlife that has contributed to climate change.
 ● Overfishing in Southeast Asia: The huge global demand for seafood has strained

marine ecosystems and the biodiversity of South Asian countries because of this there

has been now been a call for sustainable fishing and localized production which can help

stop the degradation of the environment.

Social Factors

Public sentiment in many developed countries has turned against the idea of globalization which

is mainly driven by its perceived role in creating more lower income households than before and

the gradual disappearance of the middle class.

● Job Outsourcing: Globalization led to the outsourcing of industrial jobs from developed

nations to lower-wage countries which has been repeatedly been exposed to be

exploitative to their workers. This can be observed especially in the fast fashion industry

where companies like H&M outsource the production of their clothing to countries like

Bangladesh where the workers work in sweatshops under inhumane conditions.

● Rise of Populism: Economic discontent has fueled the popularity of populist leaders

and movements which blame globalization for job losses paired with the skyrocketing

inflation that most people's salaries are not rising fast enough to keep with has created

this new anti-globalization sentiment..

Positives of Deglobalization

1. Strengthened Local Economies and Supply Chains

○ Deglobalization encourages the development of domestic industries, reducing

reliance on international suppliers. By investing in local manufacturing and

 infrastructure, countries can boost employment and stabilize their economies. For

example there is an initiative in India "Make in India" that aims to encourage

more people and companies to produce more goods locally and rely less on

imported goods.

2. Reduced Environmental Impact

○ Shortening supply chains decreases the carbon footprint associated with

transporting goods over long [Link] can reduce climate change that is

caused by the carbon gas that is released by shipping and aviation as a

byproduct of the fuel they need to run. Additionally when an item is locally

produced most likely the people producing it will not exploit the land as badly

because they have less consumers with it not being on a global scale. This aligns

with sustainable practices such as using renewable energy sources and adhering

to stricter environmental standards.

3. Increased National Security Through Self-Reliance

○ By producing critical goods domestically, nations can better withstand geopolitical

tensions and global crises. This is one of the main issues that globalization itself

has now with examples such as the pandemic and the Ukraine and Russian war

being stark indicators of the benefits a deglobalized world would have.

Negatives of Deglobalization

1. Higher Costs for Consumers Due to Reduced Trade

 ○ Local production often comes with higher costs as labor and materials in

developed countries tend to be more expensive than in low-wage economies.

This can result in increased prices for goods and services placing a burden on

consumers. For example, producing electronics domestically in the U.S. rather

than outsourcing to Asia may raise prices for everyday items like smartphones

and laptops .

2. Slower Economic Growth, Particularly in Developing Countries

○ Many developing nations rely on exports to fuel their economies and create jobs

like Bangladesh who rely on the fast fashion industry for a good percent of their

countries income. This has caused developing countries to look at

deglobalization in a negative light because it reduces international trade and

shifts demand towards domestic markets in developed countries which severely

impacts their economies.

3. Geopolitical Instability as Nations Compete for Resources and Influence

○ A deglobalized world could incite more competition among nations for resources,

such as rare earth minerals, energy supplies, and food. This competition may

lead to increased tensions and conflicts particularly in developing countries

where resource distribution is uneven. Examples include:

■ Energy Conflicts: The shift to renewable energy because of global

warming has intensified the race for minerals such as lithium, cobalt, and

others that are key components in batteries and solar panels.

■ Food Security Concerns: Reduced global agricultural trade could

heighten food insecurity in regions dependent on imports leading to social

unrest and migration. For example the war in Ukraine disrupted global
 wheat supplies affecting many countries who rely on their export to

provide wheat in their countries.

Countries Considering Deglobalization

United States

The United States has been at the vanguard of the deglobalization process, now well

ensconced between the presidency of Donald Trump and continuing into the Biden

administration. The "America First" policy under Trump levied heavy tariffs against China and

pulled the United States out of the multilateral trade deal known as the Trans-Pacific

Partnership. These actions signaled a pivot toward bilateral agreements and attention to

domestic manufacturing.

President Biden had retained some of these protectionist steps: restrictions on Chinese

investments, the promotion of domestic industries through heavy subsidies on renewable

energy and electric vehicles. Policymakers in the U.S. have framed these efforts as necessary

in the interest of national security with an emphasis on the building of strong supply chains by

"trusted partners".".

United Kingdom

The UK's departure from the European Union in 2016 (Brexit) is one of the first major indicators

of the world looking towards moving to deglobalization. The decision reflected the United

Kingdom's growing skepticism toward multinational agreements and a desire for economic and

political sovereignty. Since Brexit, the UK has pursued independent trade agreements,

prioritizing national interests over EU regulations.

China

China's approach to deglobalization is a lot subtler than many other countries because while it

remains deeply integrated into the global economy, it has created and implemented strategies to

reduce their dependence on foreign markets. They have a "dual circulation" policy that mainly

promotes domestic consumption and self-reliance in critical technologies such as

semiconductors which as mentioned previously was in shortage during the pandemic because

of the strict technological barriers. These efforts are partially in a response to the U.S. trade

restrictions and tariffs but also the growing geopolitical competition between the two nations.

Russia

Russia's deglobalization was unintentionally accelerated because of its invasion of Ukraine and

the subsequent sanctions imposed by most of the Western nations. After being cut off from

most of the global financial and trade systems Russia has turned towards focusing on building

local industries and strengthening ties with non-Western economies such as China and India.

India

India has adopted selective deglobalization policies under Prime Minister Narendra Modi's

"Make in India" campaign. These policies aim to boost domestic manufacturing and reduce

reliance on imports, particularly from China. India has also pulled out of regional trade

agreements like the Regional Comprehensive Economic Partnership (RCEP), citing concerns

over protecting its local industries.

Developing Countries
In many developing countries, deglobalization is less about choice and more about necessity.

Debt crises that were accelerated by the pandemic and the rising interest rates have forced

nations such as Sri Lanka, Argentina, and others to reconsider their economic dependencies.

These countries are increasingly seeking alternatives to Western-led globalization such as

engaging with China's Belt and the Road Initiative.

Trade Agreements Currently at Risk

1. World Trade Organization (WTO)

○ The WTO, established in 1995 to promote free trade and resolve disputes, has

seen declining influence in recent years. Countries such as the United States

have increasingly begun to ignore its rules and regulations and have shifted their

focus more towards bilateral agreements. Additionally the rise of tariffs and the

increasing amount of trade barriers being put in place especially between the

U.S. and China is against the WTO's core principles. The organization’s ability to

enforce its rules on trade is being questioned and it is looking clearer and clearer

each day that the organization's days may be numbered if they don’t make a

great change.

2. European Union Trade Agreements

○ The EU is responsible for the trade policy of the member countries and

negotiates agreements for them. Speaking as one voice, the EU carries more

weight in international trade negotiations than each individual member would.

However, internal pressures from member states like Hungary and Italy where
 populist parties challenge EU-wide policies has created more friction. Brexit was

already enough to demonstrate the vulnerability of the regional agreement and

other nations could follow the United Kingdom's example at any time which would

lead to a fragmented European trade landscape.

3. NAFTA/USMCA

○ The transition from NAFTA to the United States-Mexico-Canada Agreement

(USMCA) reflected growing tensions over trade imbalances. While USMCA

modernized the NAFTA agreement and was said to make closer trade

relationships between the three countries the U.S. has continued to impose tariffs

particularly on Canadian and Mexican goods. An example of this is when Donald

Trump in March 2018, he imposed tariffs on steel (25%) and aluminum (10%)

from most countries including Mexico and Canada.

4. China's Belt and Road Initiative (BRI)

○ China’s ambitious infrastructure and trade project has faced criticism and

pushbacks, particularly from Western nations led by the United States. There

have been multiple allegations of debt-trap diplomacy and increasing

environmental safety concerns have led countries like Sri Lanka and Malaysia to

reconsider their participation in the BRI which has jeopardized this trade

agreement.

Trade Agreements That May Become At Risk

 1. Regional Comprehensive Economic Partnership (RCEP)

○ The RCEP, which includes China and several Asia-Pacific nations' main aim is to

foster trade in the region. However as started before with the increasing

geopolitical tensions particularly between China and India, it has threatened the

long term stability of the trade agreement. India's decision to withdraw from the

agreement in 2018 has called the trade agreement's validity into question.

2. Trans-Pacific Partnerships (CP TPP and TPP)

○ The Comprehensive and Progressive Agreement for Trans-Pacific Partnership

(CPTPP), the successor to the TPP, is now particularly vulnerable to

deglobalization trends. This is because the U.S. withdrawal under the Trump

administration set a precedent and other nations may also follow suit as they

reassess their trade priorities in light of domestic economic pressures.

3. Mercosur (South American Trade Bloc)

○ Regional trade agreements like Mercosur, which includes countries such as

Brazil, Argentina, and Uruguay, have faced internal disagreements on policies of

trade. Protectionist tendencies that have been enhanced by the recent economic

instability among its member states could further weaken this regional trade bloc.

A Deglobalized World?

A deglobalized world would shift the focus of countries inward and would more emphasize local

economies and a greater sense of self-reliance than import from faraway foreign countries .
While this new approach might address some of the challenges globalization has created it

would most likely also come with its own set of difficulties and uncertainties.

Economically, a deglobalized world would mean countries producing more for themselves alone

and a local market. Manufacturing will shift more to be in the products country of origin as there

will be no need to manufacture globally anymore and there would be more focus on the local

market with nations investing in their industries to reduce reliance on foreign suppliers. For

example, the U.S. could produce its own semiconductors instead of depending on Taiwan, and

European countries might expand renewable energy production to avoid reliance on imported oil

or gas which was a huge problem they had because of their reliance on Russia. This localized

focus could strengthen communities and create more jobs and maybe stabilize the rapidly

inflationary economy . However, it could also leave developing countries—many of which

depend on exports to wealthier nations—struggling to adapt, leading to greater inequalities

between nations.

Politically, the world would feel divided. The domination of nationalist and protectionist politics

could influence governments to place the needs at home well ahead of global cooperation.

Tariffs imposed, restricted trade, and even the pullback of countries from organizations such as

the World Trade Organization may be what the future of the world would look like .

The environment might benefit somewhat from such a deglobalized world. Shortened supply

chains and reduced reliance on transporting goods across the world would lower emissions and

ease the stress on natural resources. But there's a tradeoff, too: countries relying on older,

dirtier technologies may see local pollution rise. In addition, competition for necessities such as

water, arable land, and minerals could spawn conflict, and it would be clearer even in a less

integrated world that nations would be facing some of the same problems.
In many ways, this would be a more fractionalized world. Trade and collaboration would not

disappear; they would probably shrink towards just the essentials, not luxuries. Communities

may be more self-reliant, but they would be forced to cope with isolation and increasing costs.

Such a turn of events may solve some of the problems brought about by globalization, such as

economic risks and environmental degradation, but it is also likely to bring on different

hardships, particularly for countries and people ill-equipped to fend for themselves.
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DEGLOBALISATION AND PROTECTIONISM. (2022, November 17). Bruegel. Retrieved

December 3, 2024, from

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FitzGerald, J. (2024, November 26). 'No-one will win' - Canada, Mexico and China respond to

Trump tariff threats. BBC. [Link]

REED, T. (n.d.). Growing Threats to Global Trade. International Monetary Fund (IMF). Retrieved

December 3, 2024, from

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