Is globalisation dying or simply finding a new way to operate?
In short: With the rise of geopolitical tensions and the aftermath of the COVID-19 pandemic, many experts suggest we are witnessing the end of globalisation. However, new data suggests the world isn't pulling apart; instead, it is undergoing a complex reconfiguration to manage new risks and vulnerabilities.
Recent global shocks, including the conflict in Ukraine and the COVID-19 pandemic, have prompted major asset managers like BlackRock to suggest that globalisation might be ending. This sentiment has fueled mainstream discussions around reshoring—moving production back to a home country—as well as friendshoring and nearshoring, which involve shifting manufacturing to trusted or neighboring nations to increase resilience against supply chain disruptions.
Despite these fears of a retreat, OECD Trade in Value Added (TiVA) data reveals a much more nuanced reality. Rather than a decline, global production networks appear to be adapting. A key metric for this integration is the share of foreign inputs found within a country's exports. By 2022, this foreign value-added share across OECD economies had recovered from pandemic-era disruptions to reach approximately 30.4%, marking its highest level since 1995.
Current projections for 2023-24 suggest that global integration has stabilized at these historically high levels. While businesses are indeed re-evaluating their positions to mitigate risks like geopolitical pressure, carbon footprints, and modern slavery, the evidence does not support a widespread move toward deglobalisation. Instead, we are seeing a realignment where regional ties are strengthening alongside global ones. For instance, economies such as France, Belgium, and Greece have seen their European share of value-added exports increase by roughly 3 percentage points, while Japan and Korea are deepening their reliance on East and Southeast Asian inputs.
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Sources
- Summary by Intellect · source: Where Is Globalisation Headed? A Supply Chain View
- Also: Globalisation isn’t dead. It’s reconfiguring. New insights from OECD Trade in Value Added data
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