Reverse Globalization: A temporary trend or more?!

I am certain that you have read and heard the word covid-19 and corona virus in the past six months more than any other word in the dictionary! Whether you are a government chief, public sector leader, private sector executive, an entrepreneur or a policy maker and opinion leader, you and I know that the world have changed in the past few months more than ever before and maybe it has changed forever.

What happened and what is taking place serves us like being in a crash course of learning to adapt to change, understand it and make the most of it. It was taking place in all cases but maybe it would have taken another six years instead of six months to learn the lessons, make the needed observations and take the necessary actions to ensure continuity and sustainability into the future.

As governments rethink their national priorities, strategies, and agreements internally and with the outer world, shuffling their plans and reacting to the new scene, the same dynamic is mirrored on a corporate level and across various industries.

I write this piece coinciding in a time under the weight of a global pandemic, and severe economic decline, where many governments are in crisis and corporate giants are on the brink of going bankrupt. We have witnessed, mass layoffs, entire sectors shutdown and even some businesses went out for good.

As the American computer scientist, Alan Kay said: “the best way to predict the future is to invent it”. This is precisely the moment for such a thought. The ones who failed or will fail to invent the future and re-invent themselves will certainly degenerate and die. For them to be able to reserve a spot in the new reality, they must be able to read, predict and invent what will come, otherwise they will not be able to survive and are doomed to collapse.

Let us look at the big picture and observe with a bird’s eye view. We are seeing the US and China trade war and banning of products and making new laws on IP rights, import and export. The G5 issue making headlines, while emerging economies were able to absorb the crisis and to our surprise many of the leading western world countries failed by all standards on containing what is happening. Italy uncovered the fragility of the European union since none of its European neighbors came to its aid, and each of these countries looked after their national interest behaving in a manner that is exactly opposite to what globalization is all about and the concept of forming a union among these countries. On the other hand, the UK has long struggled with Brexit, again going back to a more localized self-interest. We have also seen that Dubai government acted so fast and reshuffled its cabinet, recreating itself to face the current and future challenges. The list is long and filled with many examples of observing many countries that are now either going for being self-sufficient or aspiring to be when it comes to their basic strategic national needs (food, health etc.)

All that said, unemployment figures have skyrocketed and by end of May 2020, in USA, alone, more than 40 million were announced by the bureau of labor statistics. This number alone is equivalent to an entire population of a large size nation and the global unemployment figures are set to exceed a quarter of a billion this year. With no income, consumer demand is falling drastically, and the economy is set to go into a free fall. Similar trends are taking place across the globe with few exceptions.

When you as a business owner, leader of any sort, read headlines such as that Victoria Secret has declared bankruptcy, Zara closed 1,200 stores, the worlds’ luxury industry has crumpled and so did the airlines and hospitality, the list is long and this dynamic is almost evident across every single sector and country on this planet. Quoting the founder of Airbnb, he said that ‘because of the pandemic, 12 years of efforts were destroyed in six weeks”.

Let us now examine the idea of reverse globalization which is a concept that was discussed few years ago but now seems to provide a very real description of what is currently taking place and serves as a great label to what is happening and how the future is shaping up.

The picture painted seemed to be dim and rather pessimistic, it is not intended for that, but rather to capture the idea of assessing whether what is shaping up fits within the definition of reverse globalization. To everyone’s surprise, western countries are overtly advocating more protectionism, nationalism, and anti-globalization. USA just announced that will pull out of the world health organization, although the motivation behind it might be of political nature, yet the act itself delivers on the concept of reversing globalization as we knew it.

The big idea and concept of globalization is being put to a real test and certainly has entered new phase of being put under examination in light of all the disruptions that took place in the past six months and are still evolving.

The promise that globalization will deliver a better place is questionable and the idea that more resources will be shared globally and knowledge and wealth etc. is being tested. The reality today shows exactly the opposite of what globalization had promised us. We are seeing uncertainty, fragility, economic crisis, rise of national interest while not excluding the failed cooperation when it comes to the planet’s global warming issue. That by itself comes as a proof.

For perspective, in just this coming decade, most of the world’s largest economies will be non-Western and so will be more than half of the world’s largest corporations will have their origins in emerging countries. This will be the ultimate proof that the birth of reverse globalization is here and shaping up.

One may choose to create another description or label, yet the central idea is that globalization as we knew it or at least as we know has already changed and is evolving into something new. Some observers, economists, and social behavior analysts may even call it “localization”.

Deglobalization is defined as the process of diminishing interdependence and integration between certain units around the world, typically nation-states. It is widely used to describe the periods of history when economic trade and investment between countries decline. It stands in contrast to Globalization in which units become increasingly integrated over time, and generally spans the time between periods of globalization. While globalization and deglobalization are antitheses, they are no mirror images.

For some time, it started with east and west, then BRICS (Brazil, Russia, India, China, South Africa) went into the narrative and then it was the G20 but now it is a bit more than all that. It is more about localization and each individual country and how it will behave and perform on an individual and independent level.

The above-mentioned observations and trends are not cancelling the existence of globalization. Globalization has already taken place for the past few decades and I see that reverse globalization is more like a self-correcting mechanism to how globalization initially started. Who is to say that maybe what is happening today acts like a proof or amendment of a concept that needs a new updated version of itself?

I write this article while half of the world population still suffers a multitude of serious problems, from wars, to famine to poverty etc. one would only hope that if reverse globalization takes a solid foot that it will be able to resolve the needs of the poor that live on less than a dollar per day otherwise it will follow the same fate and doomed for failure. The difference now is that the consequences will be tragic since humankind does not have the luxury to experiment in new concepts.

Countries and new emerging world leaders are required to add real value and create solutions that will be of benefit to their own citizens and to others as well. The entire thinking should belong to that of infinite abundance rather than scarcity. One of the key take-aways that government leaders, investors, corporate executives, entrepreneurs, and even consumers should enter a true partnership relationship with each other hence making reverse globalization a win-win proposition to humanity at large and not just on an economic level but also on a cultural and shared values level as well.

I wish to conclude with a more positive view of the world where hope, and forward vision coupled with good work and innovation can always lead to a better world even when in crisis. As Nassim Taleb put it when speaking of anti-fragile he said “anti-fragile, reveals how some systems thrive from shocks, volatility and uncertainty instead of breaking from them, and how you can adapt more anti-fragile traits yourself to thrive in an uncertain and chaotic world”. About the Author: Paul Boulos is the Founder and Chief engagement Officer – Antworks Consulting. Senior Partner and Executive Business Coach – FocalPoint International. [email protected]