- Globalization is declining for the first time since the Second World War, but what does the future hold?
- A ‘cocktail’ of globalization will define this new era, Adam Tooze told Davos at a session on ‘De-Globalization or Re-Globalization?’
- The energy transition will create more connections, as part of the shifting mix.
The ties that bind the world economy together have frayed throughout the pandemic. With growing protectionism, and after a year of war in Ukraine, we’re on the brink of an era defined first by Adam Tooze, Director of the European Institute at Columbia University, and captured in the latest Global Risks Report, as ‘polycrisis’.
Has globalization reached the end of the line or is a resurgence on the cards?
This was the question put to panelists at Davos in a session on De-Globalization or Re-Globalization?
But it’s not so clear cut, says Tooze. In the next 10 years, we’re actually going to see more of a ‘new cocktail of globalization’, he predicted:
“A new cocktail, a new pattern, a new way in which those relationships are structured. I don’t actually expect serious re-globalization in the trade metric, on the foreign investment level, that seems highly implausible to me.”
Globalization is in retreat. Image: Peterson Institute for International Economics
Globalization and the energy transition
The energy transition will be part of the ‘cocktail’ mix too.
“The effect of the energy transition is essentially to create a new set of interdependencies and they are going to be quite adventurous and definitely reach out beyond the boundaries of the European bloc and the North American bloc,” said Tooze.
“Europe’s energy transition has to be interconnected and there is a lot of extremely excited talk about the connections, about Africa for instance, which would rely on cheap solar and most of that would come from China and the battery technologies as well.
“So I see that as one of the forces driving towards a new cocktail narrative of globalization rather than simple continuity but certainly not a story that drives towards regionalization or a total unbundling disintegration of the world economy, it is a new set of connections, that are shaped very rapidly as well.”
What’s driving shifts in globalization?
The shift in the trajectory of globalization is being driven by two core vectors: a plateau in the supply chain story and the geopolitics of the ‘chip wars’, added Tooze.
“There were gains to be made in particular sectors, notably internal-combustion engine driven motor vehicles… that reaches a certain plateau. We are really undergoing a major gearshift which suggests quite a large pattern in the division of labour in the automotive sector which will change that statistical story.”
Geopolitics as a vector of de-globalization has a “very different kind of forcefield to it”.
The shift in the trajectory of globalization is being driven by two core vectors: a plateau in the supply chain story and the geopolitics of the ‘chip wars’, added Tooze.
“You can go back and forth on the blame game here, but what we are clearly witnessing right now is a concerted effort to mobilize the resources of the American state apparatus to strike against individual private companies.”
The processes of de-globalization and potentially re-globalization have to be set within what historians call ‘the global condition’, he said – a state of interrelatedness that does not change whether or not you repolarize it in positive or negative terms.
“It is a bit like a taboo, the more you try not to think about it the more you end up thinking about it. So when you build the structures of the great firewall to keep the outside out, are you de-globalizing or in some sense obsessing about the other? That can have long-term effects, it can if you go lesser with the outside world which can encourage genuine decoupling.”
The session also featured Péter Szijjártó, Minister of Foreign Affairs and Trade, Hungary; Ngaire Woods, Dean, Blavatnik School of Government, University of Oxford; Adam Tooze, Director, European Institute, Columbia University; Niall Ferguson, Senior Fellow, Hoover Institution, Stanford University. It was moderated by Ian Bremmer, President, Eurasia Group.
Republished from the World Economic Forum
