For most of my adult life, the globalization of everything was taken for granted. We talked of "world economy," localization, internationalization (aka I18N), and globalization. Indeed, almost every RFP for the last 20 years has asked about internationalization and localization and multiple currencies.
Yet, beginning in about 1997, a lone voice warned us that the march toward globalization would someday reverse.
In The Fourth Turning, historians Neil Howe and William Strauss forecast a reverse in global trade:
the economy will have changed fundamentally. Compared to today, it will be less globally dependent, with smaller cross-border trade and capital flows.
Heresy! But there's more. From The Fourth Turning:
America will become more isolationist than today in its unwillingness to coordinate its affairs with other countries but less isolationist in its insistence that vital national interests not be compromised. The Crisis mood will dim expectations that multilateral diplomacy and expanding global democracy can keep the world out of trouble.
But look what's happening:
- Europe's Supreme Court struck down the Safe Harbor agreement that allowed Facebook and LinkedIn (among others) to store Europeans' data on US servers, potentially ending the flow of data across the Atlantic
- As the cost of freight rises, the amount of global trade declines, as local production becomes more attractive
- Time Magazine recognized "Globalization in Reverse" in 2014:
"With global economic integration seemingly in reverse, at least for the moment, many economists and trade experts are beginning to talk about a new era of deglobalization, during which countries turn inward."
- Fortune Magazine also recognized last year that "globalization has a reverse gear:"
For most of the past 20 years trade has raced ahead of global economic growth, usually at about double its pace. GDP grew by 3.5% in 2006, the last healthy, pre-crisis year, and trade at 8%. This was, it seemed, a golden ratchet binding the planet ever closer. But the most recent 24 months show something that looks an awful lot like a trade shock. It isn’t just that trade is no longer doubling — it’s slowing. In some crucial areas trade growth has slipped below GDP growth — and this year, globally we’ll be below the 20-year average rate of trade growth yet again. Figures on investment in assets held overseas, probably the best indicator of enthusiasm for globalism, are drifting down toward 40%, from more than 50% in 2008. The move is serious enough that economists have begun to ask: Is globalization running backward?
Howe and Strauss would answer "yes."
Crisis eras, which occur about every 80 to 100 years and last about 15 to 20 years, see a shift from global to local. We entered a Crisis era with the fall of Lehman Brothers in 2008.
Question: Suppose the reverse of globalism continues--let's call it 'localism' for now. How will localism affect your company's investments? Will you continue to invest in globalization, or will you shift investments to shore up your local markets?