“Fragmentation” – one the many buzzwords heard around Davos this week. “Fragmentation”, it is referring to a breakdown of the kind of free-wheeling, border-crossing trades and investments which have built the global economic order over the past three decades. It also means “deglobalization” – rebuilding fences between nations and nations.
Deglobalization won’t happen overnight but it is not a new issue. Supply-chain disruption, war in Ukraine, growing political divides and trade disputes are renewing concerns about a return of an era of isolation.
Here are the micro-deglobalization playing out in real time:
China’s ride-hailing giant Didi officially delisted its share from NYSE
Starbucks and McDonald’s pulled out of Russian market
Airbnb said it would pull all of it listings in China
Malaysia moved to restrict exports of Chicken to its neighbors
Microsoft slowly scale back their China practice
These supply chains have been built over 30 years, so it’s just really difficult to move them into another country. The US baby formular shortage is a huge public health crisis that indicates the peril of relying too much on domestic production for essential goods. It is far more complicated if governments around the world are doing deglobalization.
Image source: https://www.pexels.com/photo/antique-antique-globe-antique-shop-antique-store-414916/