Is digitization the new globalization?

As the rest of you struggled under gray skies and rain, I spent the end of last week under the blue skies and cool Atlantic breeze of Porto, Portugal. Now, before I lost half of my audience to jealousy, I can say that I was working at a corporate event on the topic of the uncertain future of globalization.

With chaotic supply chains and key US-China trade relations still in a delicate state, the future of globalization is something weighing heavily on companies as they emerge in the world. post-covid recovery.

While many of the people I met felt that the image of a deflated globe (see logo above and the cover of “The Leveling”) was too pessimistic a portrayal of the state of the world. world economy, my current roadmap is that we are on an exit from the globalization of the period 1990-2020 (fall of communism to the fall of Hong Kong), towards a new multipolar form of world order, which remains largely to to build.

Deflated world

To give a name to this phase or path, I propose ‘Interregnum’, an English term for a pause between periods of government (used especially between the end of the reign of Charles I and the ascension of Charles II to the throne between 1649 / 60 – very relevant for Levellers elsewhere).

Today, the Interregnum is at the midpoint of a paradigm shift (see Structure of Scientific Revolutions by Thomas Kuhn) and is characterized by noise, uncertainty and multiple struggles between the “old” and the “new” (finance is a good example with the emergence of “DeFi” or decentralized finance).

In the interregnum, new leaders have yet to emerge (think the United States, Russia and China) and the firm “rules of the game” of the new world order have not yet been set (there is no has no binding agreement on cyber warfare rules of engagement for example).


This is not an optimistic sounding diagnosis, although it is realistic, and should also challenge the idea that all is well in our world.

What is also confusing is that in the context of globalization (an intertwined, interconnected and interdependent world where nations are willing to sacrifice some sovereignty for better trading relations) there are several emerging trends that could be considered. as representing a return to globalization, but in fact don’t.

One of them is the resumption of the economic cycle, which has benefited from a huge boost from public spending and central banks in developed countries. Indeed, an interesting snippet of profit calls from major US banks is that households are rich in cash, which should fuel consumer spending in the second half of next year. On the other hand, I suspect that China is now close to a recession.

Business cycle

More broadly, my point is that an increase in economic activity is not the same as a resumption of globalization. Globalization is a very specific business model and while many drivers of globalization such as the flow of people and ideas are pending, other distinct models are emerging.

In general, globalization and the business cycle (see NBER Business Cycles page) have a very strange relationship. Before this wave of globalization began, the world experienced a steady pace of short business cycles. In contrast, the period of globalization was marked by the two longest booms in modern economic history (1991-2001, 2009-2020), punctuated by the Internet bubble and the global financial crisis.

A partial explanation for this is that the positive effects of globalization – China exports deflation, growing emerging economies, increasing global consumption, and international disintermediation of financial risks have all helped cushion and sustain the phases. expansion of the business cycle.

Another positive trend to watch is the acceleration of the digital economy, which from an investment perspective is exciting and disruptive. There is a temptation to say that the advent of the digital economy portends the renewal of globalization, but I have a feeling that the effects of digitization will be largely confined to industry verticals and states. nations.


Consider the point someone made to me about the hundreds of thousands of Indian “tele-doctors”: they will disrupt the Indian healthcare system rather than the UK healthcare system. Also consider the large amounts of data that will be created by applying 5G and then 6G to our cars – much of this will be used and stored locally (at least in Europe) than global.

However, the idea that technology is transforming the nature of economic activity is very important and gives clues as to what will replace globalization. For companies, globalization meant they could optimize their businesses through an interconnected network of activities – a factory in Mexico, fueled by research and development in Zurich from a head office in Berlin, inspired by marketers in Barcelona and sold to consumers in North America.

The effective end of cheap labor, the rise of protectionism as a political issue, and advances in robotics most likely mean that the tendency to “go abroad” is slowing down. What is more interesting is what happens to consumers and workers – to a large extent they ‘go home’ – feel freer to be able, even at the margins, to work from the city of their choice and consume more online services (advice on virtually trying on clothes).

I don’t know what the long-term effects of this may be, but I suspect that in Europe at least the flows of people will be better distributed around the second and third cities (Bordeaux, Porto, Munich, Malmö for example) and that ‘there will be more attention to local political issues (a sub-trend I have noted is the growth of apps that seek to make participation in local democracy easier and more innovative – see Polyteia, Citizen Lab, Civocracy and Fluicity for example).

This is probably a hopeful way to close this chapter of the debate on the future of globalization, or “what’s next? “

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