Read the abstract below and answer the question that follow.
Unpacking the possibilities of deglobalisation
By Finbarr Livesey
Abstract
The interpretation of the global economy has been framed as an inevitable journey towards ever greater integration—a
story of hyper-globalisation. This article discusses the nature of manufacturing to understand whether this interpretation
holds and to investigate the possibility of deglobalisation at the level of physical goods trade in the coming decades, and
what that may imply for other non-physical elements of globalisation.
Introduction
The framing we use for our research and commentary on contemporary affairs affects the questions we ask and the
assumptions we bring to providing analysis and advice to government. The current framing of globalisation, trapped
between the rough economic nationalism of President Trump and the zeal of those who believe globalisation is almost a
moral imperative, is obfuscating the changes that are happening in the global economy. Specifically, the heat and light
generated in these arguments hides the fact that we are seeing some elements of globalisation go into reverse.
This article discusses the broad definition of globalisation to look in detail at the changes that are occurring in the
production of physical products. Broadly using the emergence of global value chains (GVCs) (Gerrefi, 2014) as the starting
point for many decisions on the location and span of company activities, this article argues that we are seeing early signs of
deglobalisation for the making and supplying of physical products across a number of industries.
The process of physical deglobalisation has the potential to change the expressed pattern of trade, that is the aggregate set
of decisions between consumers and producers that come together to form the flow of goods in the global economy. As
companies face different economic conditions, either in terms of costs or in terms of the feasible scales of activity, they will
change the footprint of their activities. This primarily could lead to a deepening of the regionalisation of trade and in the
longer term a possible fall in the relative volume of trade when compared to global economic activity.
If there is a process of physical deglobalisation, this has implications for other elements of globalisation, specifically for the
flow of capital in the global economy. Depending on how countries decide to treat the profits of subsidiaries of multinationals
as the footprint of production and consumption come closer together, this may create pools of capital, exacerbating for
multinationals issues of offshore profits and the inability to reshore these funds to their home territory. Rather than being
isolated, physical deglobalisation has links through to other aspects of globalisation and brings into question the narrative of
the inevitability of hyper-globalisation.
Article is available on: https://doi.org/10.1093/cjres/rsx030
Evaluate the arguments given for and against globalisation.
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