Can Political Trends Accelerate the Collapse of International Business Globalization?
International business globalization has brought forth myriad benefits over the last few decades. Liberalized trade agreements have made the world safer and more stable, as countries that were formerly geopolitical rivals developed deep commercial links.
Just as importantly, globalization allowed millions of people in the developing world to rise out of abject poverty. Free trade has inarguably been a massive boon to the most underprivileged populations on the planet. Yet, despite these very real advances, the future of business globalization has never looked so tenuous.
Let’s examine why this is the case and what it means for businesses.
Is International Business Globalization in Danger?
Globalization has ushered in an era of extended economic prosperity. Most of these gains, however, have been concentrated at the very top. Record levels of inequality—and the loss of jobs in the developed world that accompanied new growth in less-developed areas—have helped create political turmoil and uncertainty.
Moreover, a rising populist tide in Europe and the United States, and widespread anger over major trade agreements, are threatening to reverse the course of globalization. The Trans-Pacific Partnership, once regarded as a lock for passage, is now dead on arrival. Major changes may also be coming for NAFTA.
These changes, while significant enough, may only represent the tip of the iceberg. The upcoming Donald Trump Administration in the United States intends to end some trade agreements, unless certain changes are made. Meanwhile, anti-trade political parties in Europe continue to make inroads. The recent Brexit vote stands as the most obvious example of a nation pulling back from the benefits of a common market to pursue a more independent approach.
Globalization has always offered opportunities and challenges for businesses in equal measure. These opportunities include tapping into a vast global pool of talented executives and workers and reaching new, profitable markets. Integrating personnel from differing backgrounds, adhering to local jurisdictional regulations and laws, and bridging cultural and language gaps are a few of the more prominent challenges recruiters and HR staff face from globalization.
But as the tide of globalization recedes, smaller companies may become more locally focused. This will most likely result from the increasing cost of doing business overseas, thanks to modified trade agreements and the potential for tariffs. Recruiters and HR professionals will have to accommodate this shift.
It is unlikely, however, that large globally-integrated firms will abandon markets they have worked so hard to open or the skilled workforce they have cultivated. Political headwinds may ultimately not lead to the end of globalization, but merely the end of the first phase of global integration. The march of technology—and the economic benefits of global integration—may exert a gravitational pull too strong to resist.
Despite how these changes play out, IMSA will continue to connect the world’s most talented executives with leading organizations.