Comment: The death of globalization has been greatly exaggerated
If instead you seek resilience through self-sufficiency, you may end up with neither. The scandal of infant formula shortages in the United States has just given a perfect example.
THE GLOBAL ECONOMY IS REORGANIZING INTO REGIONAL BLOCKS
There is fragmentation and fragmentation. Globalization means two things. Conceptually, it means the economic integration of national economies – deepening cross-border flows of goods, services, capital and people – especially between countries at different levels of economic development.
But sometimes it is taken more literally to mean this process involving the whole world. Keep this in mind and you will see that it is possible to “deglobalize” (in the second sense) without “deglobalizing” (in the first sense). Yellen’s friend-shoring is an illustration of this.
There is a lot of pressure for ami-shore. Look no further than the EU’s plan to reconfigure its energy system. It aims to end energy imports from Russia, but it does this in part by increasing other regional and global energy exchanges, in particular by finding new suppliers for natural gas imports today and hydrogen in the future.
Also look at efforts by democracies to agree on the rules of conduct for the digital economy and the handling of sensitive data, which could reduce digital transfers between democracies and non-democracies while deepening the connectivity of data within these blocks.
It therefore seems very plausible that the global economy could be reorganized around large regional blocs, defined not only by geography but also by common values and governance. This would be “de-globalization” in the literal sense.
But that would imply more globalization in an economically meaningful sense – that of deepening cross-border economic integration. “Regionalized globalization” would be a better term.
The question then would be whether further globalization within these politically bounded regional blocs could be as effective and productive as a literally global integrated economy. My hunch is that for advanced economies focused on the transatlantic West, the answer is yes. – and that there is much more doubt for less advanced economies.
But this is, of course, an uncertain bet. If regionalized globalization is the way we are headed, we will see if China needs the West more than the West needs China.