Our world has moved from globalization euphoria in the early 1990s to a globalization backlash over the past decade. We are witnessing a profound transformation of globalization – of its original definition as “the development of an increasingly integrated global economy marked by free trade, free flow of capital, and the tapping of cheaper foreign labor markets”- shaped by new actors like China, trends in e-commerce and new technological dimensions, such as artificial intelligence and machine learning, according to an article from World Economic Forum.
The International Monetary Fund has estimated that foreign direct investment surged by an average of 50% during the 1990s.
Today, we are witnessing a reverse trend. The Economist has examined the track record of the 500 largest firms worldwide and found that in eight out of 10 sectors, multinational firms have expanded their aggregate sales more slowly than their domestic peers. For US-based firms, returns are now 30% higher in their home market. Other moves by multinationals reflect similar trends: Uber retreated from China in 2016, after spending nearly $1 billion a year competing with Didi.
Further stoking this uncertainty is the rise of China’s cultural, economic and business influence. The greatest example is its bold Belt & Road Initiative. Touching dozens of countries across Asia, Africa, the Middle East and Europe, with over $60 billion in infrastructure investments, it bids to increase regional and global connectivity - and heralds an era of globalization with Chinese characteristics.
