Political Risk by Deglobalization

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Political Risks Associated With Deglobalization

Navigating The Changing Landscapes


Changes In The Global Landscape

Is Deglobalization Even An Option?

Understanding the global political risk associated with deglobalization can be difficult. Prior to the pandemic, the world we lived in appeared seamlessly connected and intertwined. However, recent trends suggest that this interconnectedness may be waning. We are now seeing a global trend of “deglobalization” – where countries and companies are increasingly reducing dependencies on one another and striving to be more self-sufficient. But what exactly is deglobalization, and why is it happening?

What Is Deglobalization?

Grossly simplified, globalization can be seen as the world shrinking in size as it becomes easier to interact with those far away. The creation of the internet skyrocketed this effect by allowing for near-immediate communication, banking, and travel between countries. An example of this can be seen in the UN, wherein a multitude of nations within the larger European continent allow their citizens to move between countries with relative ease.

By contrast, deglobalization can be defined as the process of reverting back to more localized economies and attempts at self-sufficiency. This means that people, businesses, and governments are becoming less reliant on other countries or regions for goods and services in an attempt to reduce vulnerabilities. It also leads to an increase in protectionist policies, such as tariffs or quotas on imported goods, which make it harder for foreign products to enter a market whose ultimate goal is to support and emphasize domestic industrial growth.

What Is Political Risk?

Political risk can be defined as the probability of a change in conditions impacting any and every aspect of politics, from shifts in how businesses are taxed to radical political reforms. Put more simply, political risk is a valuation system that assesses how much a change in policy or political conditions may affect the overarching political system. Often, understanding political risk requires that you understand the complex relationship between finance, politics, legislation, and economics associated with the region, or in this case, the whole global economy.

The Political Risks Associated With Deglobalization

How They Affect Governments and Economic Operations

The ‘risks’ associated with deglobalization, more often than not, evolve as a result of the changes in production and logistics that go along with a shift from more global to domestic oriented manufacturing and industry.. Naturally, as countries make changes  regarding import, export, and international business ventures, the existing systems will need to change, adapt, or risk crumbling entirely. Here, we will go deeper into a few different risks and how they may affect the social, economic, and geopolitical spheres.

The first risk associated with deglobalization is potentially higher costs of production. By limiting access to international labor markets, it can become more expensive to pay workers at home. . This can lead to an increase in prices for consumers as companies attempt to cover their increased overhead costs. It can also limit the availability of certain products or services that may be difficult or costly to produce domestically.

Deglobalization may also raise the potential competition within various supply chains, making it more difficult to acquire input materials for goods and products to be made. Many businesses rely on global supply chains for their production needs, but if access to input materials  are jeopardized  due to deglobalization measures, companies could be left scrambling for alternative sources of raw materials or finished products. This could significantly impact a business’s ability to remain competitive in its market, resulting in lost profits and lower customer satisfaction levels. On a social level, this may also cause people to lose faith or become frustrated with existing policies as necessary goods become increasingly difficult to acquire. They may then demand changes from their government as a result, creating a feedback loop of change that can drastically change the geopolitical landscape of the surrounding region.

The third risk associated with deglobalization is the potential for increased economic instability. With increased volatility in international markets, businesses may find themselves facing periods of extreme volatility where demand rapidly increases or decreases due to changing political climates or other external factors outside their control. This could make it difficult for businesses to stay afloat during these times and put them at risk of closing down altogether if they cannot weather the storm.

Finally, the fourth risk of deglobalization is an increase in trade barriers and tariffs. Some countries may impose high tariffs on imported goods which could make it difficult for businesses to compete within their respective markets. This could lead to increased costs and decreased profitability, which could ultimately affect the global economy.

Overall, deglobalization can pose a number of risks for businesses that are operating in a global environment. It is important for business owners and leaders to be aware of these risks and develop strategies to mitigate their potential impacts.

How Deglobalization Has Already Impacted Parts Of The World

A Few Examples

In recent years, deglobalization has become a growing trend in many countries. The deglobalization process has significantly impacted different parts of the world. From international trade flows to emerging markets’ economies to immigration policies – no part of the globe is immune from its effects.

Emerging Markets

Another area where deglobalization has had a significant effect is emerging markets. Many emerging markets rely heavily on foreign investment, particularly from multinational corporations that are looking for new markets to expand into.  As global economic conditions have worsened and competition for investment increased, so too has foreign investment in these emerging markets. This has had a negative impact on these countries’ economies as they struggle to attract new sources of capital and investment.

Immigration

Secondly, deglobalization has also had an impact on immigration patterns around the world. As nations become more insular and focus more attention inwardly than outwardly, they are often less welcoming towards immigrants and refugees who seek out work or refuge elsewhere in the world. This can lead to increased hostility towards immigrants and refugees as well as stricter immigration policies that make it more difficult for them to find work or asylum abroad.

What We May See In A More Deglobalized World

Trends and Changes in The Global Landscape

The world has become increasingly interconnected and globalized over the past few decades. As we move into the future, however, it is likely that many of the trends that have been driving globalization will start to reverse. Globalization has allowed us to benefit from increased trade and cooperation between nations; however, it appears inevitable that this trend will soon be reversed due to political and economic pressures within individual countries and desire to reduce external vulnerabilities. As a result, it is important for us to be aware of how these changes might affect us so that we can prepare ourselves for what lies ahead in this ever-changing landscape. By understanding both the potential benefits and risks associated with a shift away from globalization, we can better equip ourselves for whatever the future holds.

Politics

In a more deglobalized world, countries may become more resistant to cooperate with one another on issues such as climate change or economic policy. Larger economies will work to become more independent from the world, while smaller ones may find themselves scrambling in the middle. International treaties designed to address global issues, such as the Paris Accords, may even be left unaccomplished as powers focus on issues that specifically affect them.

Technology

Finally, a more deglobalized world could have an effect on technology development and innovation since technological advances often come from collaborations between different countries or regions of the world. Therefore, if there is less collaboration between countries due to increased political tensions or decreased economic ties, then it is possible that technological advancements will slow down or even stop altogether. This could potentially impact our ability to address global challenges such as climate change or poverty alleviation, given our reliance on technology to solve these problems.

Additionally, changes in the international economic landscape could, in turn, lead to higher levels of unemployment and decreased opportunities, especially for those in countries with developing economies. This, in turn, may make it more difficult for some countries to find their place and voice on the global stage. In this way, deglobalization could have far-reaching consequences that go beyond just political tensions between countries.

Social Risks Associated With Deglobalization

How Deglobalization May Affect People Around The World

In recent years, the world has seen a trend of deglobalization. Occasionally this is done in order to protect domestic interests. While this can have some positive effects, it also carries with it certain social risks that should not be overlooked.

Before any decision is made about withdrawing from global economic partnerships or practices, social risks should be taken into consideration. It is essential that these risks are weighed carefully against any potential benefits before any decisions about further deglobalization or policies are implemented by governments worldwide.

Social Exclusion

Another risk associated with deglobalization is social exclusion. As countries move away from global economic partnerships, they tend to become more insular and closed off from the rest of the world. This can lead to increased xenophobia and even outright hostility towards other cultures and peoples, which can have damaging effects on both individuals and society as a whole. Additionally, it can result in decreased access to educational opportunities for those who cannot afford them or do not live close to quality institutions abroad.

Decreased Mobility

Finally, deglobalization often leads to decreased mobility between countries—particularly when combined with tighter border controls and immigration restrictions—which can limit people’s ability to travel freely across international borders. This can create obstacles for those seeking employment or education opportunities abroad, as well as those hoping to join family members living in different countries or simply experience new cultures firsthand through tourism or travel programs. Additionally, decreased mobility limits people’s ability to access resources that may be available in other parts of the world but unavailable domestically due to resource scarcity or limited infrastructure development (e.g., medical care).

The Future With Deglobalization

What To Look Out For

It is difficult to predict how deglobalization will unfold in the future, but some trends can help us understand what might happen if current patterns continue. For example, we could see further divides between rich countries and poor countries as richer nations become increasingly able to protect their own interests while poorer nations struggle with increasing poverty levels due to a lack of access to global markets. We could also see further increases in nationalism, leading to more frequent conflicts between different states or regions around the world as they compete for resources or influence over one another. Finally, we could see an increase in economic inequality both within and between nations as those who are already privileged become even more so while those without power suffer even greater disparities than before. Each one of these scenarios can occur, and most likely, all three will creep up to various degrees if trends continue to move toward deglobalization.

Conclusion

Final Words As We Move Into The Future

It is clear that deglobalization can majorly impact many aspects of societies and economies across the globe. While we can not always predict the future, by understanding how these issues can interlink and impact one another, we can prepare for the potential consequences of deglobalization. By encouraging collaboration between countries in areas such as research and development, international actors can strive to create innovative solutions to global problems like climate change. As we move forward, knowledge of deglobalization, its effects, and possible ways to mitigate them can be essential in creating a stable global economic environment.

Geopolitical Futures (GPF) was founded in 2015 by George Friedman, international strategist and author of The Storm Before the Calm and The Next 100 Years. GPF is non-ideological, analyzes the world and forecasts the future using geopolitics: political, economic, military and geographic dimensions at the foundation of a nation.