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Pulling back from globalization increases the risk of war

The pullback from globalization increases the risk of trade and actual wars. Where should your business invest?

By Pepper Foster

Globalization has had enormous positive and negative impacts on economies, populations, and businesses across the globe. Some of the negative aspects have led to the increase in nationalism and country-first political movements. Fueled by COVID-driven supply chain fragility, these movements, have led many governments and businesses to start decoupling their economies and supply chains from other nations. 

This pull back from globalization will also have enormous positive and negative impacts. One of the biggest negatives though is the increased risk of war. Nations that trade with each other, whose economies are intrinsically entwined and dependent on each other, don’t go to war with each other. Nationalist nations, who have already or are actively decoupling their economies from international trading partners, or who are selecting those trading partners based on geo-political alignment, are less and less impacted and constrained and even empowered to take the resources of nations they are not trading with by force. 

We have already seen the start of this with Russia’s invasion of Ukraine. An act that has been largely condemned by the West but that Russia has been free to make because the impacts of trade sanctions from the West have been minor and their economy has been actively supported by other trading partners including China and Iran.

How will your business be impacted by these changes? What strategies should you be taking to mitigate the risks and ensure that your organization not only survives, but thrives? What will teh geo-political blocks be and which sides will North America, Europe, China, and India fall? Should your business be decreasing investment in some global markets while increasing in others? Will South America and Africa benefit from being relative investment safe havens compared to countries and economies that might become embroiled in conflict and trade wars?

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