Globalization is Decentralizing from Institutions to People
People are moving more globally than they ever have before while institutions are rethinking their unrelenting march toward globalization.
I was fortunate in March and April to spend two weeks in Europe.
The first week I was in Lisbon with my wife, working and spending time with US-based friends who had spent the winter there and were closing on purchasing a second home. The following week, I was in Madrid and Barcelona as part of a US-based “young leaders” delegation meeting with all parts of the Spanish government and civil society.
As you can imagine, the differences between the two weeks were stark. Portugal was full of relaxing conversations during long walks, while Spain was full of intense debates around long tables.
But more than that, the attitudes towards globalization and how big or small the world feels these days were different than what I was used to hearing.
The vibe from young professionals, digital nomads, and many knowledge workers was that the world is starting to feel increasingly small and connected, even more so than before the pandemic. This group, freed from the constraints of having to be in a certain location for work, is traveling, living, and spending time across borders in a way that felt impossible just a few years ago.
On the other hand, the sentiment among institutions, from governments and corporations to nonprofits and large multilaterals, was that the world is less connected than it was a few years ago. The seemingly-universal institutional expansionist themes of ever farther-reaching goods and capital were absent. In their place were more contractionist themes such as resiliency and localization. Buzzwords like “offshoring” had been replaced with “nearshoring.”
This isn’t completely surprising. The war in Ukraine has refocused much of the world on Cold War-era alliances; the pandemic is forcing a rethinking and “de-globalizing” of many of the world's supply chains; and the rise of China is forcing many countries to implicitly -- or explicitly -- choose sides in a new era of Great power competition.
This means that while people are thinking and moving more globally than ever before, institutions -- conversely -- are meaningfully rethinking the unrelenting march toward globalization that has occurred since World War II.
So, is globalization taking a step backward? The data is mixed, but nearly all measures of globalization -- the international flows of information, trade, capital, and people -- have all started to rebound from their pandemic lows.
Globalization isn’t taking a step backward but is decentralizing, moving from a largely institutionally-driven trend to one more driven by individuals.
I predict that over the next decade, while institutions potentially slow their global expansions and keep capital and goods closer to home, the global flow of people will accelerate as people enjoy new and unprecedented global mobility. But regardless of what happens with institutions, I’m convinced that individuals are poised to move around the globe more than ever.
This means more tourism, permanent relocation, and, importantly, temporary relocation. People will move more freely around the world and more often for personal reasons than for work.
More than ever in our modern era, there are major challenges for institutionally-driven globalization at the same time as a host of factors propel its individually-driven version. The pace and share of the latter, as opposed to the former, will reach unprecedented levels in the next decade.
This isn’t institutional globalization’s first major setback. For example, its growth pace slowed after the global financial crisis. But the causes of that slowdown were more economic than social. This time is different. The challenges to institutional globalization -- global conflict, the search for supply chain resiliency, and great power politics, among others -- are potentially fleeting. Meanwhile, the things driving individual globalization -- unprecedented geographic mobility -- are just beginning.
For these reasons, globalization's story will be marked by decentralization from institutions to people over the next decade.