By Richard Macrae Gordon - Founder

The End of Globalization?

March 14, 2022

For the past 35 years, one force above all others has shaped business, politics, and the entire global economy.  

It has lifted over 1.5 billion people out of poverty and hunger.

It has also allowed you, wherever you are, to benefit from goods, services, natural resources and technologies from all over the world.

That force is globalization.

Globalization refers to the growth of economic interdependence between countries; technology sourced from one country, labor and natural resources from a different country, financing from yet another. It’s the blueprint for the modern global economy.

That blueprint is quickly fading though, amid mistrust, stark ideological differences - and the kind of simmering territorial disagreements that, historically, have had a habit of turning into wars.  

Putting it all together, it’s clear that the worlds two largest economies, US and China, are gradually closing the door on one another.

Let’s look at why – and what it might mean for you.

Some won, some lost (but would’ve lost anyway)

While many people in the developing world have seen their fortunes improve substantially due to globalization, many in the developed world have not. Many developed world jobs have been sent overseas, to places with lower wages, or more ‘accommodative’ labor laws.

But globalization of the workforce hasn’t been as bad for workers in the developed world as populist politicians – and the people who vote for them - like to make out.

If you’ve lost your manufacturing job (especially in recent years), chances are you’ve been replaced by a machine, not a worker on a foreign assembly line.

Unfortunately though, the myth of the worker on that foreign assembly line taking all the developed worlds jobs has become a baked-in mainstay point of conservative politics. It’s not staying there though. For a variety of reasons, anti-globalist themes are quikcly spreading through the rest of the political spectrum.

A matter of security

As precise and efficient as they’ve become, the COVID-19 pandemic highlighted just how fragile global supply chains can be. It also highlighted just how costly it can be for everyone when they stop working.  

The pandemic was a nasty demonstration of just how difficult it can be to keep economy running when other parts of the world are closed for business. That’s especially the case for goods that have no real substitute.

Take microchips for example. One manufacturer in Taiwan (TSMC) produces most of the global supply of advanced chips. If they can no longer meet global demand, for whatever reason, the supply of everything from Teslas to iPads tightens. When supply tightens, or is delayed, fragile supply chains can cease to function as they should.

The consequences of pandemic-related disruptions were deep, but relatively short-lived. Should there be a major war, or some other event that more profoundly disrupts global supply chains, the consequences could be much, much worse.

Delays are annoying, but if the supply of something like advanced chips is threatened, it’s a matter of national security.

Turning inward

It’s no secret that we don’t live in a world defined by international cooperation. Trade ties have been weakening for a while now. Trade disputes are becoming more frequent. Some arrangements involving trade are being swept away entirely (eg. Brexit). The rise of populism and mistrust among nations grows.

The cracks in the global order aren’t just starting to show, they’re now visible from orbit.

At the same time, many of the worlds major economies have been busily making preparations for greater international isolation. The US and China are at the top of this list. These preparations include everything from expanding domestic manufacturing, natural resource production and other key economic factors.

In his first State of the Union address, President Joe Biden shared some of his vision for how this might unfold. ‘Buy American’ was couched as a means of controlling inflation (in reality, it wouldn’t work that way), but what he was really saying was that it’s now a matter of policy to reduce American reliance on certain aspects of globalized manufacturing.

China has already commenced a vast campaign to disentangle itself from reliance on potentially unfriendly supplies of natural resources. This is taking place on two fronts: substantially increasing domestic output – and increasing supply from other places, where it believes it can maintain greater influence (chiefly Brazil and Africa). Iron ore and coal are at the forefront of this push.

What does it mean for you?


When it comes to labor, it probably doesn’t mean much. Cheap labor is no longer so important to developing world economies – and those manufacturing jobs are not coming back the developed world, at least not to the levels of years gone by. Automation is too rapidly undermining the need for them.


Natural resources are a bigger concern. China dominates the global supply of metals and minerals that are vital to the electric/renewable energy economy. The US is the worlds biggest oil producer, with output of three times that of Russia.

Decreasing interdependence of just these two countries would likely mean higher costs across the board – and the countries who side with either, will likely get caught in the crossfire.


China recently closed its doors on Swedish clothing manufacturer H&M. It has closed many, many others. Many foreign businesses, most notably US big tech, were never allowed to enter in the first place. In the US, some Chinese companies have been removed US stock exchanges. Others have been banned from selling a range of products and services on the back of security concerns. This is more significant than it might seem.

War and Peace

The Russian invasion of Ukraine has been quite telling.

There’s been a cry of outrage here in the West, but it’s a very different story elsewhere in the world. People in many countires appear indifferent to, or even supportive of Russian actions. If I took a global opinion poll right now, I suspect the result would be closer to 50/50 than we like to think. That division probably provides a key insight into how the spheres of influence may evolve in an increasingly deglobalizing world. There’s certainly a lot more at stake here than just the fate of Ukraine.

Globalization hasn’t only been great for alleviating poverty and creating wealth.

It’s been instrumental in maintaining peace.

Simply put, if there’s less of a financial or economic cost associated with conflict, it becomes more likely. If there’s a financial or economic benefit associated with conflict, it’s virtually guaranteed to happen.

The upcoming meeting between the US and China over the war in Ukraine will set much of the tone for developments going forward. This is a great opportunity for the two powers to come together for peace. There is also the scope to exacerbate existing divisions.

Russia has recently asked China to provide military support for their invasion of Ukraine. If China agrees, they too will likely find themselves subject to sanctions from the West. A more entrenched polarization of the geopolitics would likely follow.


Investors will have a difficult time adjusting to a deglobalizing world. It’s the reversal of most of what they’ve been working with for their entire careers. An unconstrained approach will be needed to successfully navigate these waters, which goes for us as much as anyone else. We’re ready for this though – and we’ve got the right network of people around the world to help us make the right decisions on your behalf.

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