How Globalization Will Change After the Pandemic

In 2005, when Thomas Friedman proclaimed “the world is flat,” globalisation appeared irreversible. The fall of the Berlin Wall, China’s entry into the WTO, the rise of the internet and the spread of global supply chains compressed distance and time. The assumption was that economic integration would lead to rising prosperity and a shared stake in stability for everyone. Two decades later, the world looks anything but flat. The 2008 global financial crisis was the first fracture. It exposed how deeply interconnected the system was, but also how unevenly its risks and rewards were distributed. Inequality widened within countries even as millions were lifted out of poverty globally. Then came geopolitics. Supply chains that had been optimised for cost and efficiency began to be seen as vulnerabilities. The pandemic delivered the shock therapy as Governments discovered how dependent they were on distant factories for essential goods. During the era of “hyper-globalisation” (1990–2008), global trade grew almost twice as fast as world GDP. After the global financial crisis, trade still grows, but no longer faster than the world economy. Capital flows tell a similar story. Foreign direct investment peaked before 2008 at over 5% of global GDP and has since fallen to roughly half that level, while becoming more volatile and more nuanced. Investment is more regional, more strategic and less frictionless. Supply chains, once optimised ruthlessly for cost, are now being redesigned for resilience. This shift from efficiency to redundancy leads to structurally higher costs and more inflation volatility. If globalisation delivered such clear economic benefits, what caused its slowdown? The core reason is not economic failure, but political. Globalisation grew global output, but it did not distribute gains evenly within countries. In many economies, wages stagnated even as profits and asset prices rose. Communities lost jobs faster than they gained new ones. This domestic backlash then collided with geopolitics. The pandemic and the war in Ukraine reinforced the lesson: efficiency without control can be dangerous. The deeper issue was institutional. Capital moved freely but safety nets remained national. When shocks hit, citizens turned to governments, not global systems, for protection. The implications for the global economy are profound. Growth is becoming more fragmented, less synchronised. Inflation is likely more volatile. The world economy looks less like a single engine and more like loosely connected regional systems. What lies ahead is not de-globalisation, but re-globalisation with constraints. A world of blocs, buffers and “trusted” networks. Less flat, more uneven. Less efficient, more resilient. The age of frictionless globalisation may be over, but interdependence is not. The challenge now is managing it without letting fragmentation become the new systemic risk.

Globalization isn't dead. It just moved neighborhoods. For 30 years, the corporate strategy was simple: chase the lowest unit cost, no matter where it was on the map. That was Globalization 1.0. It worked incredibly well—until it didn't. The pandemic broke the supply chains, and rising geopolitical tensions buried the old model. The era of chasing efficiency at all costs is over. Enter Globalization 2.0. The new buzzword I’m hearing in every cross-border deal discussion isn't "offshoring." It's "Friend-Shoring." This isn't about politics; it's about cold, hard risk management. We are witnessing a massive philosophical shift from "Just-in-Time" inventory (maximum efficiency, zero tolerance for error) to "Just-in-Case" security (redundancy, resilience, and political alignment). The capital isn't disappearing from the global stage; it’s just relocating to politically stable allies. We are seeing massive deal flows and FDI moving into Mexico (nearshoring), India, and Vietnam as companies seek to bypass global friction. The map of global trade is being redrawn right now. The critical question for 2026 isn't "Where is the cheapest labor?" It's "Where is my supply chain safe?"

Headlines show multilateralism in retreat. But dive into the numbers, and you’ll find that global cooperation isn’t really going away. Instead, the era of big, multilateral collaboration is evolving—into a “minilateralism” that’s pragmatic, flexible, and based on common interests. That’s my takeaway from our third annual Global Cooperation Barometer, published together this week with the World Economic Forum. While pressures on multilateral institutions have intensified, we show that overall cooperation remains steady—a good reminder that despite recent shifts, our economy is still very much a global one. A few other big themes I’m taking with me: -Bright spots on tech & innovation: Despite tighter controls, we’re seeing that IT services and talent flows are up amid expanding international bandwidth and new collaborations on AI, 5G and more. -Uneven (but real) climate progress: China accounted for two-thirds of record clean tech deployment, but the EU, ASEAN, and developing economies are stepping up. -A tale of two cities on health: Despite a drop in cross-border government assistance in health, overall collaboration remains flat due to investments by private institutions. -Peace and security cooperation decline: Every tracked metric fell below pre-pandemic levels, but growing pressures are creating the impetus for more cooperation, including regional peacekeeping. In terms of where to go from here, we suggest leaders strengthen resilience capabilities, play offense on “re-mapping” international engagement, and find new forums to match the right players, format, and issue. Overall, though, the most important recommendation is a back-to-basics—the only way to increase cooperation (and get stuff done) is to start a conversation. You can find the full report here: https://lnkd.in/g5ZVau4M A big thanks to Børge Brende Brende, WEF, and everyone who contributed to this work. Looking forward to starting a conversation about what’s next. 

Global trade just pulled a plot twist. DHL’s new Global Connectedness Update shows something nobody expected in 2025: globalization didn’t shrink. It actually stretched. Average trade distance hit nearly 5,000 km, a record high. So much for “nearshoring is the future.” Here’s the kicker: US importers rushed to front-load goods before tariffs hit. China simply rerouted exports to ASEAN, Africa, and the EU. The world said “ok fine” and kept trading anyway. So what does this mean if you sell DTC or on marketplaces like bol, Zalando, or Amazon? 🌍 Front-load hangover Your suppliers already shipped early. Expect weird stock timing and Q4 demand gaps. 🚚 New lane logic Routes are shifting through ASEAN and Africa. That means recalculating delivery times before customers start complaining. 💶 FX and freight math Oil prices dipped but carriers are still adjusting surcharges. Time to revisit your cost-per-delivery assumptions. 📦 Expansion twist Trade growth is actually upgraded for MENA and Latin America. These are the new test markets for marketplace-ready brands. 😂 Moral of the story Globalization didn’t die. It just changed its flight path. Before your next peak-season meeting, ask one simple question: “If our goods took a detour through Vietnam tomorrow, would our PDP still show the right delivery date?” That’s the kind of boring operational question that quietly decides who wins Q4. #DHL #Marketplaces #DTC #Ecommerce #Logistics

I had the privilege of sharing perspectives on how successive shocks from geopolitics, pandemics and climate change have rewritten the rules of trade. Scale & efficiency alone is no longer enough. The next era of value chains will be: ·               Diversified and resilient ·               Digitally enabled ·               Green and standards-driven We also launched our joint BCG–FICCI report “Evolving Landscape of Global Value Chains”, and unveiled by Hon’ble Minister Shri Piyush Goyal Industry, Consumer Affairs, Food & Public Distribution, and Textiles, Government of India. The report sets out clear pathways for India to strengthen domestic capacity, leverage FTAs, and invest in innovation to emerge as a trusted hub in the evolving global value chains.

The old order didn't so much rupture as finally confess its exhaustion. Today’s #disorder is not reducible to #Trumpism, #Iran, #Ukraine, #China or #populism alone. It's the cumulative result of seven reinforcing shocks: the end of unipolarity, Russia’s assault on the UN Charter order, the rise of China and other emerging powers, the weaponization of interdependence, the return of America First, proliferating conflicts and the aftershocks of COVID-19. The central bargain of globalization — that integration would deliver convergence, prosperity and stability — has frayed because its gains were uneven and its institutions failed to adapt. In my latest column with the World Economic Forum, I make the case that the liberal international order isn't coming back in its old form. The world is no longer organized around a single hegemon willing and able to underwrite rules, markets and security guarantees. Nor do the #IMF, #World Bank, #WTO or #UN Security Council command easy legitimacy when they still reflect the power map of 1945 or 1991 rather than that of 2026. The result is a more transactional, fragmented and coercive environment in which countries hedge, diversify, and seek leverage rather than alignment. The practical lesson is blunt: strategy can no longer assume a stable geopolitical operating system. Supply chains, capital flows, technology standards, sanctions, trade rules and security partnerships are instruments of statecraft, not neutral infrastructure. Yet this isn't merely a story of fragmentation and decline. Middle powers — from #Brazil and #Canada to #Germany, #Indonesia and #Japan — have more room to shape the next settlement through coalitions on AI, climate, minerals, trade and security. The future order, if it emerges, will look less like a grand design than a negotiated patchwork. Leaders who grasp that shift early will be better placed than those waiting for the old certainties to return. https://lnkd.in/dTa2ckga

International travel is exploding again, and the industry is not fully prepared for what that means. The latest OAG data shows a clear break from the pandemic era. International seat capacity is growing 5.8 percent this winter while domestic grows only 2.6 percent. That gap may sound small, but it signals a structural shift. Forty percent of all airline seats this season are international, up from 38 percent before COVID. Travelers are not staying close to home. They want distance again. The United States is leading international growth at 3 percent, fueled by Caribbean and Mexican demand. The United Kingdom is right behind with strong transatlantic performance. Spain is up more than 6 percent in outbound capacity. Even Asia, despite uneven recovery, is moving fast. China is up 6.2 percent. India is up 6.9 percent. Turkey is the standout, growing more than 9 percent. For years, the question was when travelers would return to long haul. The answer is now. The interesting part is not just the growth itself, but what it enables. More direct routes. More city pairs that did not exist in 2019. More competition between hubs. The reopening of border-dependent itineraries that were dormant for half a decade. International travel is getting easier and cheaper again as scale returns. Airlines are responding. Schedules are expanding. Load factors are rising. Widebodies are being redeployed to markets that disappeared during the pandemic. Some carriers are already outperforming their pre-COVID networks. The shift matters because it resets the logic of global mobility.  Visa regimes, airport infrastructure, aircraft orders, and airline partnerships all change when long haul demand accelerates. Entire regional economies are affected when international routes come back at scale. Domestic demand carried aviation through the recovery phase. But the next cycle will be defined by cross-border movement. Travel demand has already changed. Now the roadmap has to. #Aviation #Hospitality #TravelIndustry

Focus of EY's Geopolitical report this month was on the Life sciences sector. Our sector has been increasingly targeted as a nationally strategic sector with the global trade decoupling since the pandemic. China included biological medicines and medical devices as key industries in which it aims to become self-reliant in its 14th Five-Year Plan (2020-2025).   In February, President Biden issued an executive order to prevent the bulk transfer of Americans’ sensitive personal data, including genomic data, biometric data and personal health data, to countries of concern. In May, a US House of Representatives committee passed an amended version of the US BIOSECURE Act, which, amongst other provisions, bars companies from US government contracts if they do business with prohibited entities, with a 2032 deadline to wind down any existing relationships. Governments will continue to treat biotechnology and advanced pharmaceuticals as a strategic sector, leading to more de-risking and economic security policies affecting the sector. So clearly the issue requires attention from the C-suite. The BIOSECURE Act will continue to move through the legislative process and is likely to be enacted in some form later this year. Washington could also introduce more restrictions on cross-border trade and investment in biotech with countries seen as geopolitical competitors, and possibly industrial policies to promote greater domestic innovation in and manufacturing of these products.   China will continue to build the infrastructure to develop its domestic biotech industry, including a talent pool, investment and regulatory policies that support the growth of home-grown corporations. In response to US actions, China could consider introducing export restrictions for the raw ingredients needed for key drug supplies (it manufactures about 40% of the global supply of active pharmaceutical ingredients or APIs).   India stands to benefit from the diversification of life sciences manufacturing. The United States-India Trade Policy Forum, for instance, recently focused on the opportunity to de-risk and diversify the global pharmaceutical supply chain. So what can the C-suite do: - Evaluate your global manufacturing and supply chain strategies and assess whether you need to adjust to emerging geopolitical dynamics. Establishing or expanding supply chains with contract drug manufacturing organizations (CDMOs) in countries with favorable ties to governments in their consumer markets is likely to be a common strategy to derisk the supply chain which is costly and will take time.   - Consider M&A opportunities associated with the implementation of the BIOSECURE Act or similar legislation in other markets, as such laws could result in some foreign companies selling facilities to third parties – private equity, competing CDMOs, or another biopharma company – to continue operating.

Globalization remains at historically high levels as countries and companies use agility and strategic foresight to manage uncertainty. That raises an important question: how will global connectedness develop from here? Building on the insights from the newly published DHL Global Connectedness Report, we can be confident about the future. These five factors will support the continued strength of global flows: The benefits of globalization remain significant: Most economists continue to view globalization as positive overall, pointing out that trade and foreign investment drive economic growth and that reversing globalization would come at a high cost. In response, many decision-makers are seeking to preserve the benefits of global integration while mitigating the risks. Openness to partnerships, for example by building on the EU-India Trade Agreement or moving forward with the future EU-Mercosur free trade agreement, would bring clear benefits.   Adaptability boosts resilience: Companies have significantly improved their ability to adapt to new frictions. They are diversifying their suppliers, redesigning their networks, and redirecting flows, thereby keeping global connections stable even in turbulent times.   Risk reduction is not synonymous with deglobalization: most trade still takes place between countries that maintain friendly or neutral relations. And when production is relocated to alternative sites, this often leads to an increase in international trade and investment rather than a decrease.   Technology could further boost global flows: In the past, technology has driven globalization by breaking down distance barriers. New innovations, including AI and machine translation, could once again accelerate cross-border exchanges.   Multipolar growth expands opportunities: Geopolitical rivalries create uncertainty, but a broader distribution of economic activity expands opportunities. More and more regions are becoming influential players in trade, investment, and innovation.   Yes, the risks to globalization are real, but taken together, these trends point to a future in which global flows remain resilient, adaptive, and full of opportunity.   #globalization #GlobalConnectedness #globalTrade

The narrative of deglobalization oversimplifies the complexities of today’s global economic landscape.   While traditional indicators such as trade openness and FDI may suggest a slowdown, a deeper analysis reveals that globalization is evolving rather than retreating:   📈 From 2016 to 2023, the global value of greenfield investments increased by 69%, while cross-border mergers and acquisitions (M&A) fell by 57%. 🌏 The global resurgence of industrial policy is redefining economies of scale, moving away from the "Factory China" and "Factory East Asia" models that once characterized globalization. 🤝 As the US implements policies to de-risk its supply chain from China, we see a shift in its trade deficit towards connector countries such as Vietnam and Mexico.   These developments indicate the emergence of more intricate and regionally diverse global value chains. Scenario planning, smart localization, and operational optimization are essential for navigating the complexities driven by industrial policies. Businesses that adopt these strategies will be well-positioned to seize new trade and investment opportunities, thriving in a world that remains interconnected yet increasingly fragmented.   Check out our latest article for more insights into the new phase of globalization: https://lnkd.in/eufRphn9