Globalization in the past few decades has brought extraordinary benefits to people across the world. In emerging markets, trade has helped lift billions out of poverty and enabled access to innovative goods and services. In developed markets, standards of living have continued to rise, and the range of goods and services has expanded. Citizens across the world have become more connected by shared ideas, international supply chains, global employers and travel.
There have also been significant downsides. Environmental damage has occurred, particularly where regulation is weak. Labor standards have not been upheld universally. And inequality has grown dramatically within countries when the benefits of globalization are not shared widely. Many governments are now taking action to address these, and other, downsides. And rightly so: globalization must work for all.
However, as our scenarios illustrate, the world is not just turning its back on the disadvantages of globalization. It is becoming increasingly clear, particularly as geopolitical tensions mount, that it is also turning its back on its advantages. This creates significant challenges for international companies. But, more importantly, the current trajectory of globalization now threatens global peace and prosperity.
CEOs and other international business leaders have a crucial role as advocates for the most optimistic of our scenarios, Globalization lite. Companies should continue to develop and leverage relationships with all stakeholders – including policymakers, investors, employees, customers and others – to support policies that spread the benefits of globalization more widely and promote sustainability and long-term value around the world.
Environmental and labor standards should be strong, supply chains need to be resilient to shocks, economic gains should be widely shared, and national security must be protected. But a slide toward protectionism, self-reliance and economic (or even military) conflict will challenge the attainment of all these goals. The open movement of goods, capital, ideas and people across borders makes the world a more harmonious and prosperous place. CEOs should fight for Globalization lite – a better working world than the one in which they operate today.