Introduction
Globalization has transformed economies around the world through the free movement of goods, resources, and capital across international borders. This trend has largely been characterized by the elimination of trade barriers (Hill, 2012). Consequently, economies have become more liberalized because of this development as people continue to benefit from the growth in employment opportunities, which has led to increased household income and the subsequent transformation of families and communities. However, recent social and political developments on the global stage have cast doubt regarding the future of globalization as it is known today. Notably, the 2016 election of President Donald Trump in America and the United Kingdom’s (UK) exit from the European Union (EU) through a popular referendum have painted a gloomy picture on the future of economic integration in the world. This paper demonstrates that these developments in the business environment have made the world less globalized. Evidence of the growth of economic nationalism and anti-immigration sentiments will be provided in this study to support this position and the implication of this trend on businesses performance outlined in the end.
Economic Nationalism
Economic nationalism refers to the promotion of state-interventionist policies over other market considerations in economic management. This movement is associated with state control of natural resources, restrictions on movement, and heightened scrutiny of capital flows (Steers, Nardon, and Sanchez-Runde, 2016). Broadly, policies that promote economic nationalism are usually adopted to safeguard national interests. Its entrenchment in business philosophy makes it one of the most impactful forces of global development. This mantra has nurtured a “what is in it for me?” ideology in business negotiations, which contradicts the principles of the comparative advantage theory, which encourages companies to focus on their key competencies and sell them to their trade partners.
Recent tariffs wars between the US and China demonstrate how nations are adopting economic nationalism policies through the implementation of “punitive” economic principles in cross-border management to sabotage free trade if their interests are not addressed. For example, the US recently imposed trade tariffs on Chinese goods shipped into the US because it wanted to force the communist nation to renegotiate its balance of trade agreement with the US (Nie, 2017). This trend has also been witnessed in the UK where authorities have renegotiated a deal with its European partners after opting to leave the EU. This trend shows that nations are increasingly looking to safeguard their economic interests in a world where boundaries have largely been broken, as more people seek investment or careers development opportunities across borders. Consequently, there has been a low level of cooperation among nations, which has made it more difficult to prioritize a globalization agenda in an economic nationalist environment.
Clamping Down on Immigration
Recent anti-immigration sentiments across most countries around the world have contributed to the diminished rate of globalization. For example, in Greece, there has been a wave of anti-immigration protests across major cities, which has been fuelled by fears of economic instability because of an influx of “cheap” workers and rising cases of inequality in the society (Wallis, 2019). This anti-immigration philosophy has further permeated the country’s legal system through the tightening of asylum laws and increased surveillance of international borders (Wallis, 2019). This trend has not only been witnessed in Europe but the US as well through the surging wave of anti-immigration sentiments across major states in the country and a heightened level of suspicion among people and immigrant communities.
In Europe, this trend has led to the shutdown of international borders and the curtailment of the free movement of people across states and regions. While there may be inadequate evidence to understand the impact of anti-immigration policies on the globalization movement, there are adequate grounds to believe that these developments have begun to affect international flows of people and capital. Consequently, businesses are suffering through increased human resource gaps and diminished enthusiasm for international integration among partner countries.
Implications on Business
The slowdown of globalization portends serious ramifications for businesses because it influences consumer confidence and the viability of existing demand and supply chain networks. The cost of doing business is likely to increase in this type of setup because of the loss in economies of scale due to a scale-down of business operations (Steers, Nardon, and Sanchez-Runde, 2016). There is also likely to be a loss of key markets for businesses that depend on foreign markets for sustainability because an anti-globalization movement could close borders and prevent the growth of international trade altogether. Broadly, these insights show that globalization could affect companies by increasing their cost of doing business and pre-empting a decline in their market share.
Conclusion
This study has demonstrated that globalization has been undermined by several developments in the global business environment, which have led to the restriction of the free movement of goods and services. The trend has been buoyed by the growing support for economic nationalism and the surge in anti-immigration sentiments across major world capitals. These forces have negatively affected economic integration in the world. The current movement towards isolationism and nationalism is only going to erode most of the gains that have been made through globalization thus far. Therefore, there is a need to reverse this trend and set the world back to the goal of economic integration.
Reference List
Hill, C. W. L. (2012) International business: competing in the global marketplace. 9th edn. New York, NY: McGraw-Hill.
Nie, W. (2017) Why America would lose a trade war with China.
Steers, R. M., Nardon, L. and Sanchez-Runde, C. J. (2016) Management across cultures: developing global competencies. 3rd edn. Cambridge: Cambridge University Press.
Wallis, E. (2019) Anti-migrant protests in northern Greece.