ndupress.ndu.edu SF No. 297 1
T
he Economist denes globalization as the “global integration of the
movement of goods, capital and jobs,”
1
and for decades, the process
has been advancing. e combination of labor cost advantages, in-
creasingly ecient freight systems, and trade agreements fueled globalization by
providing regional cost advantages for manufacturing. Over the last six decades,
it transformed agricultural societies into industrial powerhouses.
en, the 2008–2009 global nancial crisis—particularly the collapse of
China’s demand for commodities—slowed global trade. is led to early spec-
ulation that a number of factors were slowing globalization.
2
In fact, accord-
ing to World Bank statistics, global merchandise trade as a percentage of gross
domestic product (GDP) recovered relatively quickly from the 2009 crisis, al-
most reaching pre-crisis levels by 2011 (see gure 1). Speculation about slowing
globalization ceased, even though trade as a percentage of GDP attened and
then declined from 2011 to 2014 (see gure 2).
3
It was not just manufacturing;
services followed the same pattern.
4
Global nancial ows also declined sharply
following the crisis but did not recover (see gure 3): “e ‘Great Retrenchment’
that took place during the crisis has proved very persistent, and world nancial
ows are now down to half their pre-crisis levels. . . . Overall, net ows have
fallen substantially relative to the years preceding the sudden stop.”
5
As recently as 2014, the Mackenzie Global Institute reported, “e network
of global ows is expanding rapidly as emerging economies join in.”
6
But by the
time it produced its 2016 report, the institute had changed its tone, declaring
that “after 20 years of rapid growth, traditional ows of goods, services, and -
nance have declined relative to GDP.”
7
Most analysts concluded that the reduction in trade was simply a cyclical
downturn that would be reversed when China’s economy recovers. ey predict
Will Technological
Convergence Reverse
Globalization?
by T.X. Hammes
STRATEGIC FORUM
National Defense University
About the Author
Dr. T.X. Hammes is a Senior Fellow
in the Center for Strategic Research,
Institute for National Strategic Studies,
at the National Defense University.
Key Points
Numerous trends are slowing, and
may even be reversing, globaliza-
tion over the next decade or two.
Manufacturing and services, driven
by new technologies, are trending
toward local production. For eco-
nomic, technical, and environmen-
tal reasons, new energy production
is now dominated by local sourc-
es—solar, wind, hydro, and fracked
natural gas. To meet an increasing
demand for fresh, organic foods,
rms are establishing indoor farms
in cities across the developed world
to grow and sell food locally.
Recent trade ow statistics indicate
these factors have already slowed
globalization. Technological and
social developments will accelerate
these inhibiting trends. Voters in
the United States and Europe are
increasingly angry over interna-
tional trade. Prospects for passage
of major trade agreements are dim.
Authoritarian states, particularly
China and Russia, are balkanizing
the Internet to restrict access to in-
formation. Technological advances
are raising the cost of overseas
intervention while deglobalization
is reducing its incentives.
This paper argues that deglobal-
ization would have momentous
security implications. Accordingly,
deglobalization must be monitored
closely and if the trend continues,
U.S. leaders will need to consider re-
structuring organizations, alliances,
and national security strategy.
July 2016
CENTER FOR STRATEGIC RESEARCH
