Mathew Burrows & Robert A. Manning
There may be a new consensus in favor of national industrial policies where national security imperatives shape economic decisions and geopolitics dictates de-risking and working with economic partners whose values align with Washington’s. But the assumption that these trends will lead to a more stable and prosperous world appears flawed. Instead, the evidence points to the deepening erosion of the global economic system and its fragmentation, which is likely to reinforce great power competition ― Cold War 2.0 ― and increase the likelihood of conflict among major powers.
The current situation is a backlash from the excesses of hyper-globalization, which generated both prosperity and wealth disparities within nations (e.g., the hollowing out of U.S. manufacturing) and among nations. Today new patterns, including the bifurcation of policy-driven trade, capital, and technology flows, as well as weaponized interdependence (tariffs, sanctions, export controls), have unraveled the economic integration and connectivity brought about by the past era of globalization.
Current dynamics are often referred to as deglobalization. But this is an oversimplified or at least, premature assessment: The flow of ideas, goods, capital, and people across borders continues. Instead, the data suggest a new pace and direction of flows, a new geometry of trade and investment, or as the International Monetary Fund (IMF) calls it, “slowbalization”: near-flat growth and region– and bloc-centric trade in goods and investments as well as slow globalized trade in services.
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