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Plummeting flows of trade, capital, and people at the beginning of the Covid-19 pandemic prompted a wave of speculation about the end of globalization, and Russia’s invasion of Ukraine brought even more predictions of a retreat toward national self-sufficiency. But, according to research for the latest DHL Global Connectedness Index, international flows show no signs of a sustained downturn. The data shows a broad pattern of decoupling between the U.S. and China, but the flows of countries that are geopolitically aligned with the U.S. and China do not — at least yet — indicate a broader split between rival blocs. Nor is there evidence that globalization is giving way to regionalization. While companies do need to adjust for heightened geopolitical tensions, they should not abandon global strategies. Corporate deglobalization, in fact, could be a riskier path than making focused adjustments to mitigate geopolitical risks.
Three key questions lie at the heart of debates about whether global crises and escalating geopolitical tensions have begun to reverse globalization: Has the growth of cross-border trade, capital, information and people flows gone into reverse? Are geopolitical tensions fracturing the world economy into rival blocs? And is globalization giving way to regionalization? The answer to all three questions — despite evidence of U.S.-China decoupling — is still “no.”