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The Economist Feb 1st 2019

Slowbalisation – powerful and well-written article on page 9 about the shift from global growth to regional relationships and growth. According to the article, globalization took off between 1990 and 2010 due to the tailwinds of declining shipping costs, improving communication options, lower tariffs and looser holds on finance. It feel that I would have been well-positioned for this shift, with my language and cultural background, but missed the timing by about a decade.

Regional authorities are reacting to populism and starting to throttle globalization. Formerly mundane areas such as accounting, privacy, data residency, tax, etc. are the new weapons. I have seen this myself, where the overhead to comply with local regulations make it prohibitively expensive to operate in the country. Examples include data residency requirements in Russia to tax (VAT) requirements in the EU to multi-factor authentication requirements in the UK.

A few criticisms. First, the sentence “Multinational firms have found that global sprawl burns money and that local rivals often eat them alive” is ambiguous. Does this mean that an American brand with factories in China are eaten alive by other American brands with local factories? Coast Products and Kershaw, both of which operate in similar markets and geographies, come to mind. Or does this mean that an American company attempting to expand to a local market is often outmaneuvered by local companies? Uber ceding the southeast asian market to Grab is one example that comes to mind. Second, the statement about shifting towards regional blocks is unsupported. Perhaps this is only the teaser, with supporting articles in later pages to provide examples and trends.

The article concludes with two disadvantages of slowbalisation: 1) new difficulties such as slower progress for developing countries and the untethering of American interest rates to local economic conditions (think Greek crisis of 2013) and 2) it does not fix or reverse the problems globalization created, such as decline of high-paying blue collar jobs in the West, climate change, and tax evasion. The article ends with the premises that slowbalisation, which is deeper links within regional blocks, will be meaner and less stable than its predecessor, i.e. globalization.

I need to consider what this means for me. Are my language skills as relevant? Do I need to understand how the regional shift will play out and start to look regionally instead of globally? Do skills need to go deeper instead of broader? For example, does it make more sense to have a deep understanding of regional tax regulations instead of a broad view of global tax regulations?