Kim Them Do
Summary: As the world experiences serious economic, political, and technological upheavals, globalization – once regarded as a key driver of growth and prosperity – is facing unprecedented challenges. The processes of industrialization and globalization have brought significant achievements over the past two centuries, particularly through specialization, free trade, and technological advancement. However, financial crises, global pandemics, wars, and strategic competition among major powers have exposed vulnerabilities in the traditional model of globalization.
This article aims to analyze the achievements and limitations of globalization, thereby shedding light on trends such as the restructuring of global supply chains, policy shifts by national governments, and especially the adoption of de-risking strategies. Through practical case studies of the EU, the United States, China, and developing countries, the article argues that globalization is not ending but is being reshaped – moving toward stronger regionalization, geopolitical polarization, and digitalization.
Achievements of Industrialization
The Industrial Revolution began in England in 1763, marked by a wave of inventions and the application of advanced machinery such as spinning machines, looms, and steam engines. The rapid development of waterway and railway transportation systems facilitated the formation and expansion of large-scale industrial zones. A key turning point was the fact that production was no longer constrained by natural geographic conditions such as wind or water currents.
Alongside these advances, improvements in communication—particularly the telegraph—and the widespread use of steamships provided important utilities that significantly boosted productivity. This trend marked the beginning of a new era, characterized by the comprehensive development of modern industry.
From the outset, the specialization of production among countries and regions emerged as a natural consequence of the international division of labor and the principle of comparative advantage. The sharp reduction in transportation costs enabled businesses to access new markets more easily and to exploit raw materials and labor more efficiently. The 1860 free trade agreement between the United Kingdom and France was a milestone, paving the way for deeper manufacturing specialization. Industrialization quickly spread to Belgium, the Netherlands, France, Germany, and Switzerland, bringing profound political and social changes across Europe.
Achievements of Globalization
If globalization is understood simply as the growing interdependence among continents, it is clear that this is not a wholly new phenomenon. Even before the outbreak of World War I, the global economy exhibited certain interdependent characteristics, evidenced by increasing flows of people, goods, and services. However, unequal distribution of economic benefits meant that disparities between countries and populations persisted.
After World War II, under the prominent leadership of the United States, economic interdependence intensified, accompanied by a renewed spirit of multilateral cooperation. A number of key international institutions—including the International Monetary Fund (IMF), the World Bank (WB), the General Agreement on Tariffs and Trade (GATT), and later the World Trade Organization (WTO, established in 1995)—helped shape the global trade order. Most notably, the WTO introduced not only new trade rules but also a legally binding dispute settlement mechanism—a major advance in building a multilateral trade legal system. Today, the WTO has more than 160 members, representing around 98% of global trade, thus forming a solid foundation for international commerce and global supply chains.
In many discussions of economic development, trade is often regarded as the engine of national prosperity and global peace. Over time, however, there has been growing criticism of the negative effects of trade liberalization. Some economists argue that international trade results in significant losses, including millions of jobs lost annually due to foreign competition and the resulting social unrest. Yet the deeper cause is often automation, which contributes to increased productivity across the economy. Nonetheless, populist politicians frequently blame foreign competition rather than technological progress.
In reality, globalization is driven not only by trade agreements but also by technological advances—particularly in transportation and communication. Since the 1960s, the rise of containerization has dramatically reduced the cost of shipping goods by sea, road, and air. Between 1970 and 2014, transportation costs per unit weight fell by about 33–39%, and by value by about 48–62%. This made global supply chains more attractive and efficient than ever. At the same time, the widespread use of computers and the Internet enabled businesses to connect with customers worldwide, offering a transformative advantage for modern globalization.
In this context, it is only natural that businesses began locating production facilities across different geographic regions or countries, reflecting the ongoing international division of labor. Companies quickly recognized specific advantages in certain regions, such as lower labor costs, favorable infrastructure, or a highly skilled workforce. Leveraging these advantages allowed businesses to significantly reduce production costs and enhance economic efficiency.
Following this trend, multinational corporations have built flexible value chains, distributing different stages of production across various regions. For example, raw materials might be extracted in one country, semi-finished products processed in another, and final assembly completed in a location close to the target market. This strategy enables businesses not only to scale production but also to optimize costs and implement effective global marketing. The current optimal production model follows the „right time – right place – right demand“ principle, which minimizes delivery times and transportation costs.
From Economic Fragmentation to Geoeconomic Conflict
Since the early 2010s, the global economic landscape has undergone profound changes. China’s rapid rise as an economic power has triggered increasing concern among Western countries – particularly the United States – about its export-driven growth strategy and expanding global influence. At the same time, escalating geopolitical tensions, coupled with a wave of protectionism in many nations, have disrupted the established global trade order.
The 2008 – 2009 global financial crisis caused a sharp decline in international trade and investment flows, which have struggled to recover fully. Subsequent events—such as Brexit (2016), the US – China trade war (2018), and the COVID – 19 pandemic—further accelerated the trend toward economic fragmentation.
In response, policymakers in Western countries began focusing on restructuring global supply chains, aiming to reduce external dependencies and strengthen strategic autonomy. During his first term, U.S. President Donald Trump declared at the United Nations General Assembly:„The future does not belong to globalists, but to patriots.“ This statement reflected a fundamental shift in how the global economic order is perceived, marking a transition toward geoeconomic fragmentation and national economic isolation.
In 2010, only about 104 new trade protectionist measures were recorded globally. By 2023, this number had surged to 1,125. These measures include increased import tariffs, government subsidies, preferential credit programs, and various other forms of trade support.
The concept of geoeconomic fragmentation, with its emphasis on the strategic role of geopolitics, has gained increasing attention. The driving forces behind this trend are no longer based on economic efficiency alone but are now rooted in security concerns and strategic interests. Previously integrated economic blocs are fracturing, pushing many countries to adopt new industrial policies – especially in sectors such as semiconductor manufacturing, strategic resource extraction, and digital infrastructure development. Government intervention in these areas is on the rise, not only to stimulate domestic industries but also to suppress foreign competitors. This shift is leading to deep fragmentation of global value chains – economically and politically.
Economically, one direct consequence is that identical products are now being manufactured simultaneously in multiple locations. This duplication wastes resources, raises production costs, and reduces the gains from specialization. Multinational corporations also face conflicting regulatory systems and legal standards across jurisdictions, increasing legal complexity and liability. As operational costs rise, incentives for global investment diminish. Contrary to earlier expectations that multinational firms would drive technology transfer and global growth, the current climate suggests that productivity and growth may decelerate.
Politically, a major turning point was the outbreak of the war in Ukraine in 2022, alongside the renewed volatility of U.S. trade policy under President Donald Trump’s administration beginning in 2025 – both of which have intensified geoeconomic fragmentation.
Today, major economic power centers are coalescing into rival blocs that compete not only for commercial dominance but also for strategic and security influence.
The United States has shown waning enthusiasm for maintaining leadership in international institutions or traditional military alliances, raising fears of potential large – scale conflict. The transatlantic alliance between the EU and the U.S. is promoting ideas such as “economic friendship” and “technological sovereignty,” but these efforts face significant challenges due to Washington’s increasingly unilateral policies. As a result, some European countries are beginning to consider “de-risking” even in their long – term relationships with the U.S.
Meanwhile, Russia is not only continuing its war in Ukraine but also exploiting global divisions to reassert its influence in Europe, often through military threats. In contrast, China is asserting a dominant role in Asia, aggressively pursuing territorial claims in both land and maritime domains. China and Russia are deepening economic cooperation through a Eurasian counterbalance framework.
At the same time, many countries in the Global South – especially members of the BRICS group – are striving to reduce their reliance on Western-controlled financial and trade institutions.
Risk Reduction Strategies
Amid growing geopolitical uncertainty, Western governments have become increasingly sensitive to issues of national and regional security. This heightened awareness has extended into the realms of trade and investment, where vulnerabilities are now being redefined and subject to stricter controls. In this context, a new concept has emerged: de-risking strategies.
The core idea behind de-risking is not to end economic interdependence altogether but to reduce excessive dependence – particularly in sectors that may affect future political stability or national security. This shift in policy thinking signals that planners no longer view the pursuit of optimal economic efficiency as the sole priority of globalization. Instead, there is growing emphasis on geoeconomic resilience and strategic security.
In a landmark document published in March 2019, the European Union (EU) publicly referred to China for the first time as a “systemic rival,” as well as a “competitor” and “cooperative partner.” Events like the COVID-19 pandemic and the war in Ukraine have heightened the EU’s awareness of global supply chain vulnerabilities and external dependencies—especially in strategic sectors such as energy, health, and technology.
In response, the EU has implemented several concrete measures: introducing a bloc-wide foreign direct investment screening mechanism, tightening export controls, diversifying supply sources, and building strategic reserves. Simultaneously, the EU is working to sign regional trade agreements with Mercosur (South America), India, and ASEAN. These efforts aim not only to reduce dependency-related risks but also to facilitate economic recovery through the establishment of new strategic partnerships.
The most dramatic supply chain restructuring has occurred in the energy sector. Prior to the war in Ukraine, approximately 45% of the EU’s natural gas came from Russia (as of 2021). By 2024, that share had dropped to just 19%, driven by two key factors: Increased imports from alternative sources such as Norway and the United State and a reduction in gas consumption – from 334 billion cubic meters (2021) to 273 billion cubic meters (2024)
Is Globalization Ending?
The answer is negative. While the current international institutional framework – most notably the World Trade Organization (WTO) – is facing a severe crisis of functionality, this does not imply the definitive end of globalization. The WTO has been nearly paralyzed, largely due to the United States‘ withdrawal from active cooperation, which has undermined the organization’s capacity to negotiate, monitor, and resolve disputes.
Yet this institutional paralysis does not justify a wholly pessimistic view. Many governments and businesses are actively restructuring in response to global challenges such as climate change, pandemics, and technological security. Public opinion worldwide is increasingly supportive of these efforts.
Protectionism and tighter regulatory controls may slow the pace of globalization, but they are unlikely to reverse it. In fact, billions of people continue to use the Internet daily, artificial intelligence (AI) is expanding rapidly, and the speed, scale, and scope of global communication are increasing exponentially. As long as technological advancement continues, globalization will persist – albeit in a different form.
The central challenge now is to restructure globalization along geopolitical and geoeconomic lines, so that trade and investment flows are directed toward more stable and trusted networks. Two key arguments underlie this shift:
Risk reduction strategies are slowing the pace of transnational economic interdependence, particularly in sensitive sectors such as semiconductors, strategic raw materials, digital infrastructure, and data exchange. A degree of economic decoupling in these sectors appears inevitable.
Countries are increasingly seeking out „like-minded“ partners – nations with high levels of political trust and shared norms. This trend may foster more stable economic relationships but also lead to regionalized supply chains. Production and trade networks are being reshaped through bilateral or regional trade agreements, especially in digital technology and automation. As a result, the multilateral global system may gradually give way to regional structures, where new value chains form and production decisions are made based on strategic, rather than purely economic, criteria.
If world leaders recognize that mutual benefits can be achieved through regional cooperation, it is premature to declare the end of globalization. Rather, a new model is emerging—one that emphasizes resilience to external shocks, alignment with strategic partners (friendshoring), and the pursuit of technological autonomy.
Conclusion
Globalization is neither linear nor constant; it evolves in response to historical and geopolitical conditions. While protectionism, strategic rivalries, and political turmoil are currently slowing global trade and investment flows, globalization continues to advance – in new and transformed ways.
The rise of risk reduction strategies reflects a fundamental change in global policy thinking: from an exclusive focus on efficiency toward a broader emphasis on sustainability, stability, and security. Concepts like friendshoring, supply chain diversification, and technological sovereignty highlight how strategic priorities are reshaping the global landscape in the 21st century.
In this evolving context, a new form of globalization is taking shape – one grounded in flexibility, resilience, and trust among nations. While risks and uncertainties remain, the ongoing restructuring presents an opportunity. If countries take advantage of this moment to build inclusive and effective multilateral institutions, globalization can not only endure but also become more equitable, stable, and efficient in the years to come.
