The Future is Glocalization

| By TMA World

In a profound change to the global economy, the manufacturing sector will increasingly become localized – this is according to Paul Donovan, Global Chief Economist at UBS Wealth.  With advances in artificial intelligence and robotics, factories are being located closer to consumer markets enabling companies to respond quicker to customer wants and needs.  Donovan gives as an example the Swedish retailer H&M which now manufactures most of its clothing in Europe, not in Asia.

Global trade accounts for about a quarter of the world’s GDP and is at a record high, but a trend toward localization could return us to a more imperial model of trade.  In this model, raw materials and intellectual property are imported, while “everything else” happens close to the consumer.  Robotics and AI undercut the once powerful advantage of lower-cost labor in emerging economies. 

If this is the case, raw materials will still be globalized, but finished products will become a declining force in global trade.

The key lesson for managers is that the globalization is not a static ‘thing’.  It shape-shifts as factors like technology and politics disrupt our understanding of what it is and might be.  We must always be vigilant in paying attention to how our businesses – and we as leaders – must adapt.   


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