The globalization of recent decades has brought extraordinary benefits to people around the world. In emerging markets, trade has helped lift billions of people out of poverty and enabled access to innovative goods and services. In developed markets, the standard of living continued to rise and the range of goods and services expanded. Citizens around the world have become more connected through shared ideas, international supply chains, global employers and travel.
There were also significant downsides. Environmental damage has occurred, particularly where regulation is weak. Labor standards were not universally respected. And inequality has increased dramatically within countries when the benefits of globalization are not widely shared. Many governments are now taking steps to address these and other drawbacks. And rightly so: globalization should benefit everyone.
However, as our scenarios illustrate, the world is not just turning its back on the downsides of globalization. It is becoming increasingly evident, especially as geopolitical tensions rise, that it is also turning its back on its strengths. This creates significant challenges for international companies. But, more importantly, the current trajectory of globalization now threatens global peace and prosperity.
CEOs and other international business leaders have a crucial role to play as advocates for the most optimistic of our scenarios, lean globalization. Companies must continue to develop and leverage relationships with all stakeholders – including policymakers, investors, employees, customers and others – to support policies that spread the benefits of globalization more widely and promote durability and long-term value around the world.
Environmental and labor standards must be strong, supply chains must be resilient to shocks, economic gains must be widely shared, and national security must be protected. But a slide toward protectionism, self-sufficiency, and economic (or even military) conflict will jeopardize the achievement of all of these goals. The free movement of goods, capital, ideas and people across borders makes the world a more harmonious and prosperous place. CEOs should fight for lean globalization – a better world of work than the one they operate in today.