The rising tide of economic nationalism has caused many observers to announce that globalization is not just in retreat, but near death. To be sure, the Brexit vote and the election of Donald Trump (as well as the popularity of various far-right European politicians) raise important questions about the future of free trade. But the future health of the multinational corporation is not in doubt. Their outlook is good – but MNCs will need to adapt to some new realities.
Multinationals Have a Bright Future, If You Know Where to Look
The rising tide of economic nationalism has caused many observers to announce that globalization is not just in retreat, but near death. Multinationals do need to adapt to some new realities, but overall their outlook is good. By every important measure other than trade in goods, globalization is thriving. And trade in goods is falling not because of political headwinds, but due to the end of the commodities boom, rising costs in China, much slower growth in the major importing economies, ever-greater automation, and — as a result of the growing imperative for customer responsiveness — a push for shorter supply chains. What’s replacing trade as a major priority for MNCs is local investment: MNCs need to double down on localizing their operations in every major market. Stronger local ties will not only be good for corporate resilience and customer responsiveness — they’ll also create local jobs, which should placate the populist politicians, too.