In spite of recent challenges, there continues to be a strong case for globalisation. It’s been a hard time for global trade: the pandemic put immense pressure on global supply chains and the dislocation caused by the war in Ukraine is yet another reminder of how connected we are as a global economy.
Nonetheless, a retrenchment to domestic operations and supply chains cannot be the answer to our current travails. The impact of doing so would slow growth, reduce opportunity and have huge unintended consequences for emerging economies.
We acknowledge that the biggest winners in the past 30 years have been emerging economies that have integrated into the world economy and raised living standards. Yet there is still much to be gained from a model of trade that cuts across continents, lifting participation and driving growth.
Standard Chartered predicts that global trade could reach $30tn by 2030. We need more resilient supply chains — this means a balance between “just-in-time” supply chains and the “just-in-case” model, not one over the other. Companies in the future will look to diversify their centres of production, not pull them all close to home.
The way forward lies in addressing the shortcomings of the current global trade model to make it more inclusive for smaller businesses and markets. Technology is crucial to success; we need policies that encourage free exchange and enable the cross-border adoption of tech advances such as blockchain-based distributed ledger systems, making trade transparent, sustainable and resilient.
This requires strong multilateral institutions to accelerate digital agreements that provide co-operation for supranational policy implementation. And we can ensure compliance with environmental, social and governance principles over the entire supply chain by tracking adherence to sustainability criteria via digital trade platforms.
We must continue to embrace globalisation while perfecting it. If we turn our back on 30 years of advancement, the long-term consequences will be detrimental for us all.
This article was first published on 11 April 2022 in the Financial Times.