Glocalization: When Global becomes Local

Glocalization is an ugly term from the 80s, describing a trend which is about to get ugly. Until recently the “decentralization of globalization” carried many benefits, including the determent of a global homogeneous culture. Technological, economic and societal trends have turned glocalization into an ever more powerful and destructive force which will shape the New Normal.

 

Another ugly term – the Splinternet – accurately describes what has happened to one of the drivers of globalization, the net. The Great Firewall of China was one of the earliest example of the compartmentalization of the web. Driven by obvious political but also economic interests, this Chinese ecosystem has produced many powerful local competitors of Twitter (Weibo), Amazon (Alibaba) and Google (Baidu). Many undemocratic states like Russia, Iran and Turkey have used the Chinese template to pursue political opponents over the years. Even in the west the internet has become less global, witness EU privacy regulations forcing global Clouds to store information in Europe. Since the introduction of the world wide web in the 90s the internet has changed beyond recognition.

Political and technological development have fundamentally changed another driver of globalization: corporations. Tax-evasion and other ugly practices have created strong political and regulatory pressures on the profitability of global firms. Meanwhile, technology has made the development of new products and services and accessing new markets possible without large investments, eroding the competitive advantage of corporations over small local players. In times where the internet has put a premium on time-to-market, the natural advantage of small organizations in terms of speed and flexibility has further strengthened their position. The result is that global corporations have seen a dramatic fall in Return on Equity – which in English means that investors are getting lower returns for their investments. A lower appetite of those investors affects the funding of growth and development of global corporations. Even though the substitution of McDonalds by local restaurants is a culinary improvement for some, the impact on employment and local suppliers may be hard to digest for others.

The political revolution symbolized by Trump, Wilders, Le Pen and other anti-establishment has given Glocalization formidable momentum: Globalization has lost most of its remaining charm since the economic crisis of 2007-8. The internet has been instrumental in spreading Fake News and Alternative Facts on foreigners, and growing economic inequality has increased resentment against mostly undefined elites. Whether all these emotions and opinions are justified or not, politicians are subject to massive pressures to limit international distribution of (sensitive) technology, corporate activity and migration. The sometimes irrational nature of these pressures increases the risk of unintended consequences. Many economists predict an initial boom of the American economy driven by Trump’s economic policy, followed by a steady decline due to trade wars and lack of qualified professionals.

As always, The New Normal produces both winners and losers: Glocalization will not just have ugly consequences. Local companies and political parties have already benefited greatly, and will doubtlessly continue to do so. However, Glocalization has developed into a formidable force and the mutual reinforcement of its technological, economic and societal drivers shows that much more is yet to come. Global irrationality carries the risk of Glocalization getting out of control and affecting employment and political freedom of people around the world. One can only hope that the impact of Glocalization will not mirror the ugliness of its name.

The New Normal will address Glocalization in its upcoming issue. First, it will analyse underlying trends like the fall in profitability of global players, mass psychology behind nationalism and internet regulation. Then several extreme but informative scenarios will be outlined: what if cross-border mobility becomes much more difficult? What if American global corporates pull back behind US borders? What if the Internet falls apart into regional networks? In the third quarter, these trends and scenarios are critically assessed: how probable is it that  they will actually play a role 5 years from now, and to what degree will they impact our world? The publication will conclude with concrete Opportunities and Threats to our readers arising from Glocalization: how can they benefit from glocalization in business and private life, and what should they stay away from?

 

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