Article 1 - De-globalization: Theories, predictions, and opportunities for international
business research. Witt, M. (2019)
Growing evidence suggests that we may live in a period of deglobalization that began a decade
ago.
→ This will affect structures, behaviours and strategies in international business.
The authors argue that politics is the key-driver of de-globalization, therefore politics should be
more integrated into IB research.
While technology and resultant drops in the costs of transportation and communication may
enable globalization, politics determines whether firms and individuals can take advantage of
the opportunities thus afforded
Two schools of thought in political science
Each has sought to account for the development of globalization, each pointing to different
mechanisms driving it and leading to its reversal.
1. Liberalism: identifies domestic political pressures against globalization as a cause of
deglobalization, a narrative that is consistent with much public debate.
2. Realism: sees the end of US hegemony and the rise of China as a geostrategic
competitor as the trigger.
Globalization: the process of increasing interdependence among nations
De-globalization: the process of weakening interdependence among nations
Most relevant dimensions in IB: trade and FDI
→ A weakening of interdependence for these two dimensions means that we should observe
that, on average, countries rely less on goods and services or on investment from other
countries, relative to levels of domestic economic activity. In other words, trade and investment
flows as percentages of GDP should be declining.
There is a current shift towards lower levels of economic interdependence and thus
de-globalization. This is remarkable since technology is still improving, which facilitates higher
levels of economic interdependence.
De-globalization: explanations and possible outcomes
General mechanisms: Liberalism and realism
Liberalism:
● Liberalism permits a wide range of actors, interests, and forms of power to determine
political outcomes. Actors: countries, firms, NGO’s, EU, WTO
● Liberalism assumes these actors to be rational on average, that is, deviations from
rationality are possible.
● By engaging in politics, these actors pursue their self-interests
● Depending on the interests at hand, actors may seek to attain their objectives through
positive-sum cooperation (e.g., economic wealth through trade) or zero-sum competition
(e.g., national security through military strength).
, ● In pursuing their respective interests, actors have recourse to a wide range of different
forms of power. (hard power, sharp power, soft power)
● What happens domestically is least as important as what happens between countries
○ Countries interest are reflection of domestic interest
Liberalism thus presents a fairly accurate depiction of reality, with all its complexity. This is also
its major weakness as a theory. It is so permissive in terms of the possible actors, their
respective interests and the various forms of power that may matter that it can be very difficult to
arrive at a conclusive analysis and prediction for specific issues.
Realism
● The realist school narrows down this wide range of possible actors, interests, and forms
of power considerably.
● Actors are sovereign countries, especially great powers.
● Countries are unitary, rational actors, with domestic politics being irrelevant for their
behavior in the international system.
● This is because under the additional assumption of anarchy in the international system –
the notion that there are ultimately no rules constraining state behavior as there is no
overarching authority that could enforce compliance – securing survival becomes the
primary concern of states.
● Hard power (defend against other countries)
● Power representing primary tool for survival against other countries
● Relations between countries are zero-sum game
● Criticism: may miss important parts of the picture
, Relationship with (De)globalization
Liberalism:
● Globalization involves two major ingredients: (1) the agreement of states to cooperate in
building interdependence, and (2) a supporting infrastructure that enables such
cooperation to occur
(1) requires that there be sufficient political support for building economic interdependence
within each country. In other words, proponents of openness need to have more political
power than opponents.
→ challenge due to risk that countries defect to gain even greater benefits for themselves
3 ways to reduce risks
● Interactions are repeatedly, thus defecting will harm long-term cooperation and therefore
reduce benefits
● Cooperation can be helped through strategies that reward cooperation and punish
defection
● International institutions may enable international cooperation (WTO)
○ They provide a forum for discussion, for identifying mutual interests, and for
finding joint solutions.
○ Monitor compliance
2 pathways to de-globalization
1. The institutional infrastructure supporting globalization has lost its ability to support
openness. (diverging interests from countries → increased power emerging markets)
2. A change in national political interests leads countries to opt out of economic
interdependence. (public support for globalization drops, nationalist groups, some
sectors gain from opening up trade, others lose→ low skilled workers, payoffs for
cooperation may shift over time)
Realism:
● Main pathway to globalization is coercion → hegemonic stability theory
● Hegemonic stability theory: periods of globalization occur when an overwhelmingly
powerful country, a ‘‘hegemon,’’ creates and maintains, for its own benefit, sets of
international institutions (‘‘regimes’’) that govern aspects such as trade and investments.
The hegemon will keep this system in place as long as it remains strong enough to do so
and the benefits from keeping the system exceed the costs. Other states may or may not
benefit from the system.
● Loss of power → system becomes unstable
● Hegemonic stability theory links the openness of the international economic system to
the preponderance of the most powerful country, which in recent history has been the
United States of America.
● Decline in power → expected de-globalization
● Power → Military and economic power
● China is becoming more powerful
Both approaches would expect de-globalization under present conditions, however their
predictions of the future landscape differ.
business research. Witt, M. (2019)
Growing evidence suggests that we may live in a period of deglobalization that began a decade
ago.
→ This will affect structures, behaviours and strategies in international business.
The authors argue that politics is the key-driver of de-globalization, therefore politics should be
more integrated into IB research.
While technology and resultant drops in the costs of transportation and communication may
enable globalization, politics determines whether firms and individuals can take advantage of
the opportunities thus afforded
Two schools of thought in political science
Each has sought to account for the development of globalization, each pointing to different
mechanisms driving it and leading to its reversal.
1. Liberalism: identifies domestic political pressures against globalization as a cause of
deglobalization, a narrative that is consistent with much public debate.
2. Realism: sees the end of US hegemony and the rise of China as a geostrategic
competitor as the trigger.
Globalization: the process of increasing interdependence among nations
De-globalization: the process of weakening interdependence among nations
Most relevant dimensions in IB: trade and FDI
→ A weakening of interdependence for these two dimensions means that we should observe
that, on average, countries rely less on goods and services or on investment from other
countries, relative to levels of domestic economic activity. In other words, trade and investment
flows as percentages of GDP should be declining.
There is a current shift towards lower levels of economic interdependence and thus
de-globalization. This is remarkable since technology is still improving, which facilitates higher
levels of economic interdependence.
De-globalization: explanations and possible outcomes
General mechanisms: Liberalism and realism
Liberalism:
● Liberalism permits a wide range of actors, interests, and forms of power to determine
political outcomes. Actors: countries, firms, NGO’s, EU, WTO
● Liberalism assumes these actors to be rational on average, that is, deviations from
rationality are possible.
● By engaging in politics, these actors pursue their self-interests
● Depending on the interests at hand, actors may seek to attain their objectives through
positive-sum cooperation (e.g., economic wealth through trade) or zero-sum competition
(e.g., national security through military strength).
, ● In pursuing their respective interests, actors have recourse to a wide range of different
forms of power. (hard power, sharp power, soft power)
● What happens domestically is least as important as what happens between countries
○ Countries interest are reflection of domestic interest
Liberalism thus presents a fairly accurate depiction of reality, with all its complexity. This is also
its major weakness as a theory. It is so permissive in terms of the possible actors, their
respective interests and the various forms of power that may matter that it can be very difficult to
arrive at a conclusive analysis and prediction for specific issues.
Realism
● The realist school narrows down this wide range of possible actors, interests, and forms
of power considerably.
● Actors are sovereign countries, especially great powers.
● Countries are unitary, rational actors, with domestic politics being irrelevant for their
behavior in the international system.
● This is because under the additional assumption of anarchy in the international system –
the notion that there are ultimately no rules constraining state behavior as there is no
overarching authority that could enforce compliance – securing survival becomes the
primary concern of states.
● Hard power (defend against other countries)
● Power representing primary tool for survival against other countries
● Relations between countries are zero-sum game
● Criticism: may miss important parts of the picture
, Relationship with (De)globalization
Liberalism:
● Globalization involves two major ingredients: (1) the agreement of states to cooperate in
building interdependence, and (2) a supporting infrastructure that enables such
cooperation to occur
(1) requires that there be sufficient political support for building economic interdependence
within each country. In other words, proponents of openness need to have more political
power than opponents.
→ challenge due to risk that countries defect to gain even greater benefits for themselves
3 ways to reduce risks
● Interactions are repeatedly, thus defecting will harm long-term cooperation and therefore
reduce benefits
● Cooperation can be helped through strategies that reward cooperation and punish
defection
● International institutions may enable international cooperation (WTO)
○ They provide a forum for discussion, for identifying mutual interests, and for
finding joint solutions.
○ Monitor compliance
2 pathways to de-globalization
1. The institutional infrastructure supporting globalization has lost its ability to support
openness. (diverging interests from countries → increased power emerging markets)
2. A change in national political interests leads countries to opt out of economic
interdependence. (public support for globalization drops, nationalist groups, some
sectors gain from opening up trade, others lose→ low skilled workers, payoffs for
cooperation may shift over time)
Realism:
● Main pathway to globalization is coercion → hegemonic stability theory
● Hegemonic stability theory: periods of globalization occur when an overwhelmingly
powerful country, a ‘‘hegemon,’’ creates and maintains, for its own benefit, sets of
international institutions (‘‘regimes’’) that govern aspects such as trade and investments.
The hegemon will keep this system in place as long as it remains strong enough to do so
and the benefits from keeping the system exceed the costs. Other states may or may not
benefit from the system.
● Loss of power → system becomes unstable
● Hegemonic stability theory links the openness of the international economic system to
the preponderance of the most powerful country, which in recent history has been the
United States of America.
● Decline in power → expected de-globalization
● Power → Military and economic power
● China is becoming more powerful
Both approaches would expect de-globalization under present conditions, however their
predictions of the future landscape differ.
