When geologists first proposed the theory of plate tectonics in the 1960s, they revolutionized our understanding of the Earth’s surface. What seemed static and enduring was revealed to be in constant motion, driven by forces deep beneath the crust. Fault lines were mapped, and pressure zones identified, giving us a framework to predict earthquakes and volcanic eruptions that could reshape entire landscapes. Today, geologists work with precision instruments, aware that these shifts (imperceptible to the naked eye) are not only inevitable but also definitive in shaping our entire physical landscape.
 

It is the same with the global economy and human society. Beneath the apparent calm of the status quo, powerful forces are shifting. These movements, many invisible, are changing the rules of the game for individuals, businesses, communities, and nations.

 

• One of the most profound of these tectonic shifts is deglobalization, a trend that signals a fundamental realignment in the way the world interacts, trades, and collaborates.
   

• As we stand on the precipice of 2025, understanding and adapting to this seismic shift will determine who thrives and who falters in the years ahead.

 

A Brief Retrospective

 

The post-World War II era saw the emergence of globalization as the dominant economic paradigm. Trade liberalization, technological advancements, and the expansion of multinational corporations created a world more interconnected than ever before. Borders blurred as goods, services, capital, and ideas flowed freely. For decades, globalization drove prosperity, lifted millions out of poverty, and forged intricate supply chains that brought efficiency and cost savings to businesses and consumers alike.

But like any tectonic process, this era of integration also built up pressure. Disparities in wealth widened, industries in developed economies hollowed out, and cultural homogenization sparked resistance. The cracks in globalization’s foundation became more pronounced with the 2008 financial crisis, the rise of populist politics, and the US-China trade war. The COVID-19 pandemic, which exposed the fragility of global supply chains, accelerated this trend.

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• To illustrate the wealth disparity pressure point, we can look at a 2023 report by Oxfam, where the richest 1% of the global population are noted to have captured nearly ~70% of all new wealth created between 2020 and 2022, while the bottom 50% received just 1.5%. This growing inequality, exacerbated by globalization’s uneven benefits, has fuelled discontent and resistance to further integration.

• In the U.S., manufacturing jobs have rebounded modestly since their steep decline in the 2000s, but the scars of globalization remain. By 2023, the U.S. manufacturing workforce was still 25% smaller than its 1979 peak, despite reshoring efforts and government incentives like the CHIPS Act. The legacy of factory closures in regions like the Rust Belt continues to fuel economic discontent, with 73% of a cross-section of Americans in a 2024 Pew Research survey expressing scepticism about globalization’s benefits for domestic industries.​

• The global expansion of Western media and consumer culture continues to spark backlash, increasing paranoia about cultural homogenization. In 2023, India introduced measures to curb foreign content on streaming platforms, mandating a minimum percentage of locally produced shows and films. Similarly, China has aggressively promoted its “wolf warrior” cinema as a cultural counter to Hollywood dominance, limiting imported films to a widely rumoured number of just 34 per year while heavily subsidizing domestic productions. These actions reflect a growing trend among nations to preserve cultural identity in the face of perceived homogenization.

• The 2008 financial crisis wiped out over $2 trillion in global GDP and laid bare the risks of over-integrated financial systems. For instance, the collapse of Lehman Brothers in the U.S. cascaded through European economies, triggering sovereign debt crises in countries like Greece and Spain, further eroding trust in globalization.

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Due to the effects of many of the observable fault-lines, we now find ourselves in the midst of a counter-movement: deglobalization.
 

The Drivers of Deglobalization

 

When interdependence increases fragility, it ceases to be an asset.

 

At its core, deglobalization reflects a pivot from global interdependence to regional or national self-reliance. Several forces are propelling this shift:

 

1. Geopolitical Tensions: The rivalry between the United States and China, marked by tariffs, export restrictions, technology decoupling, and proxy conflicts has led nations to reassess the risks of economic dependence on adversarial powers. 
   Between 2018 and 2021, U.S. tariffs on Chinese goods rose to cover more than $550 billion in imports, triggering reciprocal measures from China and marking the largest trade war in modern history. The resulting realignment saw global companies pivot their supply chains toward alternative manufacturing hubs like Vietnam, Mexico, and India.

2. Pandemic Aftershocks: The scramble for critical supplies during and after the prominent waves of COVID-19, from personal protective equipment to semiconductors, has highlighted vulnerabilities in overextended supply chains.

3. Technological Localization: Advances in fabrication technology, automation and AI are reducing the cost advantage of outsourcing manufacturing to low-wage economies, enabling countries to bring production closer to home, while bypassing traditional supply chain links.
   India's “Atmanirbhar Bharat” (Self-Reliant India) initiative has spurred a $10 billion incentive program to boost domestic semiconductor manufacturing and electronics production, aiming to reduce its $24 billion annual electronics import bill.

4. Rising Nationalism: Across the globe, governments are adopting protectionist policies, prioritizing domestic industries and jobs over global integration - and sometimes even established orders or agreements.
   Amidst the U.S.-China rivalry, the European Union announced its Global Gateway initiative, committing €300 billion to counter China’s Belt and Road Initiative and secure diversified trade relationships. This reflects how regional blocs are reshaping alliances to mitigate dependency risks.

5. Climate and Sustainability: The urgency of reducing carbon footprints is driving localized production and shorter supply chains.

The Implications of Deglobalization
 

For Businesses:
Companies find themselves needing to adapt to a world where supply chains are shorter, less efficient, but possibly more resilient. Manufacturing hubs may shift closer to end markets, creating opportunities for regions that can position themselves as reliable alternatives.

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A 2023 McKinsey study revealed that over 90% of global supply chain executives are investing in regionalization, with approximately 60% citing resilience as a top priority, even at the expense of cost efficiency. This shift is leading to the emergence of new manufacturing hubs, like Mexico, which saw a 23% increase in U.S. nearshoring investments between 2021 and 2023.

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Businesses reliant on global markets will have to navigate an increasingly fragmented regulatory landscape, balancing localization with the need to remain competitive.
 

For Nations:
Regional trade blocs are emerging as the new engines of economic activity. While some countries may benefit from this reorganization, others risk marginalization. Nations with abundant resources, skilled labor, or strategic locations will thrive, while those overly dependent on global markets may struggle. Deglobalization also intensifies the race for technological leadership, as countries vie for dominance in critical sectors like AI, semiconductors, and green energy.

 

The Regional Comprehensive Economic Partnership (termed "RCEP"), which was signed in 2020, became the largest trade bloc in the world, encompassing 15 countries and 30% of global GDP. It is projected to boost intra-Asian trade by over $500 billion annually by 2030, benefiting nations like Vietnam and Indonesia with abundant labor and expanding manufacturing capabilities.

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For Individuals and Communities:
Labor markets are experiencing both dislocation and opportunity. Workers in industries that are "reshoring" to developed economies may find new prospects, while those in low-cost labor hubs face uncertainty. Cultural exchange, once enriched by globalization, may wane, impacting innovation and shared understanding.
 

Broader Tectonic Shifts
 

Deglobalization is not an isolated movement. It intersects with other major shifts, each compounding its impact:

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• Demographic Transitions: Aging populations in "developed" countries and youthful ones in "developing" regions will redefine consumption and labor patterns.
  Urbanization and industrialization lead to fewer children (In rural economies, children once represented free labor, helping with farms or family businesses and sustaining generational livelihoods. But in urbanized, industrialized societies, the cost of raising children - from education to healthcare to housing - has skyrocketed, making large families impractical, even undesirable, for many).
  For the "developed" world, this shift started almost a century ago; for the others, about less than 50 years ago. As a result, there is a significant shift in the concentration and characteristics of youth populations. Without large numbers of young workers and consumers, you can’t sustain mass consumption - or the trade networks that rely on it. Even in major emerging markets, demographics are shifting so quickly that soon the average American will be of similar median age to the Brazilian, Indian, Indonesian, and Mexican.

• Technological Disruption: AI and new fabrication technologies will reshape industries and widen the divide between nations that lead and those that lag in innovation. There are varying estimates about the number of jobs that will be displaced globally by automation and AI, depending on the methodology, assumptions, and specific technologies considered. Research papers by major consulting firms often present different scenarios, with some suggesting tens of millions of jobs displaced and others reaching into the hundreds of millions.

• Climate Adaptation: As nations grapple with climate change, new industries and alliances will emerge, redrawing the map of global influence.

• Shifting Alliances: The rise of multipolarity, with regional powers asserting influence, will create a more fragmented and competitive geopolitical landscape.
  As of 2024, China’s BRI has invested over $1 trillion in infrastructure projects across Asia, Africa, and Europe, effectively expanding its sphere of influence. However, this has also fueled geopolitical tensions, with the U.S. and the European Union promoting alternative initiatives like the Global Gateway and Blue Dot Network to counterbalance China’s growing clout.

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2025 and Beyond

 

To thrive in this era of tectonic change, businesses, policymakers, and individuals must adopt the mindset of a seasoned geologist: observe, anticipate, and adapt.

 

The wise adapt to tectonic shifts not by resisting the tremors, but by building on the new ground they create.

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1. For Businesses: We recommend investing in resilience. Where practicable, businesses are encouraged to diversify supply chains, embrace technological innovation, and align with the sustainability imperatives of the future.
   Prioritizing resilience will help businesses navigate the uncertainties of a potentialy fragmented global economy. This means building redundancies into supply chains, leveraging technology in logistics, and exploring nearshoring, where practicable, to reduce dependency on geopolitically volatile regions. For example, Procter & Gamble’s investment in predictive logistics tools helped to mitigate operational risks during the COVID-19 pandemic, while Apple’s diversification of manufacturing to Vietnam and India demonstrates how multi-sourcing strategies can mitigate risks. Resilience is no longer a luxury but a necessity in an era where disruptions are increasingly common.
   
   At the same time, businesses must embrace technological innovation and sustainability as central pillars of their strategy. Advanced technologies like AI and automation can enhance operational efficiency, as seen in Tesla’s use of predictive maintenance to stay ahead in the EV market. Aligning with sustainability imperatives is equally critical, as companies like Unilever have shown, with sustainable product lines said to be growing 70% faster than traditional ones. By investing in innovation and integrating reasonably practicable ESG principles, businesses can not only ensure competitiveness but also build trust and loyalty in a market increasingly driven by purpose and impact.

2. For Policymakers: We recommend a focus on strategic self-reliance without forsaking the benefits of collaboration. Policymakers must strike a careful balance between self-reliance and collaborative integration in an age of shifting global paradigms. Investing in critical lifelines like technology, energy, and healthcare will build resilience against external shocks, while leveraging collaborative platforms such as the AfCFTA, EU or RCEP can amplify market opportunities and shared resources. Resilient infrastructure (energy grids, digital connectivity) must be prioritized to strengthen local production and logistics while supporting regional integration. Simultaneously, sustainability should be embedded as a strategic pillar, driving policies that promote renewable energy, circular economies, and green technologies to ensure competitiveness in a market increasingly driven by eco-conscious consumers and investors.
   
   To prepare their workforce for current and future challenges, governments should align education and training systems with the needs of emerging industries such as AI, automation, and green energy. Funding STEM education, digital upskilling, and vocational programs can create a talent pool ready for the jobs of tomorrow. Policymakers must also facilitate robust innovation ecosystems by incentivizing R&D through grants, tax credits, and public-private partnerships. South Korea’s remarkable success, driven by R&D investments accounting for 4.8% of its GDP, demonstrates the potential of this approach. By focusing on these priorities, government actors can encourage a competitive, adaptable, and sustainable economy that thrives amidst global uncertainty.
   
   Lastly, while the establishment of robust policies and institutions is essential, their inherent inertia can often lead to stagnation, limiting their ability to adapt to evolving challenges. Once policies are enacted and institutions are set in motion, they tend to stabilize around their initial momentum, struggling to keep pace with dynamic global shifts. This is where entrepreneurship becomes indispensable as a catalyst that challenges inefficiencies, introduces innovation, and breathes life into static systems.
   
   Entrepreneurs, by their very nature, thrive on identifying gaps and solving problems, often working outside the constraints of institutional inertia. If they are encouraged, their dynamism can complement policy frameworks by driving change from the ground up, facilitating competition, and ensuring that institutions remain responsive to the needs of the present. For example, Nigeria’s active fintech ecosystem has pushed regulatory bodies like the Central Bank of Nigeria to modernize frameworks to accommodate digital financial services. This synergy between entrepreneurial innovation and institutional structure demonstrates how entrepreneurship can bridge the gap between policy intent and real-world impact, ensuring institutions evolve rather than stagnate.

3. For Individuals: Adaptability will be the cornerstone of success as global paradigms shift. Lifelong learning and the cultivation of transferable skills like critical thinking and digital literacy are essential for navigating evolving labor markets. As decentralization grows, individuals will likely consider relocating to less crowded areas, leveraging emerging opportunities in regional and local economies supported by digital infrastructure. Personal resilience, through diversified income streams, financial prudence, and strong community ties, will be critical in weathering uncertainty. Finally, embracing highly technical roles, or those that complement automation, such as those rooted in creativity, caregiving, and advanced problem-solving, will ensure relevance in an increasingly technology-driven world.

The ground beneath us is moving, often imperceptibly, but always significantly. Understanding these shifts and their implications will be the defining challenge of our time.
 

As we close 2024 and enter a new dispensation, let us not mistake the apparent calm for permanence. The forces shaping our world demand attention, foresight, and action.

 

Those who embrace this reality with clarity and courage will be the architects of the future.​​​

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The author wishes to thank the many subject matter leaders across the FACTS Finance Group who contributed to the insights and the FACTS Finance Group Editorial team.