By Dambisa Moyo
As we enter a new decade, characterized by rising economic complexity and geopolitical divisions—US-China tensions, populism and nationalism in Europe, and the looming risk of a global recession—forward-thinking business leaders are developing strategies to mitigate the longer-term risk of deglobalization. It is increasingly understood that this ever-more siloed world directly affects three pillars of global corporations: technology, global recruiting and the finance function.
In recent years, corporate leadership has rightly prioritized cyber risks, the threat of technological obsolescence and the rise of the jobless underclass stemming from increased automation. However, there are now mounting concerns about the emerging “splinternet”—an increasingly fragmented Internet with competing China-led and US-led platforms.
The shift in the US and Europe toward more stringent immigration intensifies the war for global talent. The risk of further restrictions on immigration has climbed in importance on the leadership agenda as it threatens the corporation’s ability to hire across borders.
Global companies derive enormous benefits from a centralized finance function. In most cases, this more centralized model means corporations are able to borrow at a lower cost than they would if their regional and national subsidiaries had to confine themselves to local currency markets, which tend to carry greater risk and volatility. A more siloed world means corporations will struggle to extract their investment capital and return profits to shareholders.
Ultimately, the way forward will depend on whether a company’s leadership views deglobalization as an enduring phenomenon or a passing fad. If business leaders believe deglobalization is here to stay, then real consideration must be placed on upending the prevailing global corporate structure to make it better match the deglobalized world.
Dambisa Moyo is an international economist who serves on the boards of Barclays Bank, Chevron and Seagate Technology.
