July 2023

COVID and the war in Ukraine have led to headlines about corporations wanting to secure their supply chains and countries wanting to secure their national interests, both by limiting and changing with whom they trade. Thus, there is reason to believe that we may be entering a period of deglobalization, that is, a halt or even an outright reversal of the globalization that drove global investment, boosted growth, and lowered the cost of manufactured goods for much of the last fifty years. This would have lasting consequences for the global economy and for investors.

In this paper, we examine the current evidence for deglobalization by analyzing the current environment and the historical effects of globalization, primarily during the post WWII era. We also examine the costs and benefits of globalization to identify potential impacts of its unraveling. Beyond the obvious diminishment of the peace dividend, we find that deglobalization may have ramifications for price stability, interest rates, economic growth, and lower returns on investment in the US and beyond.