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On Deglobalisation

It is being seen that after the COVID-19 Pandemic, various countries have started aligning themselves into different trade blocs, especially to reduce their supply-chain dependency on hostile States. It has led the world into an Era of Deglobalisation and trade barriers, which has had enormous implications for big corporations, who were used to operating globally with little concern for the ground geopolitics.

Now, corporations have to get used to a world where neutrality is no longer a winning strategy, if not a hurting one. Many big businesses have taken recourse to age-old strategies of friend-shoring or near-shoring, which includes shifting their supply-chain networks to allies or nearby nations in order to reduce trade uncertainty.

As nations pioneer the art of punishing foreign firms for geopolitical interests, the reputational and political costs of doing business in a hostile State are getting harsher. With nation-states having the power to control their import duties for specific nations, setting up resources in hostile States has become incredibly loss-making for corporations. On the other hand, friend-shoring can reap innumerous tax concessions and trade benefits.

As the world heads towards increased deglobalisation, the creation of trade chambers among powerful blocs is inevitable, which creates a unique situation for big corporations that are used to global domination.

Source: The Geostrata (Instagram)

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