Bricks and Mortar in a Borderless World:

Globalization, the Backlash, and the

Multinational Enterprise
Globalization has made the flow of capital, humans, and goods easier. The rapid expansion of
global economy takes place after the end of cold war and formation of European Union in 1993
which was supported by the establishment of European Central Bank in 1998 (Craig & De
Burca, 2011). Trade liberalization and the emergence of global institutions like WTO, IMF and
World Bank contributed to the expansion but a major setback took place in 2008 when the global
economy was hit by the greatest recession of all time after the great depression (Reuters, 2010).
The author argues that the main outcome of globalization is a technological advancement that
allows the formation of an effective economic network, besides technology and politics, played
an important role too. Business is not restricted to the places now, they are expanding and with
regional control over operations taking place in a particular country. Over a period MNCs are
able to make firm strategies in order to survive in the globalized world. The Author further
argues that the cost of devolution has increased in this period and it has become difficult to drive
profits or to dispose of the business units in an inefficient region.

Globalization was fast from 1990 to 2008, with global trade to GDP increased by 50% and FDI
by more than 8 times (p.p. 161). However, the great recession and events occurring after that like
Brexit, American President’s focusing on the domestic market by adopting to protectionism
causes hindrance to the globalization. However, Dr.Sampson (2017) mentioned that Brexit will
affect the EU and its implications on international trade will be minute. For instance, UK will
losses 22% in FDI inflows (Sampson, et al., 2016), but the US will influence the global trade, its
president rescinded NAFTA agreement, imposed trade restrictions over China. However, Mr.
Trump's concerns seem justifiable on the grounds of rising unemployment and shrinking middle
class in the US. Studies have found a strong relationship between globalization and wages and in
order to defend the domestic workforce interest, a balance needs to be maintained by the
countries, which sometimes make it necessary for their governments to make anti-globalized
policies.

The consequences of great depression were devastating, global trade was reduced to one third
only. Since, both the great depression and great recession have the same characteristics, the
effects can also be the same. The fall in trade and the rise of geopolitical risks has already been
witnessed, Stiglitz (2017) argued that globalisation was oversold, estimates of GDP and job
creation were wrong ant it lead to fall in confidence level of society, but globalization is a
cyclical phenomenon and an optimistic view cannot be held as irrational. However, the situation
at the current moment doesn’t look stable, US and EU are facing economic slowdowns, China is
trying to establish its own leadership and the economic tension is giving rise to social and
cultural problems like anti-immigration policies and national security is becoming vulnerable.
MNEs will find difficulties through nationalism and protectionism but multinational managers
must be able to solve the issues for their companies atleast for the medium term.

References
Craig, P. & De Burca, G., 2011. EU Law: Text, Cases and Materials. 5th ed. Oxford: Oxford
University Press.

Dr.Sampson, T., 2017. Brexit and the future of globalisation. [Online]

Available at: https://ukandeu.ac.uk/brexit-and-the-future-of-globalisation/
[Accessed 5 April 2019].

Reuters, 2010. Three Top Economists Agree 2009 Worst Financial Crisis Since Great
Depression; Risks Increase if Right Steps are Not Taken. [Online]
Available at:
https://web.archive.org/web/20100212214538/https://www.reuters.com/article/pressRelease/idU
S193520%2B27-Feb-2009%2BBW20090227
[Accessed 5 April 2019].

Sampson, T., Dhingra, S. O. G. & Van Reenen, J., 2016. The impact of Brexit on foreign
investment in the UK.. London School of Economics and Political Science, Volume 24, p. 2.

Stiglitz, J. E., 2017. The overselling of globalization. Business Economics, 52(3), pp. 129-137.