No country, no region is an island economically.

Since the collapse of socialism and the entry of formerly socialist countries into the international division of labor, economic ties have intensified.

At the same time, the retail chains have changed several times during this time.

Gerald Braunberger

Editor.

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Between the entry of the former socialist countries, above all China, at the beginning of the 1990s and the outbreak of the financial crisis in 2008, a considerable diversification in world trade could be observed: Many companies took advantage of the opportunities that arose from the opening of formerly closed markets.

Since 2008 there has been a counter-movement towards a much greater concentration of international trade.

The current discussions about a greater diversification of retail chains should therefore neither be understood as a break with the iron principles of globalization nor as a threat to globalization.

Even in the past, retail chains were not static constructs.

It would probably be more appropriate to speak of a further trend reversal in international trade.

According to analyzes by the McKinsey Global Institute, around 60 percent of world trade still takes place in diversified markets.

These include the still growing markets for services and intangible capital such as investments in patents, employee training and software.

After all, 40 percent take place in markets with a high concentration.

The Institute describes trade structures in which a country relies on a maximum of three suppliers as concentrated markets.

“China exports more than 60 percent of the most concentrated products in the electronics and textile industries.

The Asia-Pacific region contributes above average to exports in concentrated markets for commodities," says the analysis.

Fragmentation is not a new phenomenon

However, these dependencies are not destiny.

"Three-fourths of this concentration is the result of economic choice," the McKinsey experts write.

"In these cases, which account for 30 percent of world trade, individual countries source products from only a few other nations, although global supply allowed diversification." Many dependencies can be reduced;

numerous companies have long been searching for new procurement and sales markets.

The political framework within which globalization takes place is subject to lasting changes.

With the end of American dominance, the multilateral trade order, which was largely influenced by the United States and shaped by organizations such as the World Trade Organization and the International Monetary Fund, is suffering.

Of course, this order was never as pure and perfect as it may appear in retrospect.

Fragmentation is not a new phenomenon;

it has accompanied globalization for decades: Free trade agreements have even failed between democracies in the past;

TTIP is probably the best-known example.

If there is goodwill on both sides, free trade can also be enshrined in bilateral agreements.

The excited evocation of an impending fragmentation of the world in Davos can be understood as an appeal to the rulers in Washington and Beijing – who are not very prominently represented in Davos – not to let world trade suffer too much because of their geostrategic differences.

In Asia in particular, this topic dominates many discussions in politics and business.

According to estimates by the World Trade Organization, a lasting disruption to global trade chains could hit poorer countries much harder economically than rich nations.

Russia's importance should not be overestimated

In a recent blog, the International Monetary Fund recalls the beneficial results of globalization: “Economic integration has helped billions of people become richer, healthier and better educated.

Since the end of the Cold War, the global economy has nearly tripled in size and nearly one and a half billion people have been lifted out of extreme poverty.

This peace and cooperation dividend should not be squandered.”

It is undeniable that the protectionist dialogue, as well as restrictions on free trade that have actually been imposed – which, as mentioned, have existed before, have increased significantly in recent years.

But the question arises as to whether special events such as the pandemic were largely responsible for this.

"Since the onset of the pandemic, mentions of 'reshoring', 'onshoring' and 'near-shoring' in presentations and company results have increased nearly tenfold," the International Monetary Fund observed.

"The risk is that political decisions imposed in the name of economic or political security may have unintended consequences or that they are intentionally used to achieve economic gains at the expense of others."

Russia's imperialist war against Ukraine is now fueling debates on geoeconomics and geostrategy, even if Russia's economic importance for the world economy should not be overestimated.

As agitated as the public discourse was in Davos, behind closed doors, numerous participants from the business world were convinced that the economic costs of a far-reaching damage to globalization would be too great for Washington and Beijing.

Because no country is an island and no protectionist program to promote individual national economic sectors guarantees beneficial self-sufficiency.

Anyone who understands climate protection as a global task cannot refuse a global transfer of technology and knowledge.

As for the global economy, it will remain intertwined in the future.