Why Globalization Is Going Into Reverse

Is globalization running out of steam? A new study shows that cross-border investment and trade flows declined worldwide in 2012, ending a two-year recovery after the global financial crisis.

Weak economic conditions, especially in Europe, were partly to blame for the downturn, the study says. More worrisome, though, are increased protectionist measures enacted by national governments and the failure of multinational companies to capitalize on growth in emerging markets, say authors Pankaj Ghemawat and Steven A. Altman of the IESE Business School in Barcelona. “The largest threat to globalization comes from policy fumbles, rather than macroeconomic fundamentals,” they write.