Mateusz Madejski, journalist of Business Insider Polska: You are a co-author of the “DHL Global Connectedness Report”. His conclusions regarding the situation in world trade are surprisingly optimistic. Extremely optimistic considering the current economic and geopolitical climate.
Prof. Steven Altman, NYU Stern School of Business: However, I would like to point out that the report is not essentially about developments, but rather about what has already happened. Based on the available data, yes, we have concluded that globalization is by no means retreating. But it also gives some conclusions for the future. There have already been many challenges and events for the world economy and the world political order. And then we could hear: globalization is ending. Well, it didn't end.
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“I started to be skeptical”
Please give me an example.
15 years ago, when I read surveys conducted among key managers in companies, most of them said that they would “regionalize” the supply chain more. Then I would draw the following conclusion: trade will be less globalized and less regionalized. And these managers kept repeating these announcements, but these announcements were not followed by actions. So I started to become more and more skeptical about it. Ultimately, however, my role as a scientist is to observe what is actually happening in the economy – not announcements, even if they come from the mouths of key managers.
And are you optimistic?
As for global trade? Well, let's look at real data. At the beginning of last year, the World Trade Organization (WTO) predicted a decline in trade turnover. We had the strongest growth since 2017 — not counting 2021, which saw a post-pandemic rebound. Yes, this raises some optimism, but my role is to observe and analyze what will happen. And of course I intend to do so.
I also keep up to date with news from around the world. Wars, tariffs, lack of trust among world leaders towards each other, uncertainty… This does not inspire optimism about the future of the economy.
Certainly, in recent years, companies have learned to simply adapt to difficult, emergency situations. We must remember that we had a COVID pandemic quite recently. This was a great shock for the business world, but others followed. It simply built resilience in companies.
Considering the situation last year, the biggest shock to the economy was the US tariff story. This is true, but all this still concerned trade with only one country – the USA. Sure, it's a very large country, but most of the world's trade takes place outside the United States. Interestingly, last year other countries did not follow the US lead and start copying the US approach when it comes to introducing various tariffs. If that happened, we would be in a completely different place when it comes to the global economy. Of course, there were surprises. The great development of AI can be considered as such, which has also significantly influenced the development of global trade.
Artificial intelligence is, of course, on everyone's lips. Do you think AI can be the driving force behind globalization? Just like the Internet was two or three decades ago?
We cannot be certain of this, of course, but numerous studies, such as those conducted by the WTO, suggest this. Historically, this has usually been the case, with the development of technology driving globalization and world trade. For example, it helped with transport over longer distances. On the other hand, while technologies have usually pushed globalization forward, the same cannot always be said about politics. Leaders of various countries have often tried to stop global trade. So the impact of AI on globalization is one of those things that we just have to watch very closely in the coming years.
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The professor has advice for Polish companies
The current situation is a huge challenge for the heads of Polish companies. On the one hand, technology opens up enormous opportunities for global development. On the other hand, global uncertainty makes us prefer to trade with countries that are close…
Although we do not see a retreat from globalization at the global level, we do see that more and more governments and companies want to focus more and more on regional trade. I think that Poland is in a very good position to play an increasingly important role in its region.
Of course, I understand the dilemmas faced by the heads of global companies. If I were them, I would certainly look at the situation in the world, but I would also wonder what can be done to have a stronger presence in the European supply chain. Of course, I wouldn't look only at Europe, but that's the way it is: we have the closest trade relations with the countries that are simply closest to us. Some call it semi-globalization. This is how it looks like all over the world – first we focus on our neighbors, and only then we go further into the world. It may sound paradoxical, but distance in the world of new technologies is still crucial – even if some research suggests that its importance has recently been declining.
