In his latest letter to shareholders, Larry Fink, chairman and CEO of BlackRock, believes that “The Russian invasion is ending the globalization we have seen over the past 30 years.”
In my view, we are moving towards another kind of globalization but not the end of globalization. The new globalization will obviously take more and more account of environmental costs, but above all, of supply security.
We are realizing that global sourcing is actually not very robust and even very fragile. We have overestimated the short-term benefits of this system, which is looking to produce with the cheapest country or partner , without taking into account the hidden cost of security.
For Europe there are many lessons learned. As Warren Buffett said: “You only find out who is swimming naked when the tide goes out.” This is the case today for the Europeans. With the war in Ukraine, Europe realizes its vulnerability on several levels. Not only in terms of military and energy , but also from a food and technological perspective. However, we must remain optimistic. Becoming less dependent on others will result in many additional investments for Europe. So, not everything is negative.
On the contrary, for the United States, the war is less impactful as they are independent on the military level, but also in terms of energy and technology, and even in terms of food, since they don’t depend on the Ukrainian wheat.
Macro-economist and founder of Econopolis