Thuringian researchers analyze the risks of de-globalization for companies

Thuringian researchers analyze the risks of de-globalization for companies

The tremor of globalization is becoming more and more noticeable. The discussion about the “end of globalization” and the associated slowdown in economic integration is in full swing. Above all, geopolitical loyalties and new competitors in the high-tech sector and in critical raw materials are increasingly influencing trade. This is the central topic taken up by the Research Center for Geoeconomics (EFGEo) at the University of Erfurt, which is funded with 400,000 euros by the Thuringian Ministry of Economics, Science and Digital Society [uni-erfurt.de].

The newly founded research center has set itself the task of interdisciplinary basic research and deals with topics from international political economy, law, international relations, conflict research and public policy. At the same time, the doctoral college “De-Globalization and Global Decoupling” (DeGlobE) is starting, which is supported by the Hans Böckler Foundation with 567,000 euros. Both initiatives combine expertise on geoeconomics and de-globalization at the University of Erfurt. Jan Ickler and Madeleine Böhm are the key figures in these projects.

The challenges for the economy

But what does the situation look like for companies? Jan Ickler highlights that economic relations are becoming politicized and companies must play an active role in the new geopolitical order. Madeleine Böhm identifies the diversification of supply chains and increasing regionalization as drivers of de-globalization. These developments bring with them considerable risks for the German economy, especially for sectors with strong exports such as the automotive industry and the high-tech sector.

The geoeconomic risks should not be underestimated. According to a Bundesbank study by Khalil, Osten and Strobel, it is observed that as the geopolitical risk of a trading partner increases, price-adjusted imports from these countries decrease, while import prices increase. This has the effect of a negative supply shock and poses a serious threat to companies that rely on stable supply chains bundesbank.de.

Geopolitical uncertainty and its consequences

Although global trade flows have recently reached a record, they are suffering from a variety of geopolitical upheavals. Conflicts such as the disputes between the USA and China or the consequences of the Ukraine conflict have shown how vulnerable globalized supply chains are. As the neoliberal globalization that has dominated since the 1980s loses influence, we see a new geoeconomic order emerging that drives the strategizing of economic interdependencies bpb.de.

Accordingly, Germany will face major challenges when it comes to coping with this new reality. However, the energy transition could also offer opportunities for green growth and technological innovation. Companies are now under greater pressure to adapt to new geopolitical and economic conditions. The aim of the EFGEo research center and the DeGlobE doctoral college is to make a valuable contribution to the analysis of de-globalization processes and to understand their consequences for the economy.

The synergy effects between both initiatives could help to better analyze risks and develop recommendations for company resilience. In a world where geopolitical factors are increasingly coming to the fore, it is more important than ever to stay on top of things and adapt to changes.