New Momentum for Globalisation by Bundesverband der Deutschen Industrie e.V.

New Momentum for Globalisation

STATEMENT | FOREIGN ECONOMIC POLICY | GLOBALISATION

New Momentum for Globalisation Reduce dependencies and build economic resilience

January 2023 Shaping globalization in the context of systemic competition Germany both exports and imports a lot. Its economic success largely depends on foreign trade. In recent years, however, the conditions for globalization have come under increasing political pressure: Systemic competition with autocracies, tensions between the United States and China, the consequences of the Covid-19 pandemic, the ecological costs associated with globalization, and the current energy crisis pose major challenges to globalization. The European Union and Germany must find new answers to this unprecedented situation. Moreover, Russia’s war of aggression against Ukraine illustrates how autocratic regimes are inclined to sacrifice economic prosperity and interdependence for their own internal stability and geopolitical ambitions. Systemic competition will continue to be a struggle between rules-based cooperation on the one hand and power-political influence on the other. This calls for a rethinking of the way German industry sees globalization as a pillar of its economic success. The success and benefits of globalization are measured not only by efficiency gains. Global value chains will have to increase in terms of quality and resilience. Diversification and resilience play an important role in this. This next stage of globalization will require behavioural changes from political and business actors as well as on the part of society at large.

How can business contribute to a renewed momentum for globalization More than ever, internationally active companies must be ambitious and active in shaping the international environment, as well as factor geostrategic risks into their decision-making processes. Unless they are willing to help shape global change – economically, ecologically, and socially –, companies will be losing their ability to make decisions with regard to uncertainties. They must establish standards required to engage in given markets and be prepared to withdraw from countries or markets in case of violations or a disproportionate risk of violating these standards themselves. Public perceptions of businesses privatizing profits and socializing losses must remain an absolute regulatory exception in a state of permanent crisis.