What is 'Peak Globalization'?

Peak globalization is a theoretical point at which the trend toward more integrated world economies reverses or halts. Peak globalization is a similar concept to peak oil, which is the point where global oil production enters a permanent decline. Unlike oil, globalization is an economic trend rather than a commodity, so there are no hard physical limits to globalization. Instead, peak globalization can be caused by a collection of factors such as domestic pushback to the loss of jobs due to a decline in exports, increased nationalism, or overall anger at unfair trade practices such as dumping and currency manipulation.

BREAKING DOWN 'Peak Globalization'

Peak globalization has been a popular subject of discussion since Brexit and the mounting challenges facing bilateral and multinational trade deals. Although globalization has a net positive effect on populations, on average, the uneven distribution of the gains has created resentment. For example, a $10 T-shirt at a local store may be a source of frustration to an individual who as been laid-off from a domestic textiles factory due to international competition. The tendency of manufacturing companies to move operations to regions with cheaper labor has been detrimental to many populations.

Peak Globalization and Global Jobs

Offshoring in a globalized world creates tensions around immigration. In 2016, Donald Trump became the presidential nominee for the Republican Party in part by claiming that trade deals are unfair and are destroying jobs, and that immigration is detrimental to America. Trump’s success in gaining the nomination in addition to Brexit and other nationalist movements have some believing that peak globalization has been reached and that the trend of freer trade will soon reverse.

International trade is a popular subject among politicians as more businesses operate in a global labor market. From an investor’s point of view, a company should seek the most cost-effective ways of providing goods or services. Increasingly, this has required moving production and services – and the associated jobs – to regions where labor is cheap. From a politician's point of view, if jobs are moved out of a district, whether it is to the next state or another country, resentment will build among residents. When global economic growth is strong, regional jobs are often stable because opportunities are created even as others move across borders. 
 
The movement of physical goods may slow, if not decline, because new technologies and the global supply chain is enabling “production-at-the-point-of-consumption” for products such as energy, food and products. However, the movement of people, information and data worldwide is increasing and is not expected to slow in the near future.
 
RELATED TERMS
  1. Peak Oil

    Peak oil is the point at which global oil production will hit ...
  2. Peak

    Peak refers to the pinnacle point of economic growth in a business ...
  3. Global Fund

    A global fund is a fund that invests in companies located anywhere ...
  4. Descending Tops

    A pattern in charts where each peak in price is lower then the ...
  5. Head And Shoulders Pattern

    A technical analysis term used to describe a chart formation ...
  6. Peak Pricing

    Peak pricing is a form of congestion pricing where customers ...
Related Articles
  1. Investing

    Peak Oil: What To Do When The Wells Run Dry

    Find out how to invest and protect your investments in this slippery sector.
  2. Investing

    Was "Peak Oil" a Myth?

    We’ll look at what’s happened to the once-clear concept of finite oil reserves, and where it stands now.
  3. Insights

    BAML Calls Time on the Deflationary Old World

    A 35-year cycle defined by liquidity, globalization and economic inequality is coming to an end. What comes next will be very different, says a new report.
  4. Insights

    Do Cheap Imported Goods Cost Americans Jobs?

    Flooding the market with cheap products can mean job losses and even market collapse - but dumping isn't as threatening as it seems.
  5. Trading

    Peak-and-Trough Analysis

    Prices never move in straight lines, so it's time to learn about this powerful trend-following technique.
  6. Personal Finance

    5 Careers That Are Disappearing

    Understanding labor trends can help college students decide on majors and businesses choose strategic direction.
  7. Investing

    What determines oil prices?

    Understand the economic factors and other market forces that impact oil prices.
  8. Insights

    IMF Says Trade Barriers Will Hamper Global Growth

    Rising support for protectionist policies in countries around the world will hamper global economic growth, IMF officials say
  9. Investing

    Who is Most Affected by Lower Oil Prices?

    With low oil prices affecting just about everyone, from citizens to corporations to entire nations, we look at who wins and who loses with the price drop.
  10. Insights

    Can Immigration Reform Help the Economy?

    Learn some of the possible effects, both good and bad, of immigration reform on the economy. These include more jobs and revenue but also lower wages.
RELATED FAQS
  1. Globalization and International Investment

    Learn how globalization impacts international investment and transforms economies around the world. Understand the implications ... Read Answer >>
  2. How Are Global and International Funds Different?

    In English, 'global' and 'international' tend to be used interchangeably—hence the confusion. Read Answer >>
  3. What economic indicators do oil and gas investors need to watch?

    Leading indicators for oil and gas investments are centered around the levels of production, consumer demand and inventory ... Read Answer >>
Hot Definitions
  1. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  2. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  3. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  4. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  5. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
  6. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
Trading Center