Trends in Globalization and Their Impact on Local Markets
Globalization is changing shape, not disappearing
“Deglobalization” headlines can be misleading. What is happening in 2025–2026 is better described as a shift in how the world connects: more services and data, more policy friction at borders, more regional supply-chain clustering, and stricter climate-linked trade rules. For local markets, the practical question is not whether globalization ends, but which channels expand and which become costlier.
A record level in 2024, with services accounting for a large share of growth.
Global exports in 2023, highlighting the shift toward “weightless” cross-border trade.
Share of merchandise trade (excluding fuels) in late 2023—evidence of continuing cross-border production links.
Carbon border adjustment rules increase embedded-emissions reporting and payment obligations for covered imports into the EU.
Key trends shaping globalization in 2025–2026
- Digital globalization grows faster than physical trade. More value crosses borders as software, professional services, streaming, and digital platforms—often with fewer “port bottlenecks,” but more regulatory constraints (data localization, cybersecurity, taxation).
- Supply chains diversify rather than retreat. Firms redesign networks for resilience—adding regional hubs, dual sourcing, and inventory buffers—without abandoning cross-border specialization.
- Regionalization rises under geopolitical pressure. Local markets see more “nearshoring” and “friendshoring,” which can strengthen regional suppliers while narrowing access to the cheapest global inputs.
- Sustainability becomes a trade filter. Carbon reporting and product traceability increasingly shape who can sell into high-standard markets, affecting prices, procurement, and investment decisions.
Insights and what to watch
The biggest distributional effects of globalization often occur within countries rather than between them. Local markets that sit on a logistics corridor, host a specialized cluster, or have export-ready services tend to gain faster—while regions reliant on protected retail, low-skill manufacturing, or single-industry tourism can face sharper shocks. In 2025–2026, three signals are especially important: (1) whether digital and services exports grow beyond a few global hubs, (2) whether climate-related compliance costs are absorbed by firms or passed to consumers, and (3) whether supply-chain diversification creates “second-tier winners” in smaller economies.
What this means for local businesses and households
- Prices: local prices increasingly reflect global logistics, energy policy, and compliance costs—not only raw production costs.
- Jobs: demand shifts toward roles that are complementary to trade (quality, compliance, logistics, after-sales support, digital services).
- Competition: “one-click” cross-border shopping expands consumer choice but pressures low-differentiation local retail.
- Resilience: communities that can switch suppliers and sell to multiple markets recover faster from global disruptions.
Methodology
This 2025–2026 snapshot uses the latest internationally comparable releases from major multilateral sources. “Global trade” refers to total trade in goods and services in current US dollars as reported by UN Trade and Development. “Digitally delivered services” follows the WTO definition of services delivered across borders via computer networks. Supply-chain depth is proxied by the share of intermediate goods in merchandise trade (excluding fuels) reported by the WTO. Note: WTO intermediate-goods shares are compiled under updated product classification (HS 2022), and definitional updates can affect comparability versus earlier releases. Sustainability-related trade pressure is illustrated using the EU’s Carbon Border Adjustment Mechanism (CBAM) timeline and guidance. Numbers are rounded for readability; where sources flag estimates as indicative or subject to revision (notably in e-commerce measurement and supply-chain classifications), interpretation emphasizes direction and mechanisms rather than point precision.
FAQ
Is globalization “ending” in 2025?
It is changing shape. Physical supply chains are being redesigned for resilience and geopolitics, while services and data-driven trade continue to expand. The result can feel like “less globalization” in some sectors (heavy industry, sensitive tech) and “more” in others (digital services, platforms, remote delivery).
Why do local markets feel global shocks so quickly?
Many local prices and jobs depend on tradeable inputs (energy, components, fertilizers), shipping capacity, and financing conditions. When a link tightens, the adjustment typically shows up first in delivery times and business margins, then in consumer prices and employment.
What does “intermediate goods share” tell us?
It is a practical indicator of cross-border production networks. A high share means many traded items are components used to make other products, which implies deeper supply-chain interdependence and higher sensitivity to disruptions. Because the WTO series uses updated classification (HS 2022), comparisons across different publication vintages should focus on direction and mechanism.
How can green trade rules affect a local factory or farm?
Even if a firm does not export directly, it can be pulled into documentation, traceability, and embedded-emissions reporting because suppliers and buyers need compliant inputs. Over time, these requirements can influence contract eligibility, financing terms, and access to premium supply chains.
Is digital trade mainly “big tech”?
Platforms are important, but digitally delivered trade also includes professional services such as design, accounting, education, consulting, and remote support. Local firms compete through reliable delivery processes, verifiable quality, and compliant cross-border contracting and payments.
What is one practical step a local business can take?
Map your exposure in plain terms: key imported inputs by value, single points of failure in suppliers or logistics, and the compliance requirements your major buyers face. Then diversify one critical input or one customer channel at a time, prioritizing changes that reduce downtime risk.
Selected indicators used in this snapshot
| Indicator | Latest value | Period | Why it matters for local markets |
|---|---|---|---|
| Global trade (goods + services) | $33T | 2024 | Signals overall demand and cross-border activity; services growth matters for cities and skilled labor markets. |
| Digitally delivered services exports | $4.25T | 2023 | Shows the scale of “weightless” trade; local firms can export knowledge work without shipping goods. |
| Intermediate goods share of trade (ex-fuels) | 52% | Q4 2023 | High share implies deep supply-chain interdependence—local factories depend on imported components and foreign buyers. |
| FDI inflows to developing economies | $867B | 2023 | FDI brings capital, networks, and know-how, but also reflects confidence and policy risk. |
| EU CBAM definitive phase | Starts 2026-01-01 | 2026→ | Expands embedded-emissions reporting and introduces payment obligations for covered goods, influencing supplier selection and pricing. |
Figures are rounded. “Intermediate goods share” refers to merchandise trade excluding fuels as defined in the WTO note, compiled under updated HS 2022 classification; comparisons to earlier publication vintages should be interpreted cautiously.
Chart: Business e-commerce sales (approx.), 2016–2022
US$ trillions • Source: UNCTAD (Figure 1; 2022 noted as indicative)
| Year | Business e-commerce sales (US$T, approx.) |
|---|---|
| 2016 | 16.6 |
| 2017 | 18.0 |
| 2018 | 20.0 |
| 2019 | 21.2 |
| 2020 | 21.1 |
| 2021 | 24.9 |
| 2022 | 26.9 |
Coverage note: this UNCTAD series aggregates business e-commerce for 43 economies (about three-quarters of global GDP), so it is not a full world total; 2022 is flagged as indicative in the source.
Interpretation tip: this series reflects business e-commerce (mostly B2B), not only online retail. It helps explain why “digital globalization” can expand even when physical trade faces bottlenecks.
Sector-by-sector impacts (practical mechanisms)
Manufacturing
Local manufacturers gain when they specialize in a component or process that plugs into a larger network (quality certification, niche engineering, fast turnaround). The risk is margin compression when inputs are globally priced and competitors scale quickly. Resilience strategies—dual sourcing, regional warehousing, supplier audits—can raise costs but lower downtime.
Agriculture and food
Global markets reward traceability, consistent quality, and logistics reliability. The main constraint for smaller producers is compliance overhead (documentation, residue testing, sustainability reporting). Cooperative models, shared cold-chain infrastructure, and standardized packaging often deliver the highest payoff per dollar invested.
Services and the digital economy
Digitally delivered services can be exported with fewer physical constraints, but they are highly sensitive to trust and regulation (data handling, privacy, taxation). Local service firms compete by building repeatable processes: clear scope, verifiable quality, and cross-border payment and contracting hygiene.
Retail and local consumer markets
The competitive edge shifts from inventory alone to differentiation and convenience: curated assortments, service bundles, fast local delivery, and community credibility. Where cross-border platforms dominate, local retailers tend to survive by owning relationships (repairs, warranties, advice) rather than trying to win pure price wars.
A local-market playbook for 2025–2026
- Map exposure: top imported inputs, top export customers, and compliance requirements already embedded in your buyers’ procurement.
- Diversify smartly: one critical input, one critical logistics lane, and one revenue channel at a time.
- Treat compliance as capability: carbon accounting, traceability, and product documentation increasingly decide market access.
- Invest in skills: digital service exports scale when local talent pipelines and reliable connectivity exist.
Interpretation: what the “globalization debate” really means locally
In practice, most local markets experience globalization through three channels: prices (inputs and logistics), employment (which sectors expand or shrink), and rules (standards, reporting, taxation, data governance). The policy debate becomes clearer when you separate these channels instead of treating globalization as one single force.
1) Fragmentation is real, but uneven
Some trade and investment flows are being re-routed due to geopolitics and industrial policy. That does not automatically reduce cross-border activity; it can shift it toward regional networks and “trusted” corridors. Local winners tend to be places that can scale reliable production or services inside these corridors.
2) Digital globalization can expand even when goods face friction
Digitally delivered services are large and still growing, which means local competitiveness increasingly depends on skills, trust, and regulatory clarity. For cities and regions, talent pipelines and connectivity become trade infrastructure.
3) Climate-linked trade rules are becoming a market-access test
Whether a firm exports directly or not, supply chains increasingly require traceability and documentation. In the EU context, CBAM expands embedded-emissions reporting and introduces payment obligations for covered goods. The near-term impact is often administrative load; the long-term impact is selection—who remains in premium supply chains.
Policy takeaways (actionable, local-market oriented)
- Build “compliance capacity”: help SMEs with standards, documentation, testing, and basic carbon accounting so market access does not become a barrier.
- Treat skills as export infrastructure: digital services export growth depends on workforce quality and reliable connectivity.
- Reduce single-point failures: diversify logistics corridors, encourage dual sourcing, and maintain strategic buffers for critical inputs.
- Target clusters, not slogans: competitiveness improves when policy supports specific capabilities (quality, speed, certification) in a defined sector.
- Keep markets contestable: competition policy and fair platform rules matter as cross-border e-commerce and digital services expand.
- Measure what matters: track exposure to imported inputs, export concentration, and services trade—these predict local vulnerability better than headline trade ratios alone.
Limits and caveats
International statistics can be revised, especially for digital activity and cross-border services. E-commerce measurement differs by definition (business e-commerce vs online retail). Supply-chain indicators depend on classification choices (including updates such as HS 2022). For local decisions, direction and mechanism usually matter more than a single point estimate.
Sources (official and multilateral)
Direct links to the underlying datasets, notes, and policy guidance
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UN Trade and Development (UNCTAD)
unctad.orgUse: Global Trade Update (goods + services totals) and related trade analysis.
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UNCTAD — World Investment Report 2024
WIR 2024Use: FDI inflows (including developing-economy aggregates) and policy context.
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UNCTAD — Business e-commerce sales and the role of online platforms
UNCTAD e-commerceUse: Business e-commerce series used for the 2016–2022 chart and measurement notes.
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World Trade Organization (WTO)
wto.orgUse: Digitally delivered services exports and global services indicators.
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WTO — Trade in intermediate goods (information note)
PDF noteUse: Intermediate-goods share (ex-fuels) and methodological notes, including HS 2022 classification updates.
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European Commission — Carbon Border Adjustment Mechanism (CBAM)
CBAM guidanceUse: Timeline and requirements for embedded-emissions reporting and payment obligations in the definitive regime.
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Eurostat — Statistics Explained
EurostatUse: Background on intra-EU trade patterns and regional trade structure.
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World Bank — Open Knowledge Repository
World BankUse: Trade and growth research, mechanisms, and evidence summaries.
Download dataset & chart assets
ZIP archive with tables (CSV/HTML), chart images (PNG/SVG), and a small data JSON used for the visualization.
Selected indicators table (HTML + CSV) and the e-commerce time series (HTML + CSV).
Business e-commerce sales chart exported as PNG and SVG for fast embedding and crisp scaling.
JSON file with the values used in the chart, plus a manifest for quick auditing.
