The New Rules: Globalization’s Next Wave of Integration

The global recession, rather than setting back economic integration, is actually deepening it by making companies create tighter, vertical supply chains that cut out the middle-man, with companies buying direct from the producer. A major example of this is Wal-Mart, which is using its global size to negotiate directly with suppliers to reduce costs but also to ensure security of supply. To the author, all of this suggests more vertically-integrated supply chains, directly controlled by one company. Of course, for such a model to be successful, size matters; to succeed with a global supply chain, one already needs to be global. But such a trend entails new risks: why won’t terrorists now strike at globally-integrated food supplies while governments worry about nuclear weapons? The question that remains is, as supply chains shift from horizontal to vertical integration, does this necessarily imply greater globalization? − YaleGlobal