---
title: Will the Russia conflict reshape the world economy as we know it?
description: International tensions are pushing companies to rethink globalization.
---

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# [Will the Russia conflict reshape the world economy as we know it?](https://hs-sbup.thehustle.co/news/03112022-russia-conflict-economy)

 Written by [Mark Dent](https://hs-sbup.thehustle.co/news/author/mark-dent) | Apr 11, 2023 5:39:33 AM

If Russia’s invasion of Ukraine drags on or leads to conflict elsewhere, this week’s withdrawal of McDonald’s, Boeing, and other companies from Russia may look like a small ripple in a massive economic sea change.

As *CNBC*[ reports](https://www.cnbc.com/2022/03/08/after-russia-exit-moves-corporations-face-a-much-trickier-end-game.html), international tensions are pushing companies to rethink the concept of globalization altogether.

#### **For the past few decades…**

… the world order has been one of interdependence and (mostly) free trade. Experts [believed ](https://newrepublic.com/article/165524/putin-ukraine-war-globalization-authoritarian-problem)economic interests would keep powerful nations out of war.

Although globalization has declined slightly since the 2008 financial crisis, big companies still sell goods in far-flung, autocratic nations and move production into these markets, where they can pay far lower wages.

But these moves have destroyed America’s manufacturing sector and made supply chains more vulnerable to crises (e.g., pandemics and wars).

#### Russia’s war has been especially hard on the auto industry:

- Volkswagen, Ford, and Toyota are among the major car companies that have [suspended or ceased operations](https://www.wsj.com/articles/what-companies-have-pulled-back-from-russia-11646425481) in Russia
- Western Ukraine has become [a top manufacturer of car wiring systems](https://www.nytimes.com/2022/03/07/business/cars-russia-china-trade.html), meaning Russia’s invasion has disrupted car wiring production

Car companies are feeling the squeeze and contemplating where they can maintain safe facilities.

#### **What will happen next?**

Russia has [threatened](https://www.reuters.com/business/russia-proposes-nationalising-foreign-owned-factories-that-shut-operations-2022-03-08/) to seize shuttered foreign manufacturing plants and place them under state control — leaving multinational companies with a difficult choice:

- Wait for Russia to stabilize and hop back in, or
- Manufacture, market, and sell goods closer to home

The latter would increase the deglobalization trend and reduce supply chain risks.

“In 48 hours companies were pulling out and rethinking the post-war world,” Wharton School professor Witold Henisz told *CNBC*. “This is a fundamental break.”

#### **The elephant in the room?**

China. The rest of the world is far more connected with China than Russia (the US received [~$435B](https://ustr.gov/countries-regions/china-mongolia-taiwan/peoples-republic-china#:~:text=China%20is%20currently%20our%20largest,was%20%24310.3%20billion%20in%202020.) in Chinese imports in 2020, compared to [$22B+](https://ustr.gov/countries-regions/europe-middle-east/russia-and-eurasia/russia) in Russian imports).

If relations between China and the West decline substantially, then we’ll really see a reshaping of global economics.

[View full post](https://hs-sbup.thehustle.co/news/03112022-russia-conflict-economy)

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