Global markets have undergone a significant realignment in the past decade, driven by political decisions that have reshaped trade patterns and exacerbated inequalities worldwide. Economist Branko Milanovic's latest book, "The Great Global Transformation: National Market Liberalism in a Multipolar World," analyzes these shifts, highlighting the stagnation of incomes for many in the United States and other developed nations.

Milanovic's research, drawing on data from the World Bank and other sources, indicates that while globalization spurred unprecedented income growth for previously impoverished populations, particularly in China, and for the wealthiest individuals globally, especially in the West, a substantial portion of the population in developed countries experienced income stagnation or decline. This divergence has fueled a sense of economic insecurity and resentment, contributing to the rise of nationalism and protectionist policies.

The market impact of this trend is considerable. As incomes stagnate for large segments of the population in developed economies, demand for goods and services slows, impacting corporate profitability and investment. This, in turn, creates pressure on businesses to seek cost efficiencies, often through automation or offshoring, further exacerbating income inequality. The rise of nationalism also leads to trade barriers and protectionist measures, disrupting global supply chains and increasing costs for businesses.

The current situation is a departure from the late twentieth and early twenty-first century, when globalization was widely seen as a force for economic convergence. However, the benefits of globalization have not been evenly distributed, leading to a backlash against free trade and international cooperation. This has created a more fragmented and uncertain global business environment.

Looking ahead, the trend towards nationalism and protectionism is likely to persist, driven by continued income inequality and a lack of political consensus on how to address it. Businesses will need to adapt to this new reality by diversifying their supply chains, investing in automation, and focusing on markets with stronger growth potential. The future global landscape will likely be characterized by increased regionalization and a greater emphasis on national economic interests.