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From Globalization to Deglobalization: Zooming Into Trade

Abstract

After decades of increasing globalization both in trade, capital flows but even people to people movements, it seems the trend has turned towards deglobalization. This article shows some evidence of the decrease in merchandise, capital and, to a lesser extent people to people flows. In addition, zooming into trade, the article offers an account of the importance of the strategic competition between the US and China to foster the deglobalization trend further. This is true for trade but even beyond in the tech and finance space. Finally, the demise of the WTO could be one of the most relevant turning points towards deglobalization, especially as far as trade is concerned. This should bring downward pressure to growth globally
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LAS CLAVES DE LA GLOBALIZACIÓN 4.0
1. Globalization as cornerstone of international
economics turning the page
As probably the most prominent economic process
in the 21st century, globalization has attracted wide
research interests and considerable support from ac-
ademia for many decades, especially after the Second
World War. There are many benefits which economic
research has attributed to globalization, from higher
economic growth to poverty reduction and even lower
inflation. For instance, Khan & Riskin (2001) finds
that Chinas poverty reduction can be attributed to
the opening up of its economy. What’s more, Rogoff
(2003) argues that the globalization process helps push
down inflation and any reversal of the free flow of pro-
duction factors will re-introduce price pressure. In ad-
dition, Tomohara and Taki (2011) put forward that
globalization brings higher wages for local employers
as foreign companies are given market access.
However, the economic literature on globalization has
taken a less positive turn since 2008. Hillebrand (2010),
for example, argues that protectionism may improve in-
come equality in some countries although he still thinks
that a retreat from globalization will lead to profoundly
negative implications to the global economy.
On the basis of the increasingly heated debate on
where we stand with globalization versus deglobaliza-
tion and its importance for the global economy, this
paper aims at shedding some light on the trend and
current degree of deglobalization focusing on trade.
There seems to be enough evidence by now to ar-
gue that the globalization process, including the free
flow of trade, capital and people, has stalled since the
global financial crisis in 2008. Regarding the move-
ment of merchandise, after a sharp decline in 2008,
the general expectation was that trade would contin-
ue to grow at rates similar to those previous to the
crisis. Actually, this has not been the case. Chart 1
shows that trade volume grew by an average of 3.5%
from 2009 to 2018, which is much slower than the
7.6% average growth before the 2008 financial Cri-
sis. Furthermore, we are now at a zero growth rate
in trade, which is understandable on the back of the
US-China trade war and several other protectionist
waves, such as the US with Europe but also between
Japan and Korea.
In line with the deceleration in trade, cross-border
capital flows have also declined. This is true general-
ly but also for the most stable (and possibly produc-
From globalization to deglobalization:
Zooming into trade
Alicia García Herrero
Senior researcher of the European think tank BRUEGEL
SUMMARY
After decades of increasing globalization both in trade, capital flows but even people to people movements, it seems the trend has turned
towards deglobalization. This article shows some evidence of the decrease in merchandise, capital and, to a lesser extent people to people
flows. In addition, zooming into trade, the article offers an account of the importance of the strategic competition between the US and
China to foster the deglobalization trend further. This is true for trade but even beyond in the tech and finance space. Finally, the demise
of the WTO could be one of the most relevant turning points towards deglobalization, especially as far as trade is concerned. This should
bring downward pressure to growth globally.
KEYWORDS
De globalización, Trade, US-China trade war, WTO.
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LAS CLAVES DE LA GLOBALIZACIÓN 4.0
tive) type of capital flow, namely foreign direct invest-
ment (FDI), which has declined sharply to the level
of 2008 (chart 2). In fact, the average growth rate of
outward FDI since 2000 points to a minimal 0.8%,
with a decline of -28% in 2018 owing to escalating
trade tensions. It is hard to know whether FDI is no
longer growing because of lack of demand or because
of constraints for investors to operate. In any event,
the difference in returns among recipient countries
are such that the much lower FDI nowadays could be
seen as a critical sign of fragmentation of global capital
markets. As if FDI trends were not enough, portfolio
flows into emerging economies have also slowed down
since the European Sovereign Crisis in 2010 (chart 3).
The exception has been Emerging Asia until 2017 but
portfolio inflows into Asia have started to come down
too since 2017(chart 4). The picture for cross-border
lending is more mixed. Total cross-border lending has
not come back to the levels before 2008 but there is
a shift towards more lending into Emerging Markets
and less into developed economies (chart 5).
As people-to-people movement, either in terms of
migration or tourism, globalization is still on the go.
In fact, the number of international migrant has been
rising, suggesting movements of labor remains active-
ly increasing (chart 6). The relatively more short-term
visitors’ arrival data also confirms the pattern with a
steady growth rate of 4% (chart 7). However, we start
to see some signs of increasing restrictions. As shown
in chart 6 & 7, both migrant and visitor numbers in
the world is experiencing slower growth. What’s more,
featuring many anti-immigration movements, immi-
gration controls have been significantly tightened es-
pecially in the US with a rapid increase in visa denials
(chart 8). This is an obvious barrier for further integra-
tion of the labor market globally, given the importance
of the US labor market.
Chart 1
Global trade in volume
% YoY
Source: UNCTAD, Bloomberg, Natixis.
15
–15
10
5
0
–5
–10
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Volume
35
LAS CLAVES DE LA GLOBALIZACIÓN 4.0
Chart 2
World outward FDI flow
Source: UNCTAD, Natixis.
80
–80
60
40
–40
20
–20
0
–60
2,5
–2,5
2,0
–2,0
1,5
–1,5
1,0
–1,0
0,5
–0,5
0,0
2000
2002
2001
2003
2004
2005
2006
2008
2007
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
% YoYUSD trillion
Chart 3
Total Portfolio Flows into Emerging Markets
USD bn
Source: IIF, Natixis.
500
–100
400
300
200
100
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
36
LAS CLAVES DE LA GLOBALIZACIÓN 4.0
Chart 4
Total Portfolio Flows into Emerging Markets by region
USD bn
Source: IIF, Natixis.
250
0
200
150
100
50
2011 2012 2013 2014 2015 2016 2017 2018 2019
Emerging Asia Emerging Europe Latin America Africa & Middle East
Chart 5
Global banking flow
USD bn
Source: BIS, Natixis.
(*) EM gauged based on available data, including Brazil, Chile, China, Hong Kong, Indonesia, India, South Korea, Macao, Mexico, Philippines, Russia,
Singapore, Turkey and South Africa.
7000
–3000
6000
5000
2000
4000
3000
1000
1200
–200
1000
800
600
400
0
200
0
–1000
–2000
2000 2002 2004 2006 2008 2010 2012 2014 20162001 2003 2005 2007 2009 2011 2013 2015 2017 2018
Total Emerging Markets
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LAS CLAVES DE LA GLOBALIZACIÓN 4.0
Chart 6
International migrant stock
Source: UN, Natixis.
300
0
250
200
50
150
100
3,5
0,0
3,0
2,5
2,0
1,5
0,5
1,0
1990 1995 2000 2005 2010 2015 2017
% Annual Growth RateMillion
Chart 7
International tourist arrival
Billion
Source: UNWTO, Natixis.
1,6
0,0
1,4
1,2
0,6
1,0
0,8
0,4
15
–5
10
5
0
0,2
2000
2002
2001
2003
2004
2005
2006
2008
2007
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
% YoYBillion
38
LAS CLAVES DE LA GLOBALIZACIÓN 4.0
The question, thus, is how have we gotten here and
what to expect next. One key aspect is the increasingly
hostile relation between the two largest economies in
the world, namely the US and China. Analyzing the
reasons for this and its future consequences can offer
some cues as to the potential for additional deglobali-
zation forces. The next section reviews the trade as-
pects of the US-China strategic competition, followed
by a section on other economic aspects as well as a brief
account of the implications of the ongoing US-China
trade war on the World Trade Organization (WTO)
and, thereby, to the further deglobalization of trade.
2. The US-China trade war
To understand the trade war and its implications, a
good starting point is to review the actions taken by
both sides so far. From seemingly untargeted meas-
ures announced in early February 2018 for solar pan-
els and washing machines, the US has been moving
in increasingly targeted direction against China and
away from current global status quo. The most ob-
vious instance of this was the announcement of 25
percent additional import duties to be applied to $50
billion equivalents of imported goods from China
on the basis of Chinas infringement of intellectual
property rights. More importantly, about two thirds
of those import tariffs have been applied since 6 July
2018. The speedy introduction of the announced
import tariffs by the US, without allowing much
time for negotiation of a deal between China and the
US, shows that the US resolution to change global
trade flows, at least as far as China is concerned. On
that basis, China had no choice but to retaliate with
equivalent import tariffs on US goods.
Since then, the list of Chinese imports on which the
US is aiming to increase tariffs has expanded to cover
an additional $200 billion of goods. Thanks to a truce
reached on the side-lines of the Buenos Aires G20
summit in late 2018, the 25 percent US import tariff
on an additional $200 billion of goods from China
was postponed, but it is clear that this was just a truce
to buy time for both sides.
Chart 8
Increasing visa refusal rate for tourist and business travelers from major economies by US
(%)
Source: US Department of State, Natixis.
30%
0%
25%
20%
15%
10%
5%
China India Vietnam Italy Brazil Mexico
2017 2018
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LAS CLAVES DE LA GLOBALIZACIÓN 4.0
Chinas ability to retaliate against US trade measures
has obviously been more limited, at least on the trade
side, because it does not import enough goods from
the US to match the US import tariffs. This explains
why Chinas second batch of retaliatory measures was
more moderate, at least in size ($60 billion). Un-
fortunately, the peace did not sustain as the turning
point came in March 2019 when the US raised tariff
to 25 percent from 10 percent on the $200 billion
Chinese imports. Ever since then, the market has seen
no shortage of hostility such as US’s move to place
Huawei into its entity list in May, banning it from
purchasing from US companies and China retaliation
to increase tariff on $60 billion worth of product at
25, 20 and 10 percent respectively in June. Between
periods of tension escalation is tentative cooling-off
phases, as President Xi and President Trump repeat-
edly rekindled trade talks before major meetings but
subsequently let the market down all of a sudden. The
tale of the two went on until almost full tariff coverage
of Chinese imports was placed and made pending by
President Trump on August 13 followed by declaring
China as a currency manipulator. The confrontation
went on as China retaliated with tariff on USD 75
billion worth of US goods on August 23rd and lodged
a WTO tariff case against the US on September 2,
2019. Soon however, China and US agreed to 13th
Chart 9
A comparison of the US-China targeted products released in June and July
(%)
Source: Natixis, USITC, UN Comtrade.
0%
90%
80%
70%
60%
50%
40%
30%
20%
10%
US June (50bn) US July (200bn) China (50bn) China (60bn)
6
32 49
25
26
68
32
50
13
36
55
7
Chart 10
Decomposition of US’ imports from China
under the 200 billion tariff list
Source: Natixis, USITC.
Capital goods
29%
Consumption goods
29%
Intermediate
goods
48%
Not classified
1%
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LAS CLAVES DE LA GLOBALIZACIÓN 4.0
round of trade talks on September 5th and China
unveils tariff exemption list for US imports on Sep-
tember 11th, 2019, suggesting a new cooling off pe-
riod is on the doorstep. As rounds of escalation and
de-escalation of trade tension took place, the market
seems to gradually adapt to a new norm of hospitali-
ty between the two world superpowers. These tariffs
and complaints feature the severe confrontation be-
tween US and China. Rounds of conflicts and mak-
ing up seem to be the main theme since early 2018,
rapturing global supply chain over and over again.
Arguably, the Sino-US trade war has been a land-
mark event for deglobalization forces in the realm of
trade. In fact, global trade has seen declining since
2018 both in value and volume and thee have been
relevant disruptions of the global supply chain. The
ensuing economic uncertainty has put downward
pressure on investment, which has led the Interna-
tional Monetary Fund in its July World Econom-
ic Outlook to downgrade the forecast for global
growth, but especially for China and Asia (chart
11). Overall, rounds of de-escalation and re-esca-
lation of the US-China trade war have significantly
raised the risk of protectionism, weighing on mar-
ket sentiment and deteriorating global risk appetite.
What’s more, in response to heightened geopolitical
risk in China and Asia (as expanding sanctions are
threatened by the US to be imposed on Vietnam),
massive reshoring away from China, and possibly
Asia are taking place. This trend is going to signif-
icantly distort global trade and capital flows, push-
ing the global economy further towards the trend of
deglobalization.
Apart from the above, following the path of the US,
other countries are leveraging protectionism and
trade as weapons to achieve unilateral benefits. For
example, Japan’s recently tightened its export con-
trols on South Korean imports from Japan. Also the
US has opened a number of cases against European
exports into the US and has even threatened to ex-
pand those tariffs to much more relevant sectors,
such as the European automobile industry. More
generally, the fear exists that other countries may
engage in further protectionist measures, introduc-
ing a race to the bottom.
Chart 11
Asia growth slowed across the board
Sources: Natixis, Datastream.
9
0
8
7
6
5
4
3
2
1
CH IN PH VN ID MY TH SG SK AU HK TW
31-Mar-18 30-Jun-18 30-Jun-19
6,2
5,8
5,6
6,8
5,1
4,5
2,8
0,1
2,1
1,8
0,6
2,4
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LAS CLAVES DE LA GLOBALIZACIÓN 4.0
3. From tariffs to other types of protectionism
Apart from trade measures, the US has leveraged sev-
eral other weapons against China. Most notably, on
December 1, 2018 the arrest of Huaweis chief finan-
cial officer took place in Canada at the US request,
based on a potential breach of sanctions against Iran.
This case testifies the US’ intention to weaponize its
current hegemonic position as a rule setter. As the
national champion in Chinas telecommunication
sector, Huawei has attracted multiple restrictions on
top of the arrest. For instance, the US has tightened
its control over technology transfer into China and, in
particular Huawei, by placing this company into the
US entity list, which effectively forbids US companies
to conduct business with this company. In addition,
many countries have voiced out concerns of privacy
and Chinese spy suspicion for the 5G & smartphone
manufacturer to harness its growth and the outlook of
Chinas Information and communications technology
development. As such, the sniped Huawei symbol-
ize the deterred process of technology globalization,
which will in turn drive fragmentation of investment,
manufacturing and employment.
Beyond Huawei, the US administration has conducted
a reform of its Committee on Foreign Investment in
the United States Committee (CFIUS), with the view
of making it easier to blocking an increasing amount
of Chinas M&A into US, especially on the high-end
industrial sector. Technology protectionism is actually
going beyond the US into other developed countries,
especially the European Union, which has finally set
up its own investment screening device las April.
Beyond tech protectionism, there seems to be an
embryonic move towards financial decoupling due
to geopolitical trends. In fact, several Chinese com-
panies including SMIC and Alibaba have announced
the voluntarily delisting from US stock exchanges.
However, concerns have been raised whether such
voluntary delisting may lead to less access to USD is-
suance and in return shortage of USD liquidity, given
the dominance of the US financial system in sourcing
greenback financing. In response, China has adopted
policies to encourage the funding for tech compa-
nies including the launch of SSE STAR Market and
loosening regulations for financing. Such potential
financial decoupling deepens concerns over the trend
of deglobalization.
4. The demise of the WTO and its implications
The WTO has become increasingly dysfunctional dur-
ing the last few years and, in particular, since the ar-
rival of President Trump to power. Three main reasons
can be identified. First, the increase in membership
has brought about heterogeneity as more emerging
countries joined the club. This is clearly shown by the
lack of agreement on concluding the Doha round of
trade liberalisation measures, which launched in 2001.
Second, some new members, especially China but also
Vietnam, are still state-led planned economies, a mod-
el the WTO rules have not been designed for. Third,
under the Trump administration, the United States has
clearly turned its back on the WTO as an institution
that can solve the USs perceived trade problems. A
further decision by President Trump that unsettled the
global trading community in 2018 was the announce-
ment that (continuing a policy initiated by President
Obama) the US would block reappointments to the
WTOs appeals panel, on the grounds that the appel-
late body took too long to reach decisions and tended
to overreach. At the time of writing, the appellate body
is down to only three members (out of seven) of which
two will end their terms in December 2019. If the
US administration continues to refuse new appoint-
ments, the WTOs dispute settlement mechanism will
no longer be able to function. This threat comes two
sides: President Trump’s profound disdain for multi-
lateralism, and Chinas state-led system, which is not
compatible with the liberal nature of the global trad-
ing system and might have weakened the WTO’s foun-
dations. China has influenced the WTOs rule setting,
which is intended to ensure a level playing field. In
fact, it has become increasingly clear that the existing
rules governing the WTO cannot adequately control
the use of non-market measures designed to favour a
specific trading partner (namely China) over others.
To this end, several proposals have been made to re-
form of the WTO, including from the European Un-
ion, but none of them can really accommodate both
China and the US under the same umbrella. The most
42
LAS CLAVES DE LA GLOBALIZACIÓN 4.0
likely scenario is for the WTO to become a zombie
institution as the US disengages further. Should this
scenario materialize, the pale international negotia-
tion mechanism will become incapable of mediating
international trade disputes and building multilateral
trust, driving economies to seek their own leverages
and solutions.
5. Some tentative conclusions
After decades of increasing globalization both in trade,
capital flows but even people to people movements, it
seems the trend has turned towards deglobalization.
This article shows some evidence of the decrease in
merchandise, capital and, to a lesser extent people to
people flows. In addition, zooming into trade, the arti-
cle offers an account of the importance of the strategic
competition between the US and China to foster the
deglobalization trend further. This is true for trade but
even beyond in the tech and finance space. Finally, the
demise of the WTO could be one of the most relevant
turning points towards deglobalization, especially as
far as trade is concerned. This should bring downward
pressure to growth globally.
REFERENCE
Khan, A. R., & Riskin, C. (2001), Inequality and Poverty in China
in the Age of Globalization. Oxford University Press.
Rogoff, K. (2003), Globalization and global disinflation. Eco-
nomic Review-Federal Reserve Bank of Kansas City, 88(4),
45-80.
Tomohara, A., & Takii, S. (2011), Does globalization benefit de-
veloping countries? Effects of FDI on local wages. Journal of
Policy Modeling, 33(3), 511-521.
Hillebrand, E. E. (2010), Deglobalization scenarios: who wins?
Who loses?. Global Economy Journal, 10(2), 1850197.
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The search for answers to modern challenges to both the global and the national economy is reflected in the focus of scientific and applied researches, their object and subject analysis. Such a search requires studying of qualitative changes in the processes of globalization and their combination with the origin in different countries of the trend of deglobalization. This trend is strengthened by the political influence of the countries with the use of policy of economic and technological protectionism, sophisticated rules of the game and instruments for gaining market advantages in both high-tech and financial markets. The present scientific research is aimed at analyzing the reasons for activating the structural policy of deglobalization, building up a related contentual model. The main reasons for accumulation of corporate debts by giants of global business are defined and their dual role in the development of both industrial and financial markets is reflected, the interaction between which is intensifying in the digital economy and with the emergence of new sources of crisis. The characterization of the gaps between the volume of exports and imports, the coefficient of coverage by exports of imports, the value of which depends on positive structural changes based on the processes of deglobalization and innovative activity of high-tech markets, are provided. Dynamic trends were built up to reflect the interdependence of volumes of foreign direct investments and the level of openness of the Ukrainian economy. The relationships of fragmentation factors of industrial and financial markets under the influence of the growing role of high-tech companies in the implementation of the policy of economic protectionism are shown. A contentual model of diffusion of threats to the development of high-tech markets and their consequences in the new environment of forking out material and digital economy is built up, which deepens understanding of the reasons for the combination of globalization and deglobalization processes both in the world and in individual countries.
... Cтігліца [4][5][6][7][8], Т. Пікетті [9; 10], Д. Родріка [11], В. Робінсона [12], У. Бека [13][14][15] та ін. Дотичний напрям -спеціальні проб ле ми деглобалізації у працях В. Белло [16; 17], P. ван Бергейка [18; 19], А. Ерреро [20], у серії робочих документів, підготовлених Банком міжнародних розрахунків (Bank for International Settlements, BIS), "Глобалізація і деглобалізація" [21] тощо. ...
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The article highlights the controversial issues of the state, contradictions and trends of modern globalization in the face of new challenges and threats associated with political, immigration, pandemic, climate, economic and trade shocks – Britain’s exit from the EU, the implementation of the US President’s policy “America Above All”, the beginning of trade de-globalization as a result of the revision of free trade agreements (FTAs) and the trade “war” between the United States and China, the impact of the global COVID-19 pandemic and climate change on deepening the global economic recession, the collapse of national economies and international trade, lack of financial resources for active government support of the health care systems, social protection, small and medium-sized businesses. Political, economic, managerial and academic circles are actively discussing the problems of the “end” of globalization, de-globalization, “new” globalization, the need for a “new world order”, which will actually embody the fundamental values of democracy, economic freedom, free trade and, at the same time, will strengthen social responsibility of the world community and its international institutions, the main geopolitical, geo-economic and military centers of power (primarily the United States, China, the European Union, Russia, etc.) for the preservation of peace on the basis of consensus, recognition of global priorities in countering climatic and epidemic threats to human life on Earth , consistent implementation of the Sustainable Development Goals to eradicate poverty in all its forms and manifestations, combat inequality within and between countries, ensure continuous, inclusive and sustainable economic growth and promote social inclusion. The article drew attention to the strengthening of the trends of protectionism and economic nationalism, in particular, the US withdrawal from the Trans-Pacific Partnership agreement and attempts to revise the North American Free Trade Agreement (NAFTA). The article shows the loss of the US leadership in world trade due to the accelerated economic development of other countries, primarily the Asian region. The discussion of these problems at the Davos Economic Forum led to the conclusion about the likely end of Atlanticism and globalization. At the same time, the UN report (2018) highlighted a special section on trade hyperglobalization. The article hypothesizes that the Bali Round (2013) of negotiations on trade began the fourth wave of its globalization, and proposes a new theory of international trade – the theory of globalization impact.
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This is an open access work published under the terms of the Creative Commons Attribution-ShareAlike 4.0 International License (CC BY-SA 4.0), which allows reusers to distribute, remix, adapt, and build upon the material in any medium or format, so long as attribution is given to the creator. The license allows for commercial use (https://creativecommons.org/licenses/by-sa/4.0/) Abstract 1 It is generally accepted that COVID-19 is one of the most serious challenges the countries have faced since the end of World War II. The coronavirus, as an external shock has reshaped economic structures and lowered integration among countries. The main purpose of this paper is to investigate the impacts of COVID-19 on the globalization level of countries, which were classified into five Asian regions based on the United Nations geoscheme. To this end, an econometric method of estimation is employed based on the quarterly data pertaining to the study's variables from 2010 to 2020. Results indicate that the pandemic has had a more severe negative impact on the globalization level of more developed countries in Asia, whereas it has had a smaller negative impact on less developed regions, such as those located in Central Asia. In this regard, Japan and China can be named as two economies in which the Coronavirus has had a greater negative impact on the level of globalization. It can be highlighted that the pandemic and its related consequences, such as protectionism (trade and capital de-liberalism) and travel restrictions are not considered as potential threats for all Asian countries. What constitutes a threat for various countries depends on the country's economic nature, political stability, economic size, and globalization nature. Therefore, for globalization recovery, no unique pattern could be applied to all Asian countries, each having to determine useful practical policies based on its economic mechanism and interactions with respect to both regional and global variables.
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In recent years, Russia and China have significantly upgraded their bilateral partnership and started to speak with one voice on many global issues. Moreover, the two states agreed to co-develop their comprehensive visions for Eurasia. This strategic rapprochement comes at a time of growing confrontation between both Moscow and Beijing and the West. As this rift has emerged as one of the underlying trends in the world order dynamics, it is increasingly important to identify the extent to which rivalry with the U.S. and its allies could bring the two powers closer together. This article attempts to take an integrated look at the West’s role in forging and fostering the Russia–China partnership by analyzing the varied set of factors behind the rapprochement and the progress made by the two states bilaterally and multilaterally. Additionally, prospects for even stronger collaboration were assessed. It is argued that Moscow and Beijing’s partnership is driven by geographical proximity, economic complementarity and similar political backgrounds, but tensions with the West accelerated and cemented the rapprochement. While the collaboration trend dominates the relationship, structural difficulties hamper fully tapping its potential. Asymmetry already observed in the partnership may grow against the background of the global crisis, but clear red lines in domestic and international realms will persist for both Moscow and Beijing. Russia is likely to remain focused on preserving its strategic autonomy and diversifying partnerships.
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An analysis of the income inequality in China since the move to modernize the economy began in 1979.
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The process of globalization is being harshly criticized for a variety of reasons, but mostly because the income of large and/or vocal segments of the population of this and other countries is threatened by the dislocation and competition of trade and investment and by the inability or unwillingness of states to compensate the losers. Based on analysis with the International Futures Model, this paper concludes that if globalization halts or recedes the results will be profoundly negative for most countries and most income groups. While a retreat into protectionism may improve income equality in some countries, it will reduce incomes of both the poor and the rich and poverty headcounts will be increased. In addition, political instability will rise in a majority of countries and the probability of interstate war will increase. These results suggest that it would be far better to deal with the negative aspects of globalization directly by improving trade adjustment assistance, providing more secure access to health care, and negotiating new international agreements that benefit all countries.
Economic Review-Federal Reserve Bank of Kansas City
  • K Rogoff
Rogoff, K. (2003), Globalization and global disinflation. Economic Review-Federal Reserve Bank of Kansas City, 88(4), 45-80.