## GLOBALIZATION’S PEAK

## Source details

**Canonical URL:** [GLOBALIZATION’S PEAK](https://www.imf.org/-/media/files/publications/fandd/article/2023/june/picture-this-june23.pdf)

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- [Markdown version](/-/media/files/publications/fandd/article/2023/june/picture-this-june23.pdf.md)
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### Overview
- Globalization proxied by the trade openness metric: the sum of exports and imports of all economies relative to global GDP.
- The index has plateaued on a global level since 2008.
- Trade openness has receded for many countries since the global financial crisis of 2008, including for some of the world’s largest economies.
- Recent shocks and tensions highlighted in the text:
  - A rise in trade tensions between the United States and China.
  - Russia’s invasion of Ukraine, causing massive disruptions of financial, food, and energy flows.
  - COVID-19, which increased focus on economic security and on making supply chains more resilient.

### Trade openness trends and key statistics
- Metric used: sum of exports and imports as a share of GDP (includes both goods and services).
- The trade openness index has plateaued globally since 2008.
- Trade openness has receded for many countries since 2008, including some large economies.
- Sources cited for data and charts: Organisation for Economic Co-operation and Development; Our World in Data; and World Bank.
- Note: “The boundaries, colors, and any other information shown on the map do not imply, on the part of the IMF, any judgment on the legal status of any territory or any endorsement or acceptance of such boundaries.”

### Rising trade restrictions
- Indicator: number of trade restrictions imposed annually worldwide (includes restrictions on goods, investment, and services).
- Chart axis ticks shown in the source: 3,000; 2,000; 1,000; 0.
- Years indicated on the chart: 2010, 2015, 2020, 2020 (as presented in the source).
- Source cited: Global Trade Alert.

### Eras of globalization (periodization and characteristics)
- The history of globalization is characterized by five main periods:
  - 1870–1914: Industrialization
    - Global trade dominated by Argentina, Australia, Canada, Europe, and the United States.
    - Facilitated by the gold standard and transportation advances that lowered trade costs.
  - 1914–1945: Wars, Protectionism
    - Interwar reversal of globalization due to international conflicts and the rise of protectionism.
    - Trade became regionalized amid trade barriers and the breakdown of the gold standard into currency blocs.
  - 1945–1980: Fixed Exchange Rates
    - Bretton Woods era with the United States as the dominant economic power and the dollar pegged to gold.
    - Postwar recovery and trade liberalization; many countries relaxed capital controls.
    - Expansionary US fiscal and monetary policy made the system unsustainable; the United States ended dollar-gold convertibility in the early 1970s and many countries switched to floating exchange rates.
  - 1980–2008: Liberalization
    - Gradual removal of trade barriers in China and other large emerging market economies.
    - Unprecedented international economic cooperation and integration of the former Soviet bloc.
    - Establishment of the World Trade Organization in 1995.
    - Surge in cross-border capital flows, increasing complexity and interconnectedness of the global financial system.
  - 2008–2021: “Slowbalization”
    - Characterized by a prolonged slowdown in the pace of trade reform and weakening political support for open trade amid rising geopolitical tensions.

- Additional chart/figure notes: sources for these historical series include Jordà-Schularick-Taylor Macrohistory Database; Penn World Data version 10.0; Peterson Institute for International Economics; World Bank; and IMF staff calculations.
- Note: “Sample's composition changes over time. The concept of eras of globalization is based on the work of Douglas Irwin at the Peterson Institute for International Economics.”

### Policy focus and implications highlighted in the source
- Policymakers are working to understand and address the prospect of growing geoeconomic fragmentation.
- Policy attention has increased on:
  - Economic security.
  - Making supply chains more resilient in the wake of COVID-19 and other disruptions.

*Source: picture-this-june23 (Finance & Development, June 2023).*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2023/june/picture-this-june23.pdf_