## Charting Globalization’s Turn to Slowbalization After Global Financial Crisis

_IMF Blog, February 8, 2023_

## Source details

**Canonical URL:** [Charting Globalization’s Turn to Slowbalization After Global Financial Crisis](https://www.imf.org/en/blogs/articles/2023/02/08/charting-globalizations-turn-to-slowbalization-after-global-financial-crisis)

## Other formats

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## Bibliographic details
- Authors: Shekhar Aiyar, Anna Ilyina
- Published: February 8, 2023

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### Overview
- Authors: Shekhar Aiyar, Anna Ilyina
- Date: February 8, 2023
- Main point: Using the trade openness metric—the sum of exports and imports of all economies relative to global gross domestic product—globalization plateaued in the decade and a half since the global financial crisis, an era often referred to as “slowbalization.”
- Contextual issues highlighted: geoeconomic fragmentation, trade fragmentation, and technological decoupling.

### Trade openness metric
- Definition preserved from source: "the sum of exports and imports of all economies relative to global gross domestic product."
- Finding: Over a century and a half of data, the main phases of globalization are visible using this metric.
- Observation: The Chart of the Week shows that globalization plateaued in the decade and a half since the global financial crisis.

### Five main periods and their characteristics
- Industrialization era
  - Dominant economies: Argentina, Australia, Canada, Europe, and the United States.
  - Mechanism: Facilitated by the gold standard.
  - Drivers: Transportation advances that lowered trade costs and boosted trade volumes.

- Interwar era
  - Outcome: Dramatic reversal of globalization.
  - Causes: International conflicts and the rise of protectionism.
  - Features: Trade became regionalized amid trade barriers and the breakdown of the gold standard into currency blocs.
  - Note: The League of Nations pushed for multilateral cooperation but did not prevent regionalization.

- Bretton Woods era
  - Configuration: United States emerged as the dominant economic power with the dollar, then pegged to gold, underpinning a system with other exchange rates pegged to the greenback.
  - Drivers: Post-war recovery and trade liberalization spurred rapid expansion in Europe, Japan, and developing economies.
  - Policy shifts: Many countries relaxed capital controls.
  - End of era trigger: Expansionary US fiscal and monetary policy driven by social and military spending made the system unsustainable; the United States ended dollar-gold convertibility in the early 1970s and many countries switched to floating exchange rates.

- Liberalization era
  - Drivers: Gradual removal of trade barriers in China and other large emerging market economies.
  - Institutional change: World Trade Organization established in 1995 as a multilateral overseer of trade agreements, negotiations and dispute settlement.
  - Effects: Liberalization accounted for most of the increase in trade; cross-border capital flows surged, increasing complexity and interconnectedness of the global financial system.
  - Additional note: Integration of the former Soviet bloc occurred during this era.

- “Slowbalization” era (post-global financial crisis)
  - Timeframe description from source: "the decade and a half since the global financial crisis."
  - Characteristics: Prolonged slowdown in the pace of trade reform and weakening political support for open trade amid rising geopolitical tensions.

### Analytical emphasis
- The narrative links shifts in trade openness to changing configurations of economic and financial powers as well as evolving rules and mechanisms for economic and financial ties between countries.
- The post-2008 plateau is framed as a distinct era with policy-relevant implications for how policymakers should view geoeconomic fragmentation and trade policy going forward.

*Source: Charting Globalization’s Turn to Slowbalization After Global Financial Crisis (IMF blog entry, February 8, 2023).*

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## References

- [geoeconomic fragmentation](https://www.imf.org/en/Blogs/Articles/2023/01/16/Confronting-fragmentation-where-it-matters-most-trade-debt-and-climate-action)
- [recent IMF staff note](https://www.imf.org/en/Publications/Staff-Discussion-Notes/Issues/2023/01/11/Geo-Economic-Fragmentation-and-the-Future-of-Multilateralism-527266?cid=bl-com-SDNEA2023001)
- [ended](https://www.imf.org/en/Blogs/Articles/2021/08/16/from-the-history-books-the-rethinking-of-the-international-monetary-system)

_Source: https://www.imf.org/en/blogs/articles/2023/02/08/charting-globalizations-turn-to-slowbalization-after-global-financial-crisis_