Picture This: Globalization’s Peak
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Bibliographic details
- Authors: ANDREW STANLEY
- Published: June 1, 2023
Overview
- The free flow of goods, services, capital, people, and ideas across national borders fosters greater economic integration; globalization refers to the trend toward these flows moving more freely between countries.
- Recent evidence suggests globalization has reached a momentary peak, with trade openness plateauing globally since 2008 and receding for some of the world’s largest economies.
- Concurrently, there has been a significant surge in trade restrictions globally over the past few years.
Key findings
- Trade openness metric has plateaued on a global level since 2008.
- The trade openness metric has receded for some of the world’s largest economies.
- There has been a significant surge in trade restrictions globally over the past few years.
- The history of globalization is characterized by five main periods with different configurations of economic and financial power and different rules and mechanisms for economic and financial ties between countries.
- Policymakers are increasingly focused on the prospect of growing geoeconomic fragmentation.
Metrics and evidence
- Trade openness metric defined as: the sum of exports and imports of all economies relative to global GDP.
- Long-run data covering a century and a half show clear main phases of globalization.
- Trade restrictions imposed in 2022: (not quantified on this page; text indicates a notable increase in recent years).
Recent shocks and drivers of change
- Rise in trade tensions between the world’s two largest economies, the United States and China.
- Russia’s invasion of Ukraine has caused massive disruptions of financial, food, and energy flows across the globe.
- COVID-19 increased focus on economic security and on making supply chains more resilient after the pandemic exposed their vulnerability in many countries.
Implications and policy focus
- The observed plateau in trade openness and surge in trade restrictions suggest a new era for globalization with greater fragmentation risks.
- Policymakers are working to understand and address the prospect of growing geoeconomic fragmentation, with increased emphasis on economic security and supply-chain resilience.
F&D Magazine — Globalization’s Peak; ANDREW STANLEY; June 2023.
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- Globalization’S Peak