Exploring the impacts of deglobalization
The spectre of protectionism is haunting the global economy, as politicians in many parts of the world cast doubt on the benefits of globalization and free trade.
US President Donald Trump’s pledge to “put America first” and revise US trade agreements, the British vote on Brexit and the rise of an anti-immigrant party in Germany all testify to a new international mood that is more critical and suspicious of globalization.
The evidence shows that — overall — globalization promotes economic growth, delegates at the Women’s Forum Global Meeting 2017 heard. But at the same time, it has created losers as well as winners.
“Yes, protectionism hits economic growth and deglobalization will hurt economic development. But the question is: why is this happening? Why are we seeing moves towards protectionism? Why Brexit?,” said Karien van Gennip, Director of Private Banking and Investment at ING Netherlands.
Distrust of globalization is not the mantra of the jobless or those who might be termed “working class.” The drivers are the middle classes, who feel they are being cut adrift in a world that they once thought they knew and understood. “If we do not address these concerns, we will see protectionism, over and over again,” van Gennip warned.
The law of comparative advantage, which underpins the economics of international trade, has on balance brought low inflation and rising standards of living over the past three or four decades. But this could easily reverse, resulting in slower productivity gains, slower export growth, more unemployment and even social unrest.
“Globalization is good. But there is a big question over how its benefits are divided up. Many people feel that they go only to a small percentage of the population,” said Andrea Orcel, President of Investment Banking at UBS.
Notions of work and job loss need to change. Jobs are no longer “for life,” and those who lose their job must not be viewed — by others or by themselves — as losers. Changing jobs is becoming a natural transition, with most people moving three or four times during their careers.
Deglobalization may hamper efforts towards gender equality. Restrictions on the movement of people will limit women’s ability to move in search of greater opportunities. Reduced capital flows, which make investment capital harder to come by, may encourage the return of old cultural myths against investing in women. Internationalization weakens biases, but with economic fragmentation, these old biases kick back in.
This story is drawn from sessions at the Women’s Forum Global Meeting 2017.