Thursday, April 30, 2020

Is it time for deglobalisation, some ask?

Has a de-globalisation trend started? Are we back to days of enhanced protectionism? Is "my country first" policies going to take over? Are global value chains going to be more regionalised or local? Is it the end of the peak global trade order that saw the world "flattened"?

In this piece in PIIE blog, Douglas A Irwin tends to suggest that the pandemic would lead to a situation of localisation and looking inward. The time of deglobalisation has begun.
Experience also suggests that fear leads countries to turn inward. Many countries are now rethinking trade dependence. Phil Hogan, the European Union’s commissioner for trade, has stated, “we need to think about how to ensure the EU’s strategic autonomy.”[6] Scott Morrison, Australia’s prime minister, told parliament: “Open trading has been a core part of our prosperity over centuries. But equally, we need to look carefully at our domestic economic sovereignty as well.” Japan has also begun investigating how to break its supply-chain dependence on China and produce more at home.
These cycles of globalisation and deglobalisation will continue to exist as long as nation states with local constituencies exist. The important question is whether open borders or more protected environments provide the opportunities and avenues for populations to improve their standard of living.

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