The exaggerated death of globalisation

Globalisation is changing but not unwinding: global flows will be more regional, political, & shaped by big power rivalry

Globalisation is changing its shape.  To take just a few recent examples in addition to the ongoing US/China economic tensions: the US and EU are weighing sanctions on Russia if it invades Ukraine; China continues to squeeze Lithuania for its support of Taiwan; and the Biden Administration has proposed the preferencing of US-produced electric vehicles. On the plus side, the world’s largest FTA (RCEP) went into effect on January 1.

Many obituaries for globalisation have been written over the past two decades.  And yet world trade as a share of GDP has declined only modestly over the past decade, after several decades of strong increases.

And globalisation has been resilient through Covid.  World trade volumes are above their pre-Covid levels, and continue to grow, partly due to the rotation of consumer demand towards goods during Covid.  Exports of services (international tourism) cratered during Covid, and FDI flows weakened, but both are likely to strengthen.

But structural change is u…