They say that we have reached the end of globalization. Just look around. Trump’s protectionism, Brexit, supply chain problems created by Covid-19 and Putin’s criminal aggression in Ukraine have all helped derail the wave of global integration that was triggered by the fall of the Berlin Wall in 1989. Surely, with the stock market crashing, interest rates on the rise and a looming global economic slowdown, we have arrived at globalization’s funeral and the bells are tolling.
While this perspective has become very fashionable of late, it is wrong in almost every way. Mainly from the point of view of the economy, but also from a social and cultural standpoint. Indeed, the surprise of the last two years has been how resilient globalization has turned out to be. In an exceptionally turbulent period, the strength and variety of the connections between countries has been more surprising by its durability than by its fragility. In fact, the data suggests that the global financial crisis of 2008-2009 and the Great Recession that it triggered had a bigger negative impact on the world economy and politics than any other event in the past decade.
Despite its costs, problems and accidents, integration between countries has not died
The volume of international trade grew a lot during the period of hyperglobalization (1985-2008), going from around 18% to 31% of the total value of the world economy. With the 2008 crisis, that figure fell to around 28%. And that’s where it has been, more or less, ever since: holding steady despite all the economic shocks and political upheavals of recent years.
Trump’s protectionism reduced the integration of the United States with the rest of the world. In the US, trade fell from 28% of gross domestic product (GDP) in 2015 to 23% in 2020. UK exports to the European Union fell by a hefty 14% in the year after Brexit. But these swings, large as they were, have been offset by greater economic integration in East Asia and Africa, where the connections and interdependence between countries continue to deepen and expand.
Economic integration seems to have its own inertia that resists even blows as big as the trade wars started by Trump or the UK vote in favor of Brexit. Uri Dadush, an international economics expert, has found that the protectionist barriers erected in recent years have had a negligible effect on global trade. Of course, supply chains have come under stress and these disruptions have spurred companies to move some of their manufacturing facilities closer to end markets. Europe is now undoubtedly experiencing the painful economic consequences of its energy dependency on Russia. But, according to the available data, the net global effect, even considering these momentous changes, has not been a reduction in economic integration.
It is also important to keep in mind that globalization goes far beyond trade and other international economic flows. Globalization is based on the global spread of knowledge, ideas, philosophies, politics and people as much as it is based on the trade of goods. And in this broader sense, globalization seems to be speeding up, not slowing down. TikTok has 1.4 billion users spread over 150 countries, for example.
Science is another example of the power of globalization. Scientists from all over the world compete with their colleagues in other countries. But they also collaborate as often as never before. The number of scientific collaborative efforts located in different countries is booming. The speed at which scientists were able to create the Covid-19 vaccines, then produce them on a large scale and distribute them around the world in record time, thus saving millions of lives, is an important example. If this successful instance of globalization could happen once, it can happen again and again.
Naturally, globalization is not invulnerable and not all its consequences are positive. The levels of inequality that coexist with globalization are unacceptable, for example. If the war in Ukraine drags on much longer or – tragically – goes nuclear, it could cut off key supplies of energy, food and fertilizer that form the backbone of economic globalization. Worse still, a Chinese military assault on Taiwan could wipe out much of that country’s microchip-making capacity, crippling a world increasingly reliant on digital technologies. In the near future, quantum cryptography could make all the encryption that currently exists on the web obsolete. That would cause a severe cybersecurity crisis that would limit digital globalization.
These threats exist. They are real and serious. But they are conjugated in the future tense. At the moment, the world is more deeply integrated than it was a decade ago. Despite its costs, problems and accidents, integration between countries has not died. The challenge ahead is how to protect ourselves from its defects and make the most of the doors it opens for us.