Larry Elliott: Of course there’s a globalisation backlash. It has failed billions of people

An era of open markets and open borders – where trade and transnational capital flows rose rapidly as a share of global output – has run its course. The instruments of deglobalisation are being weaponised. Deglobalisation has happened before, notably between 1914 and 1945. It is happening now as a result of geopolitics, economic torpor, rising inequality, the failure to develop new political structures to manage globalisation, and the response to new threats.

Companies are realising that lengthy global supply chains have costs as well as benefits. Coronavirus has brought that home with a vengeance. Today, governments are less interested in breaking down barriers and more concerned about safeguarding jobs, preventing intellectual property theft and the risk of cyber crime. Companies are realising that lengthy global supply chains designed to take advantage of low wages in the developing world have costs as well as benefits. Coronavirus has brought that home with a vengeance, and is likely to further encourage the repatriation of production that was offshored in the 1990s and 2000s.

Every wave of globalisation has required a champion, a hegemonic power confident enough to spread the gospel of free trade and open markets. That role fell to Britain in the late 19th century and the US in the second half of the 20th century. But America’s self-confidence has been punctured by the rise of China as a strategic threat, and the power struggle between the world’s two biggest economies is heating up. Stock markets were jubilant when Washington and Beijing signed a trade deal but – rather like the Molotov-Ribbentrop pact of August 1939 – it is merely a truce of convenience. If Trump wins re-election in November, hostilities will resume.

Countries also get defensive when times are tough, as they have been ever since the financial crisis of 2008. The most recent wave of openness occurred in the decade after the collapse of communism, culminating in China becoming a member of the WTO in 2001... read more:




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