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Two Faces of (De-) Globalization

Cho_Sungjoon thumbBy Sungjoon Cho [originally posted on the International Economic Law and Policy Blog on October 23, 2019]

Two very different observations on (de-) globalization have caught our eyes lately.

First of all, according to the most recent statistics provided by the Global Trade Alert (composed by Prof. Simon Evenett at St. Gallen), pro-trade and investment measures across borders have shown the biggest decline ever for the past seven years, while a sharp increase of protectionist measures have continued.

In contrast, the new Trade20 Index composed by Standard Charters has highlighted the great growth potential in emerging nations, such as Côte d’Ivoire, Kenya, Oman, Vietnam, Indonesia, Thailand, and the Philippines and Ireland, let alone India and China.  José Viñals, Group Chairman, Standard Chartered views that:

“The Trade20 index points towards the strong potential of a number of markets outside the China-US-Europe trade axis. With rising protectionism casting a shadow over the future of world trade, it is encouraging that many emerging markets are still improving their trade growth potential for the medium term, forging new regional trade deals to make this happen.”

Three questions may be in order.  First, do these contrasting developments tend to substantiate a thesis of the “Great Divergence”?  In other words, is there a persistent decline in growth potential in the West and an equally persistent surge in the Rest?  Second, what are legal and political implications of such divergence?  Will the populist backlash, and the consequent resistance to multilateralism, continue in the West?  If so, does the future of the WTO depend on those emerging nations?  Third, what about transnational businesses?  Will, or should, they play a more proactive role, through lobbying and campaigning, in defying protectionism, and shaping the future of global economic order?

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