Working Paper: CEPR ID: DP15462
Authors: Pol Antras
Abstract: This paper evaluates the extent to which the world economy has entered a phase of de-globalisation, and it offers some speculative thoughts on the future of global value chains in the post-COVID-19 age. Although the growth of international trade flows relative to that of GDP has slowed down since the Great Recession, this paper finds little systematic evidence indicating that the world economy has already entered an era of de-globalisation. Instead, the observed slowdown in globalisation is a natural sequel to the unsustainable increase in globalisation experienced in the late 1980s, 1990s and early 2000s. I offer a description of the mechanisms leading to that earlier expansionary phase, together with a discussion of why these forces might have run out of steam, and of the extent to which they may be reversible. I conclude that the main challenge for the future of globalisation is institutional and political in nature rather than technological, although new technologies might aggravate the trends in inequality that have created the current political backlash against globalisation. Zooming in on the COVID-19 global pandemic, I similarly conclude that the current health crisis may further darken the future of globalisation if it aggravates policy tensions across countries.
Keywords: globalisation; global value chains; trade wars; covid-19
JEL Codes: F1; F2; F3; F4; F5; F6
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| globalization factors (F60) | hyperglobalisation (F60) |
| hyperglobalisation (F60) | slowdown in globalization (F69) |
| slowdown in globalization (F69) | deglobalisation (F69) |
| ICT revolution (L63) | hyperglobalisation (F60) |
| reduction in trade costs (F12) | hyperglobalisation (F60) |
| increased participation of global workforce (F66) | hyperglobalisation (F60) |
| automation (L23) | reshoring (F23) |
| COVID-19 pandemic (H12) | globalization trends (F60) |