Working Paper: CEPR ID: DP16521
Authors: Italo Colantone; Gianmarco Ottaviano; Piero Stanig
Abstract: We review the literature on the globalization backlash, seen as the political shift of votersand parties in a protectionist and isolationist direction, with substantive implications ongovernments’ leaning and enacted policies. Using newly assembled data for 23 advanceddemocracies, we document a protectionist and isolationist shift in electorates, legislatures,and executives from the mid-1990s onwards. This is associated with a noticeable protectionistshift in trade policy –although with some notable nuances– especially since the financialcrisis of 2008. We discuss the economics of the backlash. From a theoretical perspective,we highlight how the backlash may arise within standard trade models when taking into accountthe ‘social footprint’ of globalization. Then, we review the empirical literature on thedrivers of the backlash. Two main messages emerge from our analysis: (1) globalization is asignificant driver of the backlash, by means of the distributional consequences entailed byrising trade exposure; yet (2) the backlash is only partly determined by trade. Technologicalchange, crisis-driven fiscal austerity, immigration, and cultural concerns are found to playan important role in creating politically consequential cleavages. Looking ahead, we discusspossible future developments, with specific focus on the issue of social mobility.
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Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Globalization (F60) | Backlash (D74) |
| Trade exposure (F14) | Backlash (D74) |
| Backlash (D74) | Political shift towards protectionism and isolationism (F52) |
| Economic crises (G01) | Support for right-wing and left-wing isolationist parties (F52) |
| Fiscal austerity (E62) | Left-wing anti-globalization sentiments (F69) |
| Technological changes (O33) | Left-wing anti-globalization sentiments (F69) |