Retreat from Globalization? Observations from the 2017 World Bank and International Monetary Fund Annual Meetings

Unknown-1If one is following trade politics in the United States, one might be under the impression the degree of globalization we have become accustomed to is on a decline. The Trump Administration pulled out of the Trans-Pacific Partnership trade deal and threatens to withdraw from the North American Free Trade Agreement with Canada and Mexico. Will other countries follow the U.S. in rethinking the way trade of goods and services supports the economy?

At the 2017 Annual Meetings of the World Bank and the International Monetary Fund, CompTIA attended panel discussions with world leading scholars in international economics on the future of globalization.

During the meetings, economists could not come to a consensus if current protectionist trends will endanger the liberal trade order. Dani Rodrik, Professor of International Political Economy at Harvard University, emphasized that there will be no fundamental changes in trade policy around the world if the U.S. leaves the table. He argued that while the degree of free trade is relatively high today, the amount of newly implemented protectionist and anti-protectionist policies are roughly the same. Furthermore, Rodrik believes that business interests in the U.S. will ultimately lead Trump to adopt a less hostile attitude towards trade.

Paul Krugman, one of the leading scholars of international economics, pointed out that the politics of protectionism hurts the poor the most.

Other economists argued that protectionism is on the rise and could lead to a drastic change. The Nobel laureate in economics, Angus Deaton said that “we are all worried” with respect to a possible retreat from globalization. Arguing that the consequences for less skilled workers have been drastic, Larry Summers advocated for a new, more inclusive approach towards managing globalization which is directed at the middle class rather than multinational corporations.

If even the most intelligent scientists in the field of economics cannot agree, a famous quote by another Nobel laureate, Niels Bohr, seems to apply to the question whether we might see a trend back from free trade towards protectionism: “Prediction is very difficult, especially if it’s about the future.”

Stefanie Holland is CompTIA’s Director, International Government & Regulatory Affairs and Lukas Juergensmeier is an intern for CompTIA Advocacy

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