“The big losers in the new globalization are consumers and developing countries”

MDespite the paralysis of the World Trade Organization (WTO), the rise of geopolitical tensions, calls for relocations, globalization continues but in a different form. “It’s the start of a new era”write Pinelopi K. Goldberg, former chief economist at the World Bank, and Tristan Reed (“Is the Global Economy Deglobalizing? And If So, Why? And What Is Next?”, NBER, April 2023).

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First observation: de-globalization has not taken place, if we judge by the dynamism of trade, circulation of capital or people. The movement just slowed down. The two American economists note that “the political context and public opinion towards globalization have changed, particularly in the major economies”. Mistrust grew in 2015, when competition from low-cost countries like China fueled concern that led to Brexit and the tariff war between China and the United States.

When the Covid-19 pandemic strikes, the vulnerability of supply chains is implicated in the shortage of medicines and masks. Political leaders then plead for relocations and a reduction in dependence on supplier countries, such as China.

The third challenge comes with the Russian invasion of Ukraine in February 2022. Supply chains are threatened by geopolitical turbulence and the United States advocates the friendshoring, namely relocation to friendly countries. At the same time, globalization is accused of contributing to global warming by favoring the transport of goods and the relocation of polluting industries to countries with less severe environmental standards.

“Political orientations of the States”

These profound changes could be “the harbingers if not of de-globalization, at least of a new form of globalization”say American economists, who suggest that “we may be entering an era where the future of trade and globalization will be shaped from above by the political orientations of States rather than by market forces”.

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Sébastien Jean, professor at the National Conservatory of Arts and Crafts, observes two underlying trends. The first is the“unilateral interventionism”, which manifests itself in the proliferation of public aid to companies, very often in defiance of WTO rules, as is the case with the American Inflation Reduction Act programme, which provides for 370 billion dollars (i.e. approximately 340 billion euros) of subsidies for clean technologies. The European Union (EU) followed suit without going so far, with its Green Deal industrial plan.

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