An Ideas-Based Globalization

Av Fredrik Erixon
Publicerad 23 juli, 2020

Is globalization dying? There is good news and bad news. Let us start with the bad: the world and global politics are in a bad shape, and the post-war framework for international economic governance is no exception. The International Monetary Fund, the World Bank, the OECD and other bodies relating to economic development are all sliding into oblivion. Members of the World Trade Organization (WTO) no longer consider it a relevant arena for trade negotiation. The network of trade rules that the WTO maintains is under great pressure.  

Behind this unfortunate development stands decaying political leadership from Western governments and widespread neglect by rising powers. Worryingly, the pandemic and its economic fallout will likely accelerate the pace of institutional corrosion. No political leader offers global leadership. No Western country seems to have a strategy for the world beyond “muddling through”. 

The good news is that real, on-the-ground globalization is increasing in pace. Merchandise has dropped during the period of COVID-19 lockdown but will recover in the years to come. For a few years now, however, there has been a shift in the pattern of globalization – with the real forces of growth in global commerce coming from digital services and “trade in ideas”. They will remain the sources of globalization growth for years to come – and they are very difficult to stop for politicians with protectionist instincts. While it is a relatively straightforward exercise to put high tariffs on the imports of steel and chemicals, it is something completely different to stop exchange in ideas – for example, R&D collaboration; the sharing of new knowledge, technology and innovations – and the imitation through global organizations of business models and management practices. 

This is no time to be sanguine about the risk for protectionism. Nor should we underestimate the power of modern globalization. Real economic exchange is likely to grow even if global economic governance is breaking down.  

Fredrix Erixon is an author and director of the European Centre for International Political Economy (ECIPE), a world economy think tank based in Brussels, which he co-founded in 2006. He has previously been an adviser for the British Government, chief economist at the Stockholm based think tank Timbro and was ranked in 2010 as one of the 30 most influential people in Brussels.