Globalisation
has stalled over the past decade so it should not be blamed for the rise in
inequality seen since the financial crisis, according to research by the OECD’s
former chief economist. Research, published by the investment bank on Sunday,
showed that global integration had peaked according to many measures some time
ago.
With public opinion becoming increasingly hostile to globalisation, even its proponents have started to pay more attention to its ill-effects. World leaders, including US president Donald Trump and some economists, have blamed globalisation and international trade for rising inequality and job losses in many industries. But Ms Mann’s research supports the argument that globalisation makes countries richer in aggregate, and problems arise because governments fail to share the gains fairly or to compensate those who lose out.
Technology and the shift in consumption from goods to services have played a bigger part in the loss of manufacturing jobs in advanced economies than globalisation has, the report found. "People do not realise that we have been in a decade of treading water iwth regards to globalisation," said Ms Mann. "Global growth has returned to its pre-financial crisis rate, yet inequality has increased and productivity is still moribund. We need to look at a different story for why."
Trade’s share of global output rose at an increasing pace from the 1980s onwards, but stalled towards the end of the past decade and has since fallen back, the research showed, mirroring the breakdown of multilateral trade agreements and the growing number of protectionist measures that countries are putting in place.
Global
supply chains have also begun to unravel in recent years, according to an OECD
measure of cross-border independence that has fallen since 2011. This may be
because of concerns that supply chains had become too vulnerable to disruption
and to reputational risk when workers in poor countries are exploited.
A
Guest Editorial
