Read more about the article Resilience and Realignment of Global Trade

Resilience and Realignment of Global Trade

Multiple shocks faced by the global economy over the past three years have apparently shaken the conventional wisdom on gains from economic integration, and have sparked widespread calls for protectionist and nationalist policies. Is there already evidence of some ‘deglobalization’, or do the factors that underlie globalization remain strong enough despite the shocks? So far, there are no signs of an overall reversal in the long-term trend of greater global trade integration. However, a partial realignment seems to be underway, reflecting the more durable side of those recent shocks. This is probably leading to higher costs and prices on the margin, in the case of realignments done to overcome shocks of a geopolitical nature. The answer seems to be that global trade has been resilient, although it is undergoing some realignment.

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Read more about the article Growth Implications of a Fractured Trading System

Growth Implications of a Fractured Trading System

An assessment of the implications for growth—particularly the costs—of moving towards a fractured trading system can use as a benchmark what happened during the period of what is usually called hyper-globalization or globalization 2.0 Substantial growth in GDP per capita in emerging markets and developing economies, as well as reductions in poverty rates and lower per capita GDP inequality among countries were major achievements. The transmission channels of the trade fragmentation will be a reversal of the path by which those gains were attained.

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Read more about the article GVCs, Resilience, and Efficiency Considerations: Improving Trade and Industrial Policy Design and Coordination

GVCs, Resilience, and Efficiency Considerations: Improving Trade and Industrial Policy Design and Coordination

The COVID-19 pandemic and the war in Ukraine have reignited the debate on efficiency versus resilience in international trade and global value chains (GVCs). This policy brief[ (i) explains the contrasting perspectives of the private sector (primarily seeking efficiency) and the public sector (aiming for resilience); (ii) demonstrates that GVCs are still flourishing, despite some mounting signals of a geo-fragmentation leading to a greater reallocation of the GVCs; and (iii) provides recommendations to help the G20 navigate the balancing act between efficiency and resilience considerations. Domestic policy design in the G20 countries and international coordination among these countries is essential.

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Read more about the article Pandemic, War, and Global Value Chains

Pandemic, War, and Global Value Chains

The debate on the viability of industrial policy design based on the fragmentation of global value chains, from a cost optimization perspective, did not arise first in the wake of the Covid-19 crisis but was present long before. This industrial policy design was justified by the great development of logistics and transport across the world’s industrial clusters, which allowed just-in-time manufacturing to become the main adopted production model. However, the disruption of logistics supply chains after the advent of the crisis has multiplied the voices calling for a review of the current model of the organization of value chains, in favor of reshoring or nearshoring. This widely shared perception remains rather unconfirmed by the facts. Indeed, it has been observed that the economic sectors that are most integrated into global value chains have experienced a faster recovery than the remaining sectors, which would mean that integration into global value chains can be a factor that accelerates recovery, and therefore guarantees resilience in the event of a major economic shock.

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Read more about the article Slowbalization, Newbalization, Not Deglobalization

Slowbalization, Newbalization, Not Deglobalization

One can expect slower globalization (“slowbalization”) and a greater degree of regionalization. The term “slowbalization”—slowing growth in cross-border flows—can indeed be applied to the trends for goods, capital, and people after the global financial crisis rather than deglobalization—or outright declines in cross-border flows and stocks. The increases in digital cross-border activity also strengthen the concept of "newbalization": the nature and scope of globalization is evolving in the coming years as flows may continue to slow in tangible areas, like the trade of goods, while speeding up in intangible areas, including trade in services and cross-border data flows. On the other hand, “the death of globalization was an exaggerated announcement”.

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Read more about the article Supply Chain Disruptions and Bottlenecks Dampen the Global Economic Recovery

Supply Chain Disruptions and Bottlenecks Dampen the Global Economic Recovery

Scarcity of inputs and goods has been felt all over the world because of disruptions to global value chains since the beginning of the pandemic. Higher inflation has been a global phenomenon, even if with different intensities and multiple determinants. A mismatch between demand and supply can also be found in the energy price shocks. The running of supply chains in the U.S. has also been affected by an unexpected shrinkage in the workforce because of acceleration in retirements caused by the pandemic. The Fed's ‘wait-and-see attitude’—moving on to the tapering this year and likely small rises at the end of next year—is opposed by those who think the Fed is already behind.

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Read more about the article Brazil and South Korea: Two Tales of a Middle-Income Trap

Brazil and South Korea: Two Tales of a Middle-Income Trap

The middle-income trap may well characterize the experience of Brazil and most of Latin America since the 1980s. Conversely, South Korea maintained its pace of evolution, reaching a high-income status. Such divergence of economic growth can be related to their distinctive performances of domestic accumulation of technological and organizational capabilities. Their different approaches to global value chains and trade globalization reinforced such discrepancy in domestic accumulation processes.

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Read more about the article Trade globalization

Trade globalization

In the 1990s and 2000s, the world manufacturing production to a substantial extent moved from advanced countries to some developing countries. This was the result of the combination of an increase of the labor supply in the global market economy, trade opening, and technological transformations that allowed for fragmentation of production processes. As a result, foreign trade expanded, and world poverty diminished. Such trade globalization process stabilized in the 2010s and tends to be partially reversed by the new wave of technological changes.

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Read more about the article Climbing a High Ladder – Development in the Global Economy

Climbing a High Ladder – Development in the Global Economy

This book approaches the opportunities and challenges faced by developing countries to raise their per capita income levels during the recent phase of globalization. After dealing with the post-global financial crisis economic landscape in advanced economies, it deals with the windows of opportunity opened by trade and financial globalization for developing countries to climb the income ladder. Domestic preconditions for a developing country to benefit from those windows are then pointed out. China, Brazil, and Sub-Saharan Africa are presented as case studies. The book ends with an assessment of the impact of the coronavirus crisis on the global economy.

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Read more about the article The pandemic will reshape globalization

The pandemic will reshape globalization

The pandemic is accelerating history, in the sense that some of its recent trends are being sped up. In the case of globalization, the pandemic will not reverse it, but it will reshape it. Here we take a bird’s eye view on global trade during the pandemic, relate it to previous trends, and guess how global value chain managers and governments’ trade policymakers are likely to react.

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Read more about the article Brazil, South Korea: Two Tales of Climbing an Income Ladder

Brazil, South Korea: Two Tales of Climbing an Income Ladder

The “middle income trap” may well characterize the experience of Brazil and most of Latin America since the 1980s. Conversely, South Korea maintained its pace of evolution, reaching a high-income status. Such divergence of economic growth can be related to their distinctive performances of domestic accumulation of technological and organizational capabilities. Their different approaches to global value chains and trade globalization reinforced such discrepancy in domestic accumulation processes.

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Read more about the article Brazil, South Korea, and Global Value Chains: A Tale of Two Countries

Brazil, South Korea, and Global Value Chains: A Tale of Two Countries

South Korea has climbed the income per capita ladder up to high levels, while Brazil may be considered a case of a “middle-income trap”. Such divergence of economic growth performances can be related to their distinctive approaches to global value chains and trade globalization, as well as to domestic accumulation of technological and organizational capabilities.

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