The Second Era of Globalization is Not Yet Over: An Historical Perspective
The recent rise of populist anti-globalization political movements has led to concerns that the current wave of globalization that goes back to the 1870s may end in turmoil just like the first wave which ended after World War I. It is too soon to tell. The decline and then levelling off of trade and capital flows in recent years reflects the drastic decline in global real income during the Great Recession. Other factors at work include the slowing down in the growth rate of China and the reversal of the extended international supply chains developed in the 1990s, as well as increased financial regulation across the world after the crisis. This suggests either a pause in the pace of integration or more likely a slowing down, rather than a reversal.
Paper prepared for the Reinventing Bretton Woods Conference: Living Without Globalization. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.