Template-Type: ReDIF-Paper 1.0
Title: The Surprising Resilience of Globalization: An Examination of Claims of Economic Fragmentation
Author-Name: Brad Setser
Abstract: Bipartisan doubts about the value of liberal trade in the US are shared
  by many populist European parties, who also question the value of deeper
  international economic integration. Yet for all the skeptical
  rhetoric—and real steps from the US and other advanced
  economies—globalization is not in retreat. Global trade continues to
  rise alongside global economic growth. If anything, trade has picked up
  since the pandemic. Widespread expectations that the global economy
  would fragment into rival blocks have not yet come to pass. Global flows
  related to corporate tax avoidance remain significant, cutting into US
  fiscal revenues. China’s increasingly troubled domestic economy and
  its large-scale industrial policies risk leaving the US and its allies
  more, not less, reliant on Chinese supply in key sectors. The recent
  surge in China’s trade surplus is evidence of ongoing globalization,
  and China’s continued reliance on the world’s big democracies for
  demand runs counter to any coherent definition of fragmentation. But
  increased global reliance on China for supply emerges more from
  China’s own economic imbalances than from a healthy global division of
  labor. There is thus scope for policy reforms that support a healthier
  form of integration: notably, ending the perverse incentives in the US
  tax codes that undermine US production and revenues and harmonizing
  clean industrial policies to deepen trade among allies.
Creation-Date: 2024-10-01
Keywords: trade, international economics
File-URL: https://www.economicstrategygroup.org/wp-content/uploads/2026/06/The-Surprising-Resilience-of-Globalization.pdf
File-Format: Application/PDF
Handle: RePEc:cxx:wpaper:the-surprising-resilience-of-globalization