Seesaw of globalization: why it is becoming increasingly difficult for countries around the world to lower trade barriers

 Seesaw of globalization: why it is becoming increasingly difficult for countries around the world to lower trade barriers

The growing fragmentation of the world economy, which was discussed at Davos, is explained by the inability to organize the correct distribution of the gains from globalization, both at the national and international levels, says Natalya Volchkova, director of the Center for Economic and Financial Research and Development at the Russian Economic School.

In 2023, the motto of the next World Economic Forum in Davos was "Cooperation in a Fractured World." The wording indicates the inconsistency of the current moment. Businesses from different countries are looking for ways to develop and integrate, but run into political, military and economic conflicts unfolding in parallel.

To a certain extent, there is economic logic in this. The main driver of globalization is business. It is he who receives a direct benefit from trade and international investment, saving on costs and increasing the market for his products and services. This, in turn, ensures an increase in the efficiency of the use of all world resources - human, capital, land, etc. The world as a whole benefits from this. But how is this gain distributed? 

trading wave

Speaking about the history of the development of trade relations between countries, economists identify several so-called waves of globalization. The first began a little over 150 years ago, in the 1860s. Until that moment, the growth rate of international trade for several centuries did not exceed 1% per year. But the beginning of the process of globalization, increased this figure to 4% per year. Financial integration took place even faster, and the mobility of the population reached an unthinkable pace even for today - about 55 million people moved from Europe to America.