By Douglas A. Irwing, Peterson Institute for International Economics
World economic integration has been in decline since the 2008–10 financial crisis, ushering in an era of “slowbalization” or even deglobalization.
Tracing global trade openness—the ratio of world exports to world GDP—reveals five distinct eras of globalization since 1870. Advancements in transportation deepened international economic integration prior to the outbreak of World War I. The economic dislocation of war and protectionism during the Great Depression led to a reversal of globalization from 1914–45.
Economic integration rebounded after the Second World War and continued to increase for the latter half of the 20th century. An embrace of economic liberalization saw the removal of trade barriers in large emerging markets and led to unprecedented levels of international economic cooperation, peaking in 2008 at 61.1 percent. Since this era of peak globalization, economic integration has been in retreat, falling to 53.5 percent on the openness index in 2017.
Since 2008, China and the United States have turned inward, with the latter erecting trade barriers on imports that have disrupted global supply chains and prompted the spread of trade barriers elsewhere. The global pandemic will only add further momentum to the retreat of globalization.