First among these is demand weakness and stagnant

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First among these is demand weakness and stagnant output growth. In the last eight years, the global economy has been severely battered by the 2008–2009 financial crisis and double-dip reces- sion in Europe. Although we do acknowledge that recovery is underway, the pace of recovery remains slow and insufficient to return to its prior trend level, especially as demand from China has faltered in re- cent times. A parallel here is World War I, which destroyed both production and demand, inducing a sharp reduction in economic growth, trade and financial market performance, and bringing about an end to the first wave of globalization. We thus continue to see depressed demand (both consumer and investment demand) coupled with subdued out- put growth as risk factors for global trade flows and globalization in a broader sense. Second is a constrained policy and operating environment. Literature around globalization has explored and asserted that trade patterns have been influenced by a combination of global com- mercial strategies, the prevailing diplomatic environ- ment, the institutional framework and changing so- ciocultural perceptions. With conventional establish- ment politics being challenged across the globe, the need for policymakers to focus on domestic is- sues has become a pressing matter and, to that extent, we are potentially at a turning point of for- eign policies, particularly those relating to trade. And, last but not least, comes the rise in protec- tionism and import substitution. Domestic-oriented trade policies appear to be steadily gaining ground as economies seek to boost employment and eco- nomic activity within borders. Global value chains are likely to transform as governments emphasize increased local content requirements and multina- tionals face tough competition from more regional champions. Figure 3 The two waves of globalization World exports (% of GDP) Note: Areas shaded in green are indicative of periods when globalization was thriving, areas shaded red show time periods of faltering globalization and area shaded in blue is a period of interlude when globalization faced a mixed yet rocky path of expansion and roadblocks. Source: World Bank, WTO, OECD, Credit Suisse 0 5 10 15 20 25 30 1870 1950 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Export of goods and services (% of GDP) Opening of Suez Canal (1869) World War II (1939 -1945) World War I (1914 -1918) The Great Depression (1929 -1939) WTO founding (1995) GATT (1947-1948) Bretton Woods exchange rate management system (1944) Establishment of UN (1945) Oil crises (1973-1974 and 1979) Black Monday stock market crash (1987) Asian crisis (1997) Early 1980s Recession (mostly DM economies) Cold War (1979-1985) Dot com bubble (1997-2001) Financial crisis (2007-2008) Eurozone debt crisis (2009) Mexican peso crisis (1994) Japan's banking crisis and stagnation (1990s)
Getting over Globalization_ 9 Getting over Globalization _ 9 PHOTO: ISTOCKPHOTO.COM/OLUOLU3
10 _G etting over Globalization Globalization is running out of steam. We can see this in various ways. Our measure for tracking glob- alization – made up of flows of trade, finance, ser- vices and people – has ebbed in the past year, and

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