The pandemic and the U.S.-China trade wars of the last few years have slowed globalization, but will these changes have lasting impact? How should we move forward? On April 14, Stone Center Senior Scholar Paul Krugman will join author Marc Levinson and the co-hosts of Trade Talks — Chad P. Bown of the Peterson Institute for International Economics and Soumaya Keynes of The Economist — to discuss these issues in the free online event, co-sponsored by the Stone Center, “Is Globalization Over?”
Krugman, who is also a distinguished professor at The Graduate Center, recently answered a few questions about globalization:
You’ve said that globalization has slowed in recent years, which is something many people might be surprised to learn. What do you think is often misunderstood or misinterpreted in public discussions about globalization?
Krugman: World trade as a share of GDP — basically, the percentage of world production that gets shipped to other countries — has been basically flat for more than a dozen years, and there’s no real sign that it’s taking off again. So we seem to have leveled off after the “hyperglobalization” of the previous 20 years. What people often misunderstand, I think, is that they assume that ever-growing globalization is natural and inevitable. It isn’t — episodes of surging trade aren’t the norm, and eras of declining trade aren’t that rare.
You’ve also talked about the role of face-to-face contact in international trade — managers being able to fly to China and meet with suppliers, for example. Do you think a slowdown in travel is likely to have a significant impact on globalization in the next year or so, or will we go back to our old ways once vaccinations become widespread?
Krugman: I really hope those days aren’t coming back. I vastly prefer talking to New Delhi without the 20-hour plane trip. But probably much although not all of the business travel we used to do will indeed come back; on Zoom, nobody can see that you’re wearing shorts, but by the same token, managers can’t see the shoddy work you’re doing off camera. So my guess is that most although not all of the personal back-and-forth associated with globalization will return.
If globalization does slow significantly, who will be hurt and who will benefit the most?
Krugman: Globalization seems to be a powerful force for the transmission of technological know-how, which has been central to rising incomes in many poor countries. So if it slows, economic convergence will probably also slow, which is a bad thing for most human beings. Some advanced-country workers might benefit from reduced competition, but there are better ways to improve their lives.