Finance ministers and central bank presidents from more than 191 countries have met in Washington these days. This meeting is organized annually by the International Monetary Fund and the World Bank. As always, much more interesting than the public speeches were the conversations in the hallways.
This year, a ghost walked those halls: the ghost of deglobalization. The global wave of populism, trade frictions, restrictions on foreign investment and hostility towards immigration have been gaining ground. Protectionism is on the rise.
This must be regretted, because despite the frequent complaints against international trade, the experience with protectionism is much worse: it is the impoverishment of everyone, especially the most vulnerable.
This is not to say that globalization is without flaws. Among its main failures are having contributed to inequality in the distribution of wealth and income and not having offered, until now, large-scale responses to contain the climate emergency. This, however, should not drive governments to adopt protectionist and isolationist stances. Rather, we must work to correct these problems without losing the benefits generated by trade between nations.
Trade barriers, the main manifestation of the economic deglobalization underway, come in the form of tariffs and regulations that hinder trade. In the United States, many of the tariffs imposed by Donald Trump during his presidency were quietly maintained by Joe Biden, clear proof that, in this political environment, no one dares to raise the flag of trade liberalization. In these times, calling someone a “globalist” is an insult.
Deglobalization not only affects the mobility of goods and capital, but also that of people. The closure of borders and anti-immigration policies reflect another aspect of this setback. In the United States and Europe, a political climate has established itself in which immigration is demonized and migratory flows are associated with threats to security and economic stability. This translates into more restrictive treatment of migrants, who are often used as scapegoats for economic and social problems that have nothing to do with them. It is not about tolerating uncontrolled borders, accepting continuous immigration crises or hoping that walls, fences and armed agents will contain the tides of immigrants. It is about having realistic immigration policies that are more influenced by rational analysis than by political opportunism.
Thus, the attempt to close borders becomes another symbol of deglobalization, and those who suffer the most are the most vulnerable, who flee human crises and economic collapses only to face new obstacles.
For example, Brexit, a wanton act of economic self-harm for the United Kingdom, introduced new controls that imposed significant barriers on British and European exporters alike. Customs delays and additional costs hit businesses that once benefited from seamless access to an attractive common market. Along the same lines, the growing nationalist rhetoric in Europe makes foreign investments increasingly difficult, and the failures of immigration policies fuel the electoral results of the radical far-right parties.
The deglobalization process is gradual, and initially it is not easy to detect how economic and social dynamism is being lost. As barriers to trade, investment and the mobility of people increase, global supply chains become fragmented, prices rise and the economies of developing countries become more vulnerable. Workers and small businesses, who depend on a constant flow of goods and capital, are caught in the crossfire, facing the uncertainty of an economic system that is becoming increasingly closed and exclusive.
Those who once prospered from international trade will face stagnation, unemployment and lack of opportunity. The cost increases that appear when trade is made impossible and human mobility is restricted will undermine the prosperity of working families who, often without knowing it, depend on global integration for their well-being.
We still have time to change course. Reversing these trends and restoring an approach to international cooperation, including trade, investment and human mobility, could prevent widespread impoverishment and return the world to a path of shared prosperity. The challenge is to recognize the mistake we are making before it is too late.
