Foreign PolicyForeign Policy

The world will regret its retreat from globalization

By Eswar Prasad

24 Mar 2023 · 10 min read

Editor's Note

De-globalization is in theory supposed to bring greater economic stability. Instead, it's likely to bring economic and political volatility, most burdening poorer economies, writes Eswar Prasad in FP.

Globalization was meant to bring the world closer together, enmeshing advanced and developing economies in a web of mutually beneficial economic and financial linkages. From about the mid-1980s, trade and financial flows between countries expanded rapidly as governments dismantled barriers to these flows. 

Not everything went according to plan. Tensions rose as the benefits were not equally shared within or among countries. Widening economic inequality, often attributed to free trade, roiled many advanced economies and has had far-reaching political consequences. While they benefited from access to foreign markets for their exports, many emerging market countries were ravaged by volatile capital flows and the fickleness of international investors. Still, there was a broad consensus that shared economic interests would ultimately triumph and even help smooth over geopolitical frictions. 

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