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The great global crack-up

By Paola Subacchi

08 Mar 2023 · 4 min read

Editor's Note

From 2016 to 2021, trade restrictions nearly doubled worldwide, largely due to rising tensions between the U.S. and China. But total fragmentation, bodes well for no one, argues Paola Subacchi in PS.

LONDON – The world is at last waking up to the ways in which economic interconnectedness amplifies the risks of geopolitical turmoil. But while there is good reason for countries to boost resilience, a wholesale shift from integration to fragmentation, driven by geopolitical hostilities, bodes well for no one’s peace or prosperity.

The global economy is not there yet. While capital flows have declined considerably from their 2007 peak of $12 trillion (22% of global GDP) – a trend that began with the 2008 crisis – economic integration remains strong. Total global trade in goods and services exceeds $40 trillion – a tenfold increase since 1990.

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