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Are Intellectuals Killing Convergence?

Summary:
There is every reason to worry that a historic process of deglobalization is underway, threatening to scuttle the growth models of poor countries that previously used trade as a path to prosperity. Worst of all, this disturbing shift has been met by silence or even encouragement by those who should know better. NEW DELHI – How will COVID-19 affect developing countries’ growth prospects? The answer will depend largely on how globalization – and intellectual support for it – evolves in the pandemic’s aftermath. The prospects are not encouraging. The Economic Case for Biden Drew Angerer/Getty Images Avoiding a

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There is every reason to worry that a historic process of deglobalization is underway, threatening to scuttle the growth models of poor countries that previously used trade as a path to prosperity. Worst of all, this disturbing shift has been met by silence or even encouragement by those who should know better.

NEW DELHI – How will COVID-19 affect developing countries’ growth prospects? The answer will depend largely on how globalization – and intellectual support for it – evolves in the pandemic’s aftermath. The prospects are not encouraging.

Even before the pandemic struck, the global merchandise export-to-GDP ratio had been declining for the first time since World War II, falling by about five percentage points since 2008 to about 20% this year.

This is not the first time that the world has de-globalized. Between World War I and the eve of World War II, world trade collapsed, and the export-to-GDP ratio fell from a peak of 16% in 1913 to just over 6%. In John Maynard Keynes’s memorable words, this contraction was the result of “the projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions, and exclusion.”

Today’s deglobalization was brought on by other factors. For starters, new protectionist barriers have been erected, though not at a 1930s scale. The trade restrictions imposed by US President Donald Trump’s administration since 2017 have been relatively limited overall, and targeted mainly at China. At the global level, they have been partly offset by ongoing new free-trade agreements, such as the Economic Partnership Agreement that the European Union and Japan concluded in 2018.

Another, more important factor behind today’s deglobalization is the fraying of global value chains, which itself is the result of China’s transformation from a small export-driven economy into a much larger economy more reliant on domestic demand. As such, the past decade can partly be seen as a period of normalization after years of Chinese exceptionalism. But it was also...

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