The Case for Globalization and Robust Global Value Chains Grows Stronger

Discontent has dogged globalization for over two decades even as it has tangibly contributed to growth and poverty reduction worldwide with global value chains (GVCs) serving as its sinews. The COVID-19 pandemic demonstrated the degree to which countries depend upon an international network of suppliers for a wide range of commodities and services. That crisis, climate change, and other existential threats in the offing, bring home the need for countries to hang together, or they will hang separately. No country however large, will benefit from the overzealous pursuit of greater self-sufficiency, and for the majority, attempting to achieve even a moderate degree of autarky would entail sacrificing decades of material progress, although under the circumstances, the pursuit of strategic industrial policies by some countries may be prudent. A fracturing of the institutional infrastructure undergirding globalization and a turning inward, would also materially hamper efforts to cope with urgent national problems and international crises. Thus, the imperative for the leading economic powers is to defuse the threats to globalization and to promote resilience of GVCs. In this endeavor, the economic advantages of globalization will be pitted against strong political currents breeding domestic distrust among nations and making it harder to agree on policies necessary for economic flourishing in a planetary environment the viability of which is no longer assured. The paper makes the case that the flows of trade, capital, and technology should be safeguarded, and that dealing with the downsides of globalization is not beyond the wit of humanity.

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