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Globalization and development

Published 02 July 2024

As the debate over deglobalization unfolds, we examine the benefits globalization has brought to the developing world and how development can continue through trade. Plus, modern free trade deals represent the future of trade, and there is a growing need to revitalize services trade for global growth. While the US continues to expand its restrictions on Chinese technology investments, China's high-priority tech sectors top its corporate subsidies list. Check out what we've been reading.

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Globalization in an era of trade skepticism | Whither Free Trade Agreements? | Shipping rates rise again | Services trade is changing | Will US controls backfire? | China continues to subsidize companies, but has new priorities | More research from Hinrich Foundation

Globalization in an era of trade skepticism  

Foreign Affairs published two important articles about globalization: Brad Setser weighs in on the dangerous myth of deglobalization, while Dev Patel, Justin Sandefur, and Arvind Subramanian offer a requiem for hyperglobalization. Richard Baldwin, in his Factful Friday blog, asks is export-led development even possible anymore?  

Mentioned publications 

  1. The Dangerous Myth of Deglobalization – Brad Setser, Foreign Affairs, June 4, 2024
    Data does not fully support popular perceptions about deglobalization. 
  2. A Requiem for Hyperglobalization – Dev Patel, Justin Sandefur, and Arvind Subramanian, Foreign Affairs, June 12, 2024 
    Hyperglobalization was perhaps the most important enabler of the convergence that occurred between the fortunes of rich and poor countries between 1990 and 2020.
  3. Is export-led development even possible anymore?  - Richard Baldwin, Factful Friday, June 7, 2024 
    Must development rely on industrialization and manufacturing exports? 

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Whither Free Trade Agreements?  

Rumours of the trade deal’s death are greatly exaggerated, writes The Economist.  Peter Harrell argues for sectoral trade agreements as a way to save free trade in Foreign Affairs.  The Asia Global Institute at the University of Hong Kong has produced a RCEP trade tracker. 

Mentioned publications  

  1. Rumours of the trade deal’s death are greatly exaggerated – The Economist, June 13, 2024 
    FTA activity is slowing, partly because many FTAs are already in place.  
  2. How to Save Free Trade – Peter Harrell, Foreign Affairs, February 26, 2024
    Are sectoral trade agreements a way forward for the United States? 
  3. The Regional Comprehensive Economic Partnership Trade Tracker – Asia Global Institute, June 2024 
    The Asia Global Institute presents a new tool for following trade flows among RCEP members.

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Shipping rates rise again 

The supply chain is under strain again, reports the New York Times, while Bloomberg notes how this supply crunch looks different than Covid-era chaos. 

Mentioned publications  

  1. ‘It’s All Happening Again.’ The Supply Chain Is Under Strain – Peter S. Goodman, The New York Times, June 24, 2024 
    Shipping rates are rising under geopolitical strains and advanced orders in anticipation of delivery delays. 
  2. How This Supply Crunch Looks Different Than Covid-Era Chaos – Brendan Murray, Bloomberg, June 25, 2024
    Shipping disruptions are not yet holding back factory activity or threatening more inflation. 

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Services trade is changing  

The OECD comes out with a report arguing for the revitalization of services trade for global growth. Lucian Cernat writing for ECIPE notes a big shift in global trade in services.  

Mentioned publications 

  1. Revitalising Services Trade for Global Growth – OECD, June 24, 2024
    A new OECD report finds that reform of services trade could save US$1 trillion. 
  2. The big shift in global trade in services: a tale of five modes of supply – Lucian Cernat, ECIPE, May 2024 
    What are the key drivers of services trade over the past few years?

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Will US controls backfire?

America’s attempt to shut down Huawei is backfiring, writes The Economist, but the US Treasury announces plans to further restrict Chinese technology investments, per the New York Times.

Mentioned publications

  1. America’s assassination attempt on Huawei is backfiring – The Economist, June 13, 2024 
    Does Huawei offer a model of how to recover from US sanctions and export controls?
  2. U.S. Moves Ahead With Plan to Restrict Chinese Technology Investments – Alan Rappeport, The New York Times, June 21, 2024, and Outbound Investment Security Program – US Department of Treasury, updated June 21, 2024
    The US targets equity investments in Chinese high tech companies. 

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China continues to subsidize companies, but has new priorities 

CATL now tops China’s corporate subsidies list, writes Nikkei Asia. The KIEL Institute for the World Economy examines the scale and scope of industrial subsidies in China.

Mentioned publications  

  1. CATL tops China's corporate subsidies list, outranking oil majors – Nikkei Asia, June 6, 2024
    China’s subsidies continue but the government’s focus has shifted to high-priority tech sectors. 
  2. Foul Play? On the Scale and Scope of Industrial Subsidies in China – Frank Bickenbach, Dirk Dohse, Rolf J. Langhammer, and Wan-Hsin Liu, KIEL Policy Brief, KIEL Institute for the World Economy, April 2024 
    Government subsidies in China are omnipresent.  

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