The new globalization

By Robert J. Samuelson

The Washington Post - October 16, 2013

Globalization isn’t what it used to be. In its heyday, trade and international investment (“capital flows”) boomed. Consider. From 1980 to 2007, the value of global exports increased by nearly sevenfold, reports the World Trade Organization. As for capital flows, the annual amounts rose from $500 billion to $11.8 trillion over the same period, estimates the McKinsey Global Institute. New middle classes emerged. Hundreds of millions of people escaped abject poverty. All this seemed a real-world triumph of economic theory. Trade allowed countries to specialize in what they did best. Liberalized capital enabled investment to seek the highest returns.

Times have changed. Globalization hasn’t been repealed, but it has entered a more cautious and regulated phase. We’re creating a “gated globe,” argues Greg Ip, U.S. economics editor of the Economist in a masterful analysis. “Walls have been going up” to obstruct the free flow of trade and money, he writes. But the walls have “gates” that countries can open or close as they please. “Governments increasingly pick and choose whom they trade with, what sort of capital they welcome and how much freedom they allow [firms] for doing business abroad.” The private sector also embraces restraint; multinational companies have become more selective in their global commitments.

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