Deglobalization: Reasons and Effects

Abstract

Abstract Globalization, e.g. as measured by the ratio of global trade to global production (or GDP), has stopped advancing and may well recede in the years to come. Whether this is harmful for economic welfare depends on the precise reasons of this development. The effect of increasing border measures on GDP, however, is quite clearly negative. Because technological progress will continue to lower trade costs, globalization will bounce back forcefully when the geopolitical environment becomes more benign again.